What is direct selling? What is changing in the Indian direct selling industry? Is direct selling legal in India?
Find answers to all your questions about the direct selling industry below:
1. What is direct selling?
Direct selling is a method of marketing and selling goods and services directly to the customer. It is largely driven through word-of-mouth referrals. Products sold through direct selling companies have unique features and are exclusive to the company. The method does not involve shops, malls and it isn’t driven by the location and traditional methods of selling goods.
2. When was Direct Selling introduced in India?
Direct selling as a concept was first introduced in the late 1980s in India. It gained popularity during the nineties. QNET was founded in 1998. It is one of the first companies in the world to incorporate e-commerce as an integral part of direct selling.
3. What is the governing body of direct selling in India called?
The Ministry of Consumer Affairs is the one that governs the Direct Selling Guidelines and Rules, for both direct selling entities and their consumers.
The direct selling industry is currently a self-regulated industry. There are various Associations in India which act as an interface between the industry and policy-making bodies of the government, facilitating the cause of the direct selling industry in India.
4. What is the entrepreneurial opportunity in direct selling?
Direct selling provides an excellent prospect for enterprising people to set up their own business. Entrepreneurs can leverage the potential of direct selling with minimal overheads and cost of operation. QNET has provided opportunities to millions of Distributors who have successfully harnessed their potential through the QNET direct selling opportunity, backed by a diverse product range.
5. How did the direct selling industry perform last year globally during the pandemic?
According to the latest World Federation of Direct Selling Associations (WFDSA) report 2020, the global direct selling industry has reported an overall increase of 2.3 per cent in sales to USD 179.3 billion in 2020.
6. How did the direct selling industry perform in India in terms of sales and the number of distributors?
India has seen a great improvement in the last one year with INR 23,800 Crore (USD 3.19 Billion) worth sales in 2020. The country recorded the highest Year-over-year (Y-o-Y) growth of 28.3 per cent, the highest CAGR of 17.6 per cent over the last three years, making it one of the top 20 direct selling markets across the globe. The number of direct sellers was recorded at 74.3 lakhs (7.4 million) people as of May 2020 (Source: WFDSA report).
7. What are the recent key market drivers in the Indian direct selling industry?
The rising affluence of the middle-class consumer and the ease of online shopping has created a progressive shift in spending patterns. The new Indian consumer’s shopping decisions are of an aspirational lifestyle — high-quality brands and luxury products.
Consumers are also much more conscious about health and wellness in comparison to the previous generations. Social media also plays a key role in how people want to be perceived or fit in with their peers.
To stay ahead of the curve, QNET constantly develops innovative offerings and adapts to the change effectively.
8. What is the highest-selling product category in the direct selling industry?
Globally, the highest selling product category includes Wellness products, which comprises 57% of total sales in 2020, followed by Cosmetics & Personal Care, which comprises 22% of total sales.
9. What is changing in the Indian direct selling industry?
In the current times during the pandemic, digital sales are extremely significant. Now, the key focus is on product opportunity as direct sellers need to convince their prospects using documents, presentations and explain about the compensation model.
In addition, there is cross channel competition with store-based offline retailers. Direct selling companies not only compete with companies within the channel, but also indirectly with companies in other channels. It includes store-based retailers, especially in the current retail environment, which has not yet fully recovered.
Interestingly, the direct selling market in India grew at a lower rate of CAGR 4 per cent in 2012-2014. The key upward shift took place with the introduction of the Direct Selling Guidelines in 2016 and the Direct Selling Rules in 2021.
10. What is the future of direct selling in India?
According to ASSOCHAM, the direct selling industry will reach a value of ₹15,930 Crore by the end of 2021, up from ₹12,620 Crore in 2016. In addition, it is expected to become Rs 64,500 Crore by 2025.
As per industry estimates, the direct selling sector is poised to employ more than 18 million by 2025. The Indian Direct Selling industry is growing at a Compounded Annual Growth Rate (CAGR) of about 4.8 per cent.
This proves that the Direct Selling Industry is flourishing and illustrates its potential with the continued rate of growth, increasing at an impressive rate of 12.1% Y-o-Y. (Source: Economic Times Report)
11. How does the direct selling industry create opportunities for millennials and individuals from the rising middle-class background?
India is a huge country with immense talent and a younger population. However, creating employment for all those joining the workforce year after year is a challenge. The greatest concern about unemployment in India is the lack of skills.
According to the National Sample Survey, out of 470 million people of working age, only 10% receive training or access to professional employment opportunities.
However, India has one of the world’s fastest-growing retail and e-commerce sectors, with a market value of 600 Billion Dollars. The direct selling industry has actively played a role in creating avenues of income generation for millennials and individuals from middle-class backgrounds with an entrepreneurial mindset. They will also benefit immensely from the new direct selling guidelines issued recently as it structures the industry within a regulatory framework.
12. How did the Customer Protection Act aid the direct selling industry?
As the government framed the Consumer Protection (Direct Selling) Rules for the sector in 2021, the move recommended several other reforms to ensure robust growth for direct selling firms for implementation of the guidelines at the state level with regards to the Customer Protection Act under the registration of Department for Promotion of Industry and Internal Trade (DPIIT).
13. What are the major challenges in the growth of the Indian direct selling industry?
The Indian Direct Selling Industry is well placed to foray into international and domestic markets successfully. However, there are many challenges that the industry needs to overcome to make that vision a reality. The factors hampering full-fledged growth include fly-by-night Ponzi and pyramid schemes which are often confused with direct selling. A clearer legal definition of the industry with centralised regulations remains a need of the industry and the consumers.
14. Is direct selling legal in India?
In 2016, India’s Ministry of Consumer Affairs, Goods and Public Distribution issued The Direct Selling Guidelines 2016 as guiding principles for State Governments to regulate the direct selling business. As per these guidelines, direct selling companies are legal in India, and these guidelines aim to strengthen the existing regulatory mechanism on direct selling. Furthermore, implementation of these guidelines prevent fraudulent business practices and protect consumers’ legitimate rights and interests.
15. What are the ‘Direct Selling Guidelines’ of 2016?
The Direct Selling Guidelines of 2016 are rules and regulations laid down by India’s Ministry of Consumer Affairs, Goods and Public Distribution to regulate India’s direct selling industry.
Learn more about the guidelines here – https://consumeraffairs.nic.in/sites/default/files/file-uploads/direct-selling/Direct%20Selling%20Guidelines%20Final%20_0.pdf
16. What is the QNET direct selling opportunity?
QNET provides an opportunity for individuals to start their careers in the direct selling industry through the QNET entrepreneurial opportunity. Over the years, QNET has helped millions of Distributors who have successfully harnessed their potential through direct selling.
The growth of the Distributors has been stable, irrespective of the lockdowns. In India, QNET has registered over 500,000 Distributors, as it continues to provide a platform for a stable entrepreneurial opportunity to individuals.
To learn more about the QNET entrepreneurial opportunity, visit the QNET India page.