Before she became the owner of Peekaboo Beans, a Canadian kidswear business, Traci Costa worked as an investment banker for 10 years, toiling long hours, making deals every day. It all changed when she had her first child in the early 2000s and left her banking career to look after her daughter. She created Peekaboo Beans in 2006 after noticing the clothes she bought for her vivacious child were hindering her from moving around freely. The buttons and snaps dug into her little waist and limbs, and prevented her from unadulterated play. It gave Costa the idea to construct better clothing for children.
Costa designed her colourful line of kidswear to be versatile. The pants and sleeves have zippers so they can easily come off, and if there’s an accidental spill, parents can just reverse the clothing. Costa even had the fabrics custom developed, and Peekaboo Beans conducts third-party testing to ensure products like her Jump’n Jeggings and I Heart Play Hoodies are free of harmful chemicals. Costa initially sold the kidswear to specialty children’s boutiques in Vancouver, where Peekaboo Beans is based, but switched her business model to direct sales after witnessing heaps of retail stores going out of business during the financial crisis. “It was the best decision I’ve ever made,” Costa says.
Direct selling isn’t new. You might have grown up slathering on sunscreen your mother ordered from her local Avon lady or fishing pickles from a Tupperware container she bought at a party. Direct sales replace the retail sales chain with an army of consultants that market and sell products to people using their networks, through coffee dates and parties and order forms. And the businesses are rebounding in popularity, with sales agents out selling everything from cosmetics (Arbonne) to beverages (Steeped Tea) to home fragrances (Scentsy). According to the Direct Sellers Association of Canada, the number of direct sellers is up 17.8% over the past few years, while global direct sales have increased 20.8%. For many business owners, direct selling is the perfect way to grow a brand, far from the cluttered shelves of the retail marketplace. If you’re lucky, you might even develop a cult following.
When Costa officially switched to direct selling in 2011, she set a goal of finding 10 consultants by the end of the year. Her first sales agent, a self-proclaimed “Beanaholic” from Calgary, noticed Costa was no longer selling Peekaboo Bean products in her local retail stores and wanted to find another way to support the brand because she valued it so much. Other consultants joined Peekaboo Beans through word of mouth. By June of that year, Costa had over 100 consultants and more people lining up to sell her products. The crowd became so hectic she had to introduce an application process to hire new sales agents.
Today, Peekaboo Beans has more than 700 sales agents across Canada and is growing at an estimated rate of 30 new consultants every month. Its revenue has also increased an average of 70% every year since she made the switch, and the company has paid out more than $1.7 million in commissions to consultants so far. The agents take home a 15% to 35% commission, depending on how much they sell. Costa’s top consultants have each sold more than $200,000 total in Peekaboo Beans gear.
“If consultants are in love with the product, it’s easy for them to sell,” says Ken Mulhall, president of the Direct Sellers Association of Canada. “They want to quench their thirst for being an entrepreneur and control their own time while meeting the needs of their family.”
To become a Peekaboo Beans consultant, you have to purchase a $199 sample bundle that comes with eight of Peekaboo Beans’ best sellers. The agents will use the kit when hosting parties for local moms—creating a more intimate experience for customers. One type of Peekaboo Beans soirée has the seller gathering together about 15 moms at her home for an evening of chit-chat about kids and kid-friendly products, while the babies play in another room. They might also meet at a local coffee shop, where the consultant can hand out catalogues and give a short presentation on the company and what it offers. Moms can place their orders directly through the consultant.
“It’s a personal shopping experience where we look at the needs of the child, like whether they have certain colours they love,” says Costa, who reveals that an average Peekaboo Beans event will generate $750 in sales, much higher than the direct sales industry standard of $450. Costa believes her success comes from creating products people appreciate, but ask anyone who’s attended a direct sales party hosted by a friend or co-worker, and they’ll also tell you it’s difficult to go home without buying something.
Costa also notes it’s easier to scale a business under the direct sales model in comparison to the retail model, since growing your network of consultants requires little overhead, unlike constantly opening new stores. Additionally, it’s a great way for Costa to share her message about the importance of unstructured play for kids. “The retail model was very transactional,” she says. “There were no key messages, product knowledge or discussions of social impact.” With Peekaboo Beans, she’s able to build into her business “a unified message on the power of play, and empower women to run their own business at a low cost, selling a product they love.”
MORE ABOUT SMALL BUSINESS & ENTREPRENEURSHIP:
- The best countries for women starting businesses
- Interview: John Fluevog on how to turn your customers into a community
- How Halifax-based SkinFix is taking its 150-year-old formula global
- Why Canadian companies need access to higher-risk financing
- Five sources of financing every small business needs to know