Today, technology has affected the way every business model works. It is helping businesses evolve at a greater speed and the industry of direct selling is no exception to it. Direct selling is one of the oldest & simplest product distribution systems prevailing in India. In this system, companies appoint common individuals, called as direct sellers, as the authorized people to conduct the product sale to consumers away from any retail locations. It revolves around the selling techniques like demonstrations, samplings, circulating testimonies of the products and thereby selling the products to friends, relatives, colleagues and acquaintances.
Direct selling is one of the industries that has always kept itself updated with the technologies to explore various innate aspects of business. Technology has answers to many challenges faced by Direct Selling companies. Let us look at the key challenges faced by new age direct selling companies and how technology resolves them-
Initially the authorized direct sellers used to meet the potential consumer in person, conduct product demonstrations to exhibit and sell the products which was certainly a time consuming process. Now with changing technological advancements, the direct seller can simply share a video of the product to the consumer and if the consumer finds it good enough then he can purchase products directly through direct seller’s personal webpage! In order to ensure the best purchase experience for the consumers, products get delivered within 2-4 working days.
Organizing seminars is a routine exercise in the field of direct selling and this helps direct sellers to address a larger number of people at once. However, recently, the concept of webinars has changed the whole experience of conducting seminars and training sessions across the industries. Education is one of its best examples.
Webinars can work well for the direct sellers as well; as they can address a large number of potential consumers across different geographical locations in one go. It is cost effective and convenient for both the direct sellers as well as the consumers. Some of the direct selling companies like Netsurf have already started using Facebook LIVE and YouTube LIVE to address a larger audience. Every week such companies conduct product trainings, business trainings, guest seminars on FB Live, which is highly effective. It saves lot of time, efforts and the most important it saves cost.
Mobile Applications are revolutionizing the way direct selling business is conducted. The mobile apps enable direct sellers to handle their business activities on the go and fulfill their desire to provide the best purchase experiences to the consumers.
KPMG reports on Direct Selling Industry estimated the size of the industry to be around Rs. 80 Billion in year 2015. It has grown at a CAGR of over 13% between 2010 and 2015. In September 2016, the government of India issued guidelines for conducting a legitimate direct selling business for the players in the industry. These guidelines boosted the spirit of the players and the estimated market size predicted is Rs. 645 billion by year 2025. These numbers optimistically highlight various opportunities in the industry.
The business of direct selling promotes entrepreneurship in India. This is one of the safest business opportunities available for an individual, as it does not demand heavy investments, there is little or no risk, it does not need a retail store or a warehouse and it gives returns in proportion to the time and efforts one invests in the business conduct. This opportunity is open for masses, as it usually does not demand any specific educational qualification.
Direct selling is always considered as one of the most effective ways to empower women as it gives them the advantage of time and place to manage their work and personal life balance effectively. Worldwide in 2012, women comprised of 75% of the workforce in direct selling industry while the ratio is 58% in India today. In India, considering the rapid growth, the direct selling industry provided self-employment to over 3 million female distributors in 2015 while it has a capacity to financially empower the lives of 10.6 million women by year 2025.
According to the guidelines, the companies will have to manufacture the products to be sold in India, which in turn boost the ‘Make in India’ movement initiated by Indian Government.
The fair & fundamentally strong players in the industry now have an ease and access to the funds in the Indian market. The doors of the banks, IPOs, Venture Funds will open for direct selling companies in India.
As any other industry, direct selling industry is also evolving. It has its own challenges, advantages and disadvantages.
One of the key challenges was not having clear guidelines for direct selling industry in India. On 9th Sept 2016, Central Government of India has taken step and designed a framework for direct selling companies. I am sure all the legitimate direct selling companies are happy with this step, and hoping to see comprehensive law for Direct Selling Industry like any other industry in India.
The guidelines issued by central government in September 2016 should be ideally used as a framework by the states to frame the regulations for conducting the direct selling business. The state government of Rajasthan has already framed them and started the implementation as well. It is a better way than every state implementing their own set of rules for the industry in their territory. It will be better if the government can come up either with an act, an independent act or as a part of the Consumer Protection Act 1986, to regulate the industry nationwide. It is necessary, as it will bring in a lot of harmony in the business conduct of the Direct Selling companies across India.
It is also believed that these guidelines will help in addressing challenges faced by direct selling industry.
1. Consumer Protection: Consumers will be aware and equipped to distinguish between the real good players and the unreliable players. Consumer’s protection & safeguarding their rights will be the most important impact that these regulations will have on the industry.
2. Organization in the industry: Today approximately 80% of the direct selling industry prevailing in India is unorganized. There are various ponzi schemes running in this 80% of the portion under the garb of direct selling. I feel the industry will be organized and will get the status of an Industry with the policies coming in.
3. The legitimate and fair players in the industry will have an ease and access to funds in the Indian market. The doors of the banks, IPOs, Venture Funds will open for direct selling companies in India.
This article is authored by Sujit Jain, Chairman & Managing Director, Netsurf Communications Pvt Ltd.