Direct selling has been around since the dawn of human civilisation. Nearly every era of human history has had some variation of direct selling, whether it’s traders who sold wares directly to the public or street hawkers in marketplaces. The modern direct selling industry, however, could be considered to have been established in the late 19th century.
The allure of self-employment, a personalised selling experience, extra income, and becoming a successful entrepreneur have made sure direct selling keeps growing. The direct selling industry is thriving around the world – a $168 billion global industry as of 2023, it boasts a presence in more than 170 countries with around 103 million independent sales representatives.
In Sync with the Times
By adapting to the latest tech and trends, the industry has steadily been growing and is expected to have a CAGR of 6.7% by 2032. The virtual party system, for instance, allows direct sellers to showcase products to customers through live online videos. Many direct selling organisations have also implemented faster pay-out systems, a key advantage in the gig economy, through e-wallets, to attract millennials. Today, payment processing providers have become increasingly prominent in this ecosystem.
The advent of tech trends is also finding favour in the direct selling segment. Companies are making the most of Gen AI, BI and data analytics, IoT, cloud computing, Augmented Reality, and the Metaverse to open up newer dimensions of engaging with and selling to customers.
Even though global retail sales took a small dip in 2023, the direct selling industry in India continues to thrive. According to the WFDSA 2024 report, sales in India jumped by a significant 11.8% last year, reaching a total of $3.43 billion. This marks a substantial increase from $3.23 billion in 2022 (2023 Constant USD).
One of the standout trends in India was the growing popularity of home improvement products. Household goods and durables saw a significant increase in popularity with their market share within India’s direct selling industry jumping from 1% in 2022 to 8% in 2023.
The India story
The Indian direct selling industry started in the early ’90s. It grew by over 12% year-on-year in 2022-23 alone, notching up a gross turnover of INR 21,282 crores. The 2023 Global Annual Direct Selling Data Report from the World Federation of Direct Selling Associations (WFDSA) ranks India 11th worldwide, and among 8 of the top 24 billion-dollar markets in the Asia Pacific region. There are approximately 86 lakh people currently employed in the Indian direct selling industry, with 53% of them being women.
A FICCI-KPMG study indicates that the direct selling market in India has the potential to reach INR 645 billion by 2025, extending the self-employment opportunity to 18.1 million people, provided it undergoes reforms conducive to its growth.
Opportunities for growth
According to a report by EY, the share of India’s working-age population to total population will reach its highest level at 68.9% by 2030. A growing appetite for financial independence is making direct selling a viable career option for this demographic.
For network marketing to appeal to a young demographic, companies need to build a strong online presence. Here are a few ways to do that:
- The Indian youth spends close to 5 hours a day on their phones online shopping and browsing social media. Companies need a marketing strategy that makes use of these various digital touchpoints. They should also explore newer content formats, and tailor their websites and mobile apps for enhanced user experience.
- Engage with users on their home turf – social media. A data report by SproutSocial reveals that when customers feel connected to brands, 57% will increase their spending with that brand and 76% will buy from them over a competitor.
- Emphasise empowerment through entrepreneurship by showcasing the creative control and earning opportunities that direct selling offers.
- Share knowledge and insights with the broader industry through a comprehensive content strategy. Educating and providing valuable insights is a great way to establish expertise and trust.
Challenges
Many people in India have the wrong idea of the direct selling industry. Misinformation from hearsay rather than verified evidence, has led to the masses believing in baseless myths and allegations. Although the industry is slowly gaining acceptance, it could be sped up if some areas of legislation and perception are addressed effectively.
To flourish, the direct selling industry in India needs a strong regulatory framework. There has been a good progression – from the Model Direct Selling guidelines of 2016 and the Consumer Protection (Direct Selling) Rules, 2021. But there’s still more work to create a favourable environment for the industry:
- The Prize Chits and Money Circulation Schemes (Banning) Act, 1978 by definition means ‘An Act to ban the promotion or conduct of prize chits and money circulation schemes’. Created with the aim of penalising dubious money circulation schemes, at times, it has been misinterpreted and applied to legitimate multi-level marketing businesses, resulting in a hostile business environment for the direct selling industry and their distributors.
- Consumer disputes should not be mistaken as criminal cases when there are consumer courts to settle disputes related to product grievances within a product refund period.
Even though various associations of the direct selling industry are working towards achieving these objectives, a joint effort from all the leaders in the industry is still needed. Only then will the Indian economy grow and benefit from the entrepreneurial success that many countries with a conducive environment for direct selling to grow, already do.
The Way Forward
To gain a better perspective without bias, seek to learn more about this industry and its players through neutral sources. Some key aspects to research into a company are its compensation plans, marketing strategies, products, and sign-up fee. By educating yourself, you can make an informed decision on whether you want to pursue direct selling as a career or a part-time option. A career in this industry is definitely worth considering, given its promising future.
