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Last Updated : Aug 26, 2019 07:52 PM IST | Source: Moneycontrol.com

Here are the factors driving the growth of direct selling in India

The role of India’s direct selling industry has been as integral to the country’s retail sector as it has been misunderstood over its forty year existence.

Moneycontrol Contributor @moneycontrolcom
Representative image
Representative image

Rishi Chandiok

India is unique in that it has policies for each retail format. Most nations adopt a national retail policy with sections pertaining to different operating models. This presents a grey area for e-commerce and direct selling since the controlling legislation was originally created for traditional retail. However the recent maturation in e-commerce guidelines has created a substantial opportunity for progress.

Several other factors will accelerate the expansion of non-traditional retail, specifically direct selling in the near future.India is unique in that it has policies for each retail format. Most nations adopt a national retail policy with sections pertaining to different operating models. This presents a grey area for e-commerce and direct selling since the controlling legislation was originally created for traditional retail. However the recent maturation in e-commerce guidelines has created a substantial opportunity for progress. Several other factors will accelerate the expansion of non-traditional retail, specifically direct selling in the near future.

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The role of India’s direct selling industry has been as integral to the country’s retail sector as it has been misunderstood over its forty year existence. However, technology, higher awareness, and a proven business model now leave the industry well placed for a period of sustained scale. The segment is likely to reach Rs 15,930 crores by 2021 at a CAGR of around 4.8 percent. A significant factor behind this change is the fact that direct selling fosters entrepreneurship. Several features of the direct selling mean that entrepreneurship is built into its operating framework like empowering people based on intent and motivation, not just experience.

First, flexible hours. Direct selling can prove to be a viable income source, even as a part-time vocation, if someone has the intent to learn and an interest in selling,. Also, distributors are incentivised to identify, recruit, and train new entrepreneurs.  This promotes self-employment and financial independence. Furthermore, direct selling eliminates the inequality of opportunity presented by traditional jobs by evaluating people on certificates and work experience that may or may not be relevant to the task. Successful entrepreneurs in direct selling is based on personable skills and selling aptitude.

An aptitude-based rewards system is particularly relevant to the country’s largest workforce segment - the youth. India is set to have the world’s largest youth workforce by 2020 and, while this is a great opportunity, it also represents a challenge. A large proportion of this demographic is likely to be underskilled, and this places the onus on education and vocational training. Direct selling affords these entrepreneurs the chance to gain valuable real-life experience while building a network of contacts alongside a strong financial foundation. This is allows young Indians to start their businesses within a proven framework.  The industry will play a pivotal role in addressing India’s employment concerns as it is poised to create nearly two crore jobs over the next six years.

Another viable aspect of direct selling is its ability to engage under-represented segments. Consider the case of women. India has one of the world’s lowest rates of female participation in the labour force at just 25 percent.  A stark contrast to the 53 percent that make up the country’s direct seller numbers. The model’s focus on flexibility, personal relationships, and authenticity is helping many female direct sellers, many of who may not have had access to traditional employment, capitalise on their existing social networks and create a lucrative income source. The industry could, with more education, awareness, and training, attract an even higher proportion of women.  This opportunity is pegged close to a USD 770 billion opportunity.

The industry also creates many avenues for indirect employment alongside the income opportunities to direct sellers,. Usually MSMEs provide production, packaging, and logistics. Indirect employment in India’s direct selling industry today supports over one million people, in addition to a direct seller base of nearly four million. Indirect employment gives these businesses access to more revenue streams while the onus of working to international quality standards also enables them to create value through learning from the world’s best practices.

The industry also has its advantages from a customer perspective. Today’s retail consumers expect convenience, the best prices, and personalised interactions. While a majority of non-traditional channels meet some or all of these expectations, direct selling’s advantage lies in its personalized transactional experience. Direct sellers are encouraged to build authentic and trusting customer relationships that are beneficial in the long term. For buyers, this means an open and honest selling experience in the comfort of their home or workplace. Also, since direct sellers provide valuable first-person insights into consumer expectations, direct selling companies are quick to respond to market developments.

Consider the case of health and wellness. Consumers across social segments, income classes, and geographies are becoming more health conscious. They want better lifestyles, healthier work schedules, and access to world-class products. It’s no surprise that over 53 percent of direct selling product sells come from the health and wellness category. Relationships and product quality are always critical factors for retail success, and the direct selling industry is best placed to capitalise on this trend.

As India continues its rapid transformation, direct selling will be at the forefront of income generation and alternative means of employment in the retail space. A national retail policy that recognises and legitimises direct selling efforts with no room for confusion will be crucial for the industry’s accelerated growth. For direct selling companies, it will be important to create robust governance frameworks supported by standardised practices so that the sector can realise its true potential.

The author is the Regional Director at QNET - one of Asia’s leading direct selling companies which offers products and services in diverse markets, in the health, wellness and lifestyle segments.

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First Published on Aug 26, 2019 07:52 pm

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