Direct Selling, also referred to as Network Marketing or Multilevel Marketing (MLM), is a direct interaction between the seller and the buyer. It is perhaps the oldest traditional form of selling globally. The Direct Selling Industry operates successfully in more than 100 countries. As per a KPMG report, the industry is expected to reach INR 645 billion by 2025. So, what is driving the growth of Network Marketing companies in India? Let us quickly find out.
Direct Selling in India
Direct Selling in India started in the 1980s. Post-liberalization, in the 1990s, the industry picked up actively as many established global players entered the Indian market.
Driven by the gig economy, the Direct Selling industry has encouraged self-employment over the years. Direct Selling companies that incorporate the MLM business model are in line with the Government’s vision of a self-reliant India. It caters to the growing aspirations of the young population.
Rapid digitalization is seen as a boon for the Direct Selling Industry, establishing many young and promising people as entrepreneurs.
Indian Retail – Witnessing a Wave of Direct Selling
Today, the Indian consumers, led predominantly by the young crowd, are more tech-savvy than ever before. Further, the consumers who are hooked on social media platforms are responsive even in their workspaces.
Since the onset of the Covid-19 pandemic in 2020, the landscape of Indian retail has changed. We see a new wave of Direct Selling business. Well-known brands and companies are marketing their products and service directly to the consumer using online means. It is growing rapidly and set to become the next retail trend in India.
Factors Responsible for the Boom in Direct Selling
People keep looking for opportunities to earn a livelihood or build their businesses. This trend has been more visible during the Covid-19 pandemic. We saw brands from wellness and homecare sectors picked up Direct Selling and reached out to the people directly.
As people became more conscious during the pandemic, the sale of health and wellness products rose. The frequent lockdowns enforced by the government to control the spread of the Coronavirus compelled people to stay indoors.
The Direct Selling companies stepped in to deliver various products, especially daily needs and essentials, at consumers’ doorsteps. The Direct Selling business model has now become a norm of the days, and the companies haven’t looked back since then. Let us now know about factors driving the Direct Selling industry.
The Work-from-Home Norm Has Led to Increased Consumption
The onset of the pandemic saw most industries struggle to keep their operations going on. As the Government enforced frequent lockdowns to control the spread of the virus, it became even more difficult for companies. Many companies were quick to embrace the work-from-home (WFH) norm and could sustain their revenues. When most people were confined within four walls of their homes, it led to an increase in the consumption of homecare and household products.
Direct Selling – Enabling Many to Earn their Livelihoods
The economic recession compounded the onset of the Covid-19 pandemic. It resulted in an unemployment crisis.
The Direct Selling industry that stood out during the economic crisis provided livelihoods to millions and showed them a way to attain financial freedom and become entrepreneurs.
In a gloomy scenario, the Direct Selling Industry that was the silver lining saw it generate more than five million livelihoods.
Direct Selling in India– More Reliable
The Direct Selling industry is growing at a rate of more than 4.5 per cent year-on-year. It is mainly due to the consumers having stepped up their online shopping via the Direct Selling channel.
Today, with the advancements in technology and leveraging of the affordable Internet, buyers and sellers are both at ease. Buyers have the option to compare product features and prices before finalizing their purchases.
Direct Selling companies who have stepped up their e-Commerce activities have the option to showcase their products or services. Unlike before, the online activities and stiff competition, Direct Sellers are restricted from bluffing about their products.
Direct Selling: A Win-Win Situation for Brands and Consumers Alike
With an increase in e-commerce activities, brands today have greater control over their sales and revenues. The digitally-savvy consumers can get closer to a brand without any intermediaries resulting in price reduction. So, that’s a win-win situation for the consumers as well as the Direct Selling companies.
Joining a Direct Selling company provides a source of livelihood and the option to earn a residual income. It has attracted many people to join a Direct Selling company and own their own business that comes with negligible investment and involves no startup costs.
