Being an Independent Representative and having analyzed the Direct Selling Industry in India and other Asian markets, I thought I would share some of my view points.
There was a time when Direct Selling companies in China and Singapore faced similar fears from the government and resistance from the general public that Direct Selling business in India is experiencing today. Misinformation coupled with lack of appropriate laws to protect the business and the people working in the unique network system led to apprehensions. We can learn from how the government of China and Singapore had stepped in with a requisite legal framework and changed the dynamics of the Direct Selling business.
China has seen a growing number of direct selling companies in the past decade with their tax revenue hitting over 300 billion yuan ($4.7 billion), the Ministry of Commerce (MOC) said on Wednesday. China now has 71 direct selling companies employing over 2.8 million people with products ranging from cosmetics to health care equipment according to an MOC statement.
In 2014 alone these companies paid taxes of 5.7 billion yuan and their sales revenue reached 25.1 billion yuan!! The Ministry of Commerce in China works to strengthen supervision to help consumption and increase employment.
China issued two regulations on direct selling in 2005 and announced amendments in March 2014 to step up supervision of the business.
China is currently ranked No.2 in the global direct selling market contributing 23.3% sales to global industry revenues, according to Direct Selling News billion-dollar markets report. Global estimated retail sales topped US$178 billion in 2013, up 8.1 percent from 2012, according to the most recent data from the World Federation of Direct Selling Associations (WFDSA).
Direct selling is expected to see a value CAGR of 6% at constant 2015 prices over the forecast period. We can expect more business representatives joining in, especially the health conscious older population, who are likely to play an important role in driving growth.
In Singapore, direct selling continues to be sustained by the core factors of health and wellbeing. Singaporean’s are likely to spend more on products that are designed for such purposes. These include consumer healthcare items like nutritional supplements, beauty products that are anti-ageing and water purifiers/filtration systems. As these products tend to be strong in direct selling, their popularity helped to generate stable value sales in 2015.
Singapore established a clear and firm direct selling legislation named the Multilevel marketing Act. The act was created to prohibit the registration of businesses that are designed to promote multi-level marketing schemes or arrangements and to make it unlawful for any person to promote such schemes or arrangements and to provide for matters connected therewith.
With regular awareness events for the citizens, Singapore is a great example of how governments can take on responsibilities of informing and educating its population on the differences between pyramid schemes and legitimate companies.
In Singapore, direct selling is expected to see a CAGR of 2% at constant 2015 prices over the forecast period. Growth is likely to be sustained by consumers who prefer to purchase products based on recommendations by family members or friends as they deem such sources more trustworthy. Some consumers also prefer direct selling agents as they are usually more willing to help their customers more with their purchases, e.g., providing home delivery, and giving detailed recommendations on what products to buy, and so on.
India is perched at the point China and Singapore was in Direct Selling 5-years ago. But the question is whether the Indian government will wake up to the economic and employment generator potential of Direct Selling.
It’s a wake-up call for India now. We have been hearing all around that the direct selling guidelines / law will soon fall in place for India. As on date, the good thing is that the proposed BILL has a provision to protect the interest of consumers buying on e-commerce and direct selling platforms. A good move indeed for India is in the offing, worth appreciating since this will provide a safe, regulated and customer friendly platform to do direct selling business in India.
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I hope that genuine products sold will soon have a regularized market and we will be part of the e-retail industry. What I can consume, I can sell with comfort. QNET products are real and genuine, undoubtedly for healthy living and wellness.
Let’s keep walking ahead. Keep talking…and walk the talk!