Pinning hopes on direct selling

A report suggests that the direct selling industry is booming in India.

Indian Direct Selling Industry (IDSA), in collaboration with Ernst & Young, launched a report to evaluate the present state of the direct selling industry and recognised the contributions it makes to the economy.

Direct selling industry creating new job opportunities
Pinakiranjan Mishra, Partner and Industry Leader, Retail and Consumer Product Practice, Ernst & Young, said, “With a presence of over 13 years in India, the direct selling industry has shown a robust growth, bringing numerous individuals in its fold through its entrepreneurial nature of activity. Today, the industry encompasses a size of INR 33,300 million, bringing into its fold nearly 1.8 million people and having posted a healthy growth rate of 17% in 2008-2009.”
“The social impact of direct selling is also visible in its ability to empower women, especially in a country such as India. With nearly 70 per cent of the workforce engaged in direct selling comprising women, the activity has emerged as a means for their self empowerment and social progress.” said Chavi Hemnath, Secretary General, 
IDSA. IDSA, an affiliate of the Direct Selling Association (DSA) of America, is an industry body which represents the interests of the stakeholders involved in the activity in India.

What direct selling industry does
Initially, direct selling industry had image problems and these problems have manifested themselves over the last few decades. At an international level, the direct selling association (DSA) has implemented an ‘Image Enhancement Program’ to tell the wonderful story about industry people from all walks of life who are coming into the direct selling business. According to DSA, India is taking off now and is growing at 15 to 20 per cent a year. According to their report, direct selling did a business of $630 million in India in 2005-2006.
 It is mandatory for the brick and mortar stores to have a resolute customer service programme. It even includes greeting the customers while stepping into the store. However, guidance and product judgment of the staffs play an important role in purchasing. Except in exclusive brand outlets, the sales persons lack the adept knowledge of the product since they are accustomed to handle various brands. This gives a positive point to the SLM process where the selling depends on the convincing ability of the trader. He/she must have an adequate acquaintance with the brand name, product quality and the assurances provided by the company for demonstration. On this, Anshu Bagai, Head-Marketing, Tupperware India (P) Ltd., said, “While starting business 60 years back in the US, we experienced that the retailers are indifferent to a particular brand and they are primarily led by the merchandise agenda. Therefore, they actually promote a product where they get more margins. As far as our product is concerned, it requires demonstration and involvement from the trader to demonstrate before the consumers and then only they would choose our product.”

Price point 
Price points always remains high for these brands, but their superior quality armed with the intimate way of marketing, the products are able to cross this hurdle and win customers. While surveying Tupperware, one notices that its products, as compared to its competitors (like Pearl Pet, Cello, etc.), are expensive. There is no doubt that the varieties of products made available by this brand are manufactured to suit the varied climatic conditions; a quality that its competitors lack.  

After-sales service
Various companies have policies of sale services. Reputation of a brand lies much on this particular issue, that when served earnestly, a customer’s preference definitely goes with the brand. Companies running through SLM channel too emphasise on this service. Tupperware has after-sales service in the name of total replacement. Bagai says, “Our products have lifetime guarantee. It means, in your complete lifetime if there is ever any manufacturing defect in the product, we will replace it. That is the level of confidence we have in our product.”

Retail industry vs direct selling industry
There is no doubt that the retail sector in India is on an upswing and is now being considered to be the next sunshine industry but as India's direct selling industry gears up for the future in a collective way, can it give the retail sector a run for its money?  
Although statistically speaking there is a big difference between the two as the size of the domestic retail sector is pegged at $292 billion. On the other hand, the direct selling industry currently stands at Rs 2700 crore. In order to get its act together the Indian Direct Selling Association is in talks with the Ministry of Consumer Affairs to give the direct selling business industry a status and design a framework with the dos and don'ts of direct selling in India.  

Direct selling industry in India is generally defined as a low investments and high returns affair. Moreover, with the Government likely to come out with a legislative framework for direct selling in a few months from now, companies that are international are likely to foray into India in the next two years. Therefore, the industry is set to cross the USD 1000 million mark by 2010.  


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