Independent Entrepreneurship through Direct Selling

They never advertised nor did they open retail fixed stores in the market locations but still managed to reach the end customers with their products and are doing successful businesses......
Direct selling

Market Capacity and Turnover

 

From  being  a  Rs.  895  crore  industry  in  1998-99,  the  direct  selling  industry  in  India is  today  Rs.  3,330  crore  industry, growing at a rate of 17 per cent every year.  According  to Ernst  &  Young  survey  report, the Indian  direct  selling  industry  is  estimated  to  become  worth Rs.  5,328  crore by  2012-13.

 

According  to  the  same  survey  report,  IDSA (Indian Direct Selling Association) Member  companies  contributed  over  Rs.  370 crores  to  the  government  exchequer  in  2008-09  in  the  form  of  various  taxes.  The total no. of sales consultants associated with direct selling in India stood at 1.82 million people.

 

Strong Network: Backbone of the business

 

To make the product reach the customers, the manufacturer needs convincing & self-motivated distributors. Building a strong network across the region is the most important step of this model, who can ask more members to join the network and could make product a big success among the consumers through every individual’s effort.

  • Need of centric warehouses and distribution centres for timely delivery: For example Amway has 55 warehouses and 130 distribution centres. 
  • Provide suitable training to the distributors to deliver impactful demonstration. This is route of  the business since it helps to sell the products which otherwise is costly for the Indian consumers.
  • Ways of direct selling: One- to- One and One- to- Many

 

Best suited businesses in Direct Selling

 

There are various categories where one can find opportunities:

 

  • Kitchen utensils, Water purifiers
  • Gourmet food
  • Candles
  • Hand bags
  • Cosmetics, skin care
  • Home décor, cleaning products etc

 

The Direct selling business is best suited for the products which need personal demonstration and proper explanation. For example—cosmetics need personal touch to show its importance based on nourishment, beauty and how its ingredients bring difference to the customer. In case of water purifiers—imparting knowledge and educating the customers on product result makes direct selling a convincing model to follow. Secondly, if the product launched in the market is ‘unique in nature’ and such products are rare in the market, with low investment cost and more aggressive distributive networking can be a suitable route to follow. Thirdly, most of the products which give weightage to ‘quality’ are usually trading in this field of business.

 

DS demands self-motivating participants

 

People who want to endeavour individual entrepreneurship skill and want to make big in the business direct selling model encourages to put the foot forward. It offers opportunity to the home-makers to participate and earn more depending upon the vision of an individual involved.

 

According to Amway India, after becoming an Independent Business Owner, one  can  sell  the  products  and  procure  orders  for  products  required  by  his  customers. The difference between the Distributor price and the MRP printed on the pack is the retail profit margin of the business owner, which is approximately around 20 per cent. Without exceeding the MRP of the product, the business owner is free to choose the level of retail profit margin.

 

One  of  the  unique  feature  of  legitimate  direct  selling  companies  is  the  100 per cent money guarantee  that  they  offer  both  on  the  business  opportunity  and  products.  Amway  offers  a  cooling-off  period  for  90  on  the  business  opportunity  and  a  30-day  cooling-off  period  on  products.  Amway refunds the initial investment of Rs.  995  to  those  who  wish  to  exit the  business  with  90  days  of  joining  the  business. This makes the sales force to connect easily with little investment cost and earn the income in the form of profits.

 

Threats in DS

 

Competition adds impetus to the existing business. Amway forayed Indian markets with 6 products, has made their niche in direct selling with almost 115 products. Adding to the success story of Amway, Mr Vishal Aneja, Amway India, avers, “We  at  Amway  consider  competition good  since  it  gives  the  opportunity  to  score on  attributes  like  product  quality,  service  quality,  etc,  However,  one  of  the  challenges  that direct selling faces is lack of legislation. This makes unscrupulous and fly-by-night  entering  the  Direct  Selling  space  masquerading  themselves  as  genuine  direct selling opportunities.”

 

Conclusion

 

The business is growing at a good pace (17 per cent per annum) and with more disposable income, the business which provides solution to the customer can take this route to expand with less investment cost and fairly  good returns at every step making it a lucrative business.

 

 

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