Building a strong brand and generating consumer demand are important parts of any business model, and for the past 75 years, it has been almost an article of faith that advertising is key to achieving those two goals. But what if there were another way to build a business, one that didn’t rely primarily on advertising?
Welcome to the world of direct selling, the oldest “Next Big Thing” in the world of commerce. Direct selling relies almost exclusively on word-of-mouth promotion, peer-to-peer sales, and network building. A $182.5 billion industry globally, in India direct selling is a Rs.7200 crores-a-year business and is used by some of the world’s most recognizable brands to market products and services to consumers.
The defining characteristic of direct selling is the use of an independent sales force that provides personalised service to customers, along with the opportunity for individual direct sellers to start, manage, and grow their own business with minimal upfront capital investment. The direct-selling model works particularly well with products and services that benefit from demonstration or explanation, but virtually every kind of product or service can be sold through this channel.
The growth of the direct sales industry is related to an underlying trend: the outsourcing of services by large companies that gave rise to the BPO sector in India in the 90s. Likewise, direct selling companies do not hire their salespersons as staff, but instead offer contractual relationships that individuals can enter in order to gain access to an established business format, in return for performance-related remuneration. In this sense, direct selling is regarded as a manifestation of entrepreneurship. Since direct selling allows people to run and manage their own business and further develop their entrepreneurial abilities, it has been widely accepted as an attractive form of entrepreneurship.
Direct selling differs from other business models in another significant way. It’s not only a great opportunity to run a profitable business on a global platform but also a great way to connect with like-minded, uplifting people and build lasting, rewarding relationships.
Direct selling draws budding entrepreneurs from all walks of life primarily because it is an equal opportunity platform. Anyone and everyone irrespective of race, class, education, background or gender, gets the exact same playing field and the only thing that matters is hard work, time, and effort. The key to success in direct selling, as in any other business, lies in seeking out and listening to other people who are successful, learning their techniques, and incorporating them into your own business.
Women are particularly attracted to direct selling for self-employment as it offers them with the flexibility to manage their time and balance their work and personal lives. The industry in FY13 is estimated to have provided self-employment to 3.4 million female distributors.
An ever-increasing number of people are earning an income through this business. The emergence of direct selling has been stirring up the entire retail sector. The economic relevance of direct selling is demonstrated by its total sales volume. As per the KPMG report, the direct selling market in India is expected to grow to Rs.64,500 crores in 2025.
In the European Union the total sales volume of the direct selling industry increased from €10.7 billion to €11.6 billion, representing a growth rate of 8.1% in 2010 (Seldia, 2011). This shows that direct selling continues to perform strongly even during the global economic crisis.
Besides providing additional income opportunities to direct sellers, the industry also generates a large number of jobs. A majority of the direct selling companies including QNET outsource production, packaging and logistics management of their products, thus generating direct employment across the value chain.
Why then does this industry that provides additional income opportunities to a large number of people and promotes micro-entrepreneurship, get such a bad rap in the media? One of the key challenges plaguing the entire direct selling industry is the lack of regulatory clarification due to which the direct selling companies are mistaken as fraudulent pyramid coupled with ponzi schemes. The absence of clarity is hurting the growth and reputation of direct selling companies in India.
If you are part of the Indian direct selling industry, join other professionals such as yourself in signing this petition started by a group of independent representatives of QNET, requesting the Indian government to frame a legislation for the industry. This affects your livelihood too.