On the other hand, Network Marketing companies who employ services of people as Sales Representatives are not directly on their payroll. It enables them to showcase and spread the word about the products or services without spending big on advertisements.
Direct Selling Industry – In Line with the Government’s Initiatives
The Indian Government has boosted the Multilevel Marketing Industry with several initiatives like Make in India, Vocal for Local, Startup India, Women Empowerment, and Skill India. The Direct Selling companies align nicely with all these initiatives by promoting made in India products, developing the skills of budding entrepreneurs, and empowering women.
Further, the industry that is expected to reach INR 645 billion by 2025 has been at the forefront of Women Empowerment – more than half its workforce is women. The average disposable income of the Indian middle class is expected to double. It will increase their purchases, resulting in the further growth of the Direct Selling companies.
Direct Selling – Will be at the Forefront of Income Generation in India
The Government initiatives, rapid digital transformation, and an alternative means of employment will propel Direct Selling to be at the forefront in the retail space.
Further, to safeguard the interests of those joining Network Marketing companies, the Government has drafted regulations that render companies incorporating the pyramid business model illegal. And it has also made it mandatory for Direct Selling companies to register with a governing body.
The Government’s national retail policy recognizing and legitimizing the efforts of Direct Sellers will lead to growth acceleration in the industry.
Direct Selling companies need to create a robust governance framework and standardize their practices to realize their real potential.
Direct Selling in India– Fostering Entrepreneurship
The Indian Direct Selling industry bucked the pandemic woes and grew at 10 per cent in FY21
The Indian Direct Selling sector is poised to reach INR 15930 crores by the end of this year at a Compounded Annual Growth Rate (CAGR) of more than 4.5 per cent.
The major factor driving this growth is the fact that the sector fosters entrepreneurship. It empowers people based on their intent and motivation, irrespective of their qualification or experience.
The fastest-growing sector in India challenging times, Multilevel Marketing provides an alternative career to so many and a livelihood to families affected by the pandemic.
Expansion of Direct Selling in India Inevitable
In times of adversity, when the entire world is going through a deadly crisis, the Direct Selling industry has given rays of hope.
India has policies in place for each retail format. The recent maturation in e-commerce guidelines and other factors will continue to accelerate the growth and expansion of Direct Selling.
India’s Direct Selling industry’s role has never been appreciated ever since its existence. But the recent advancements in technology, the use of social media, a proven business model, and greater awareness has changed the perception.
Direct Selling is Set to Rise in the Days and Years Ahead
The Direct Selling industry is involved in the sale and delivery of products or services. For example, newspapers, food, bottled water and so on. It will give rise to employment for the delivery personnel.
You can join a Direct Selling company by collaborating with it after making an informed decision. It enables you to own your business most affordably without any startup costs. You can do it part-time or full-time; you earn as much as the effort you put in. It shows you the way to achieve financial freedom and become an entrepreneur.
The government boost to Multilevel Marketing, the addition of Direct Selling in academics, and the tremendous growth potential that the sector holds will see it rise further in the years ahead.
Conclusion: Its Advantage for Direct Selling in India.
The health crisis resulting from the Covid-19 pandemic has changed the way businesses are run today.
The Direct Selling companies that adhered to social distancing norms during the pandemic and delivered essentials to people confined to their homes during the frequently enforced lockdowns enabled the industry to stand out.
Today we see many retail stores and manufacturing units partnering with Multilevel Marketing companies to generate revenues. It indirectly drives sales and revenues of companies that tie with Direct Selling companies. Also, the Direct Selling companies are in line with the Government’s initiative of selling Make in India products. India is a country with a vast population that has a long list of career options. Another addition to the list now is Direct Selling. Anyone who wishes to attain financial freedom and become an entrepreneur is free to join an MLM company. There is little investment and no start costs, and there are no criteria of qualification or experience either. Direct Selling certainly holds a bright future in India.
