Direct selling empowering Young India

Direct Selling  industry  is to come up with demand-driven products in wake of the rising consumer awareness, selfemployment and social responsibility 

According to industry body Assocham expects  direct selling sector to hit Rs 45,000 crore by 2025, from the current Rs 7,770 crore. 

IDSA define and differentiate between  the Direct Selling is Marketing of product/services to the consumers generally from home or workplaces through explanation and demonstration by Direct Seller i.e. location away from the permanent retail locations. Can last indefinitely- as long as consumers continue to buy products and Pyramid/Ponzy Schemes is Compensation is based on new participants, not on selling products.

Incorporated in 1996, IDSA is an autonomous, self-regulatory body for the Direct Selling industry in India.

In India, the direct selling business took off in the mid-1990s, and peaked with a growth rate of 27 per cent in 2010-11. However, that growth has diminished drastically since. The industry grew a mere 4.3 per cent in 2013-14, hit by allegations of fraud, arrests and closure of some businesses. The industry is alarmed.

Types of Direct Selling

There are a variety of ways business owners can sell direct to consumers through direct selling.

1. Single-level direct sales: This type of sales is done one-on-one, such as through door-to-door or by doing in-person presentation. 
2. Multilevel Marketing (MLM): Sales in multi-level marketing are made in a variety of ways, including single or party presentations, but also through online stores and catalogs. Income earned through MLM is commission on sales, and the sales made by other business partners the distributor recruits into the company. 
3. Sometimes direct sales is called MLM or network marketing. While MLM and network marketing are direct sales, not all direct sales systems involve MLM. For example, in single-level marketing the sales representative is only paid commission on the sales he or she personally makes.

Regulatory Framework of Direct Selling in India

The sector needs to be developed further as it has high potential to generate jobs in the country . Industry  has demanded to have a separate law and Government acknowledge the growth of this sector and frame the  guidelines and the next step is framing a law. 

It is known fact that any business can grow if the regulatory systems are in place to facilitate growth of sector.Amid demands for a legal status to the direct selling industry can be regulated by framing rules under the proposed consumer protection Bill. In 2016, the government had issued guidelines for the direct selling industry and differentiated it from Ponzi schemes.However, to regulate the sector properly, it must have a provision to frame rules under the consumer protection bill

The Central Government's Department of Consumer Affairs had notified the Direct Selling Guidelines in 2016, to serve as a model framework on guiding principles for state governments to consider regulating Direct Selling and Multi-Level-Marketing.

It has advised the State governments to adopt the Guidelines to strengthen existing regulatory mechanism on Direct Selling and Multi-Level-Marketing, for preventing frauds and protecting the legitimate rights and interests of consumers. There are several state being started to frame guideline to regulate this sector like  Chhattisgarh and Sikkim ,Kerala,Karnataka ,Maharashtra, Karnataka and Tamil Nadu ,are adopting the guidelines.

Under the Model Framework for Guidelines on Direct Selling guidelines 2016 ,it is told that It is not in a pyramid structure and thus it will help the industry to grow at a faster pace and keep a check on fraudulent, fly by night operators.The ‘biggest achievement,’ of these guidelines he said, is the grievance redressal mechanism.

Employment Generation through Direct Selling

"Dr. S. P. Sharma Chief Economist at PHD Chamber of Commerce, New Delhi published article on Employment Newspaper that Direct Selling industry has contributed phenomenally towards self employment generation in the country. "

According to the recent survey undertaken by PHD Chamber of Commerce and Industry, the active Direct Sellers of the Indian Direct Selling Industry have increased from 43, 83,487 during 2013-14 to 49,09,505 in 2014-15 representing a growth of 12 percent. Going ahead, the recent guidelines issued by the Ministry of Consumer Affairs, Government of India to safeguard the interests of consumers, as well as help protect ethical direct selling companies would go a long way in confidence building of direct selling entities and consumers of direct selling products in India.

In KPMG Survey 2014 stated that The direct selling market in India has grown at a CAGR of 21 per cent over the last 5 years from INR33 billion in 2008-09 to INR 72 Bn in 2012-13, Direct selling companies have contributed in improving quality of life in multiple ways,Vestige, an Indian direct selling company, believes in empowering its members with the opportunity to lead their lives on their own terms.

"The size of the Indian direct selling community has more than doubled between 2009-10 and 2012-13. The industry has seen an increase of almost 2.6 million distributors from about 3.2 million in 2009-10 to 5.8 in 2012-13. The industry offers self-employment opportunities to a large number of people, specially women. Direct selling gives women the flexibility to manage their time and balance their work and personal lives. The industry also offers women financial independence and the improved ability to take care of their families. The industry in FY13 provided selfemployment to nearly 60 per cent (3.4 million) female distributors which increased 1.5 times from 2.2 million in FY10.7"

IT is added that direct selling industry holds significant potential to provide ample of job opportunities to the youth along with self-employment for budding women entrepreneurs. 

"Vestige, which started in 2004, is a direct selling player in health and personal care products. The company is constantly expanding its product range with a target to introduce 15 new products every year. The company has invested INR 200 million in manufacturing facility in Baddi in Himachal Pradesh; During 2015 they planed to invest INR 10 million in its own R&D facility, which was expected to focus on Ayurvedic products."

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References 

1. https://economictimes.indiatimes.com/news/politics-and-nation/sikkim-chhattisgarh-adopt-direct-selling-guidelines-centre/articleshow/61750983.cms
2. http://www.thehindubusinessline.com/economy/policy/rules-for-direct-selling-in-the-works/article9983239.ece
3. http://employmentnews.gov.in/NewEmp/MoreContentNew.aspx?n=Editorial&k=84
4. http://www.uniindia.com/more-states-in-process-of-notifying-guidelines-to-regulate-direct-selling-industry-minister/business-economy/news/1054773.html
5. https://www.indiafilings.com/sample-format/direct-selling-agent-agreement-format.pdf
6. https://www.indiatoday.in/magazine/smart-money/story/20150323-ponzi-schemes-absence-of-clear-laws-direct-selling-industry-817930-2015-03-27
7. https://www.businessforhome.org/2017/04/supreme-court-of-india-rules-in-favor-of-qnet/
8. http://www.dsa.org/docs/default-source/advocacy/directsellingmythvsfact.pdf?status=Temp&sfvrsn=0.9218290890122911
9. http://www.thehindubusinessline.com/news/national/telangana-issues-guidelines-for-direct-selling-industry/article9984548.ece