Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. … Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales.
Face to face presentation, demonstration, and sale of products or services, usually at the home or office of a prospect by the independent direct sales representatives. Employed by firms such as Avon, Mary Kay, and Tupperware, direct selling differs from network marketing in that it offers little or no incentives for recruiting ever increasing number of sales representatives
Scope Of Direct Selling In India
According to the Indian Direct Selling Association (IDSA), the direct selling market is estimated to hit INR 15,000 Crore by 2019-2020. 60% of the market is occupied by the foods and drinks segment. In 2015 too it was this segment that showed the highest current value growth rate of 34%.
Recently, the Direct Selling Guidelines 2016 was issued. Acting in tandem with this new set of guidelines is the Food safety and Standards Authority of India (FSSAI). Both IDSA and FSSAI are looking forward to entrust 40,00,000 distributors of IDSA’s member companies with the task of spreading food-related awareness.
Moreover, the industry aims to create business opportunities to about 90,00,000 people by 2019-2020. A very interesting fact about this industry is that women work-force is stronger here than men work-force.
Future of Direct Selling in India
Now clear regulatory guidelines are placed, the direct selling industry has the potential to touch Rs 64,500 crore in turnover by 2025, from a Rs 7,200 crore size now, felt industry experts here.
Talking at sidelines of the Federation of Indian Chambers of Commerce and Industry (FICCI), Rajandeep Singh, manager, strategy, strategy & operations, management consulting, KPMG India said that countries with a thriving direct selling market, have direct selling market to GDP ratio of 0.2 to 1.2 per cent.
In India direct selling market is around 0.08 per cent of the GDP at the moment, and hence has huge potential to grow.Singh added, “Segments like wellness, cosmetics and personal care now dominate the Indian direct selling market. By 2025, we estimate that as consumer markets would grow, the disposable income of the Indian middle class would also grow by at least 2.5 times. People in these households would spend more on personal care and wellness products.”
The direct selling industry in the country now engages around 5.8 million people who are involved as distributors or direct sellers. According to KPMG, this number could grow to 18 million direct sellers by 2025. Women form a significant chunk of direct sellers, and from a current 3.4 million women, their numbers could touch 10.6 million by 2025.
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Rajat Banerji, co-chair, FICCI-Direct Selling Commmittee, said that the industry is waiting for changes in the regulatory framework that now governs direct selling companies, and once that comes in, direct selling industry has huge potential in India. “In countries like Mexico, which have similar socio-economic structures, with one-tenth of India’s population, the size of the direct selling industry is at least eight times bigger,” he said.
The Indian Direct Selling Association (IDSA) has already sought changes to the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, and has urged the government to provide clarity in order to avoid misinterpretation.
The direct selling industry feels that the law in its current form is unable to distinguish between genuine direct selling companies from pyramid and ponzi schemes.