According to the Indian Direct Selling Association (IDSA)-PHD Chambers Annual Survey 2014-15, the current size of direct selling market in India is Rs 7,958.30 crore.
The year-on-year growth stood at 6.5% in 2014-15 when compared with 4.3% in 2013-14. The industry generated 39,29,105 self-employment opportunities in 2014-15, out of which 57.6% were women. Also, the employment generation by the industry is likely to witness a double-fold increase to about 90 lakh by 2019-20.
The Centre recently released model guidelines on direct selling, which among other things, prohibit such companies from charging any entry/registration fee from or forcing suppliers to buy back unsold stock. It has also barred ecommerce firms from selling products without approval from direct selling firms. The new guidelines have been framed as the direct selling industry is facing problems in the absence of clear legislation that defines the regulatory framework.
Speaking to Narayan Kulkarni of DH, Jitendra Jagota, Chairman, IDSA, shares the current trends and challenges before the industry.
What are the current trends in direct marketing in India? Who are the major players in this space?
Rising income, urbanisation and a large population of the youth have created a need for consumer products and require an effective and efficient channel of distribution.
Wellness/healthcare products have largely contributed to the direct selling industry by 42%, followed by cosmetics and personal care 34%, homeware and home improvement products 11%, consumer and household durables 7% and other 6%, which include food and beverage, agricultural products, Ayurveda products, and educational products utilities, among others.
The major players in the sector are Amway, Oriflame, Herbalife, Avon, Tupperware in the respective segments. Also, domestic players like Modicare, Vestige Marketing and Glaze Trading have been making a big impact, witnessing a healthy surge in their sales in the last few years.
How many people are associated with direct marketing companies in south India and Bengaluru in particular?
According to the annual survey 2014-15, South India accounted for 10,60,858 direct sellers. The region holds 23% share to gross sales of the industry in 2014-15. The industry provides part-time employment opportunity to hundreds of thousands of direct sellers, as well as an alternate career path to those who opt for it.
What are the issues before the sector?
The industry for long has been struggling on the regulatory front as there has been no definitional clarity on direct selling. However, the Ministry of Consumer Affairs recently issued the Direct Selling Guidelines 2016, which have brought definitional clarity for the sector. In the guidelines, the government has clearly defined legitimate direct selling and differentiates it from pyramid and money circulation schemes to help investigating agencies identify fraudulent players.
Prize Chits and Money Circulation Schemes (Banning) Act 1978 (PCMