Direct selling glossary: 25 terms, defined plainly
PV, BV, DP, binary, upline. The words used at every opportunity meeting, defined in one or two sentences each.
A
Autoship
A recurring monthly order a seller or customer sets up with the company. Useful for genuine re-orders; a warning sign when required just to stay "active".
B
Binary plan
A compensation plan in which each seller has at most two "legs" directly below them. Pay often depends on the sales volume of the weaker leg.
Business volume (BV)
A point value assigned to a product that the company uses to calculate commissions. It is set by the company and is not the same as the product's price.
Buy-back policy
A company's written promise to repurchase unsold, saleable stock from a seller for a refund within a set period. Required in India under the 2021 rules.
C
Compensation plan
The company's rules for how sellers are paid: retail margins, commissions, bonuses and rank requirements.
Cooling-off period
A window after joining or buying during which you can cancel and get your money back.
D
Direct selling
Selling products directly to consumers away from a fixed retail location, usually by independent sellers who earn a margin and sometimes commissions.
Distributor price (DP)
The price a seller pays the company for a product. The gap between DP and MRP is the seller's retail margin.
Downline
The people a seller has sponsored into the business, and the people they in turn sponsored.
G
Grievance officer
A named person a direct selling company must appoint in India to handle complaints from consumers and sellers.
I
Income disclosure statement
A document showing what a company's participants actually earned over a year, usually by rank. The most useful single document for judging an opportunity.
Inventory loading
Buying more stock than you can realistically sell, usually to hit a rank or bonus. A common way people lose money.
M
Matrix plan
A compensation plan with a fixed width and depth, for example three people wide and seven levels deep.
Maximum retail price (MRP)
The highest price at which a product may be sold to a consumer in India, printed on the pack.
Money circulation scheme
A scheme in which money comes mainly from new members' payments rather than product sales. Banned in India under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
Multi-level marketing (MLM)
A form of direct selling in which sellers also earn commissions on the sales of people they recruited, across several levels.
P
Party plan
Selling through hosted gatherings, in person or online, where products are demonstrated to a group of guests.
Point value (PV)
A point score attached to each product, used to track a seller's sales volume for ranks and commissions.
Pyramid scheme
An illegal scheme in which participants are paid mainly for recruiting others, or for their own required purchases, rather than for sales to real customers.
R
Rank
A seller's level in the compensation plan, usually reached by hitting personal and team volume targets.
Retail margin
The profit a seller keeps when a customer pays more than the seller's distributor price.
S
Sponsor
The person who introduced a new seller to the company. Also called an upline or enroller.
Starter kit
A pack of products and materials offered to new sellers. Should be optional and modestly priced.
U
Unilevel plan
A compensation plan in which a seller can sponsor any number of people directly, with commissions paid on a limited number of levels.
Upline
The sponsor above a seller, and the people above them, in the team structure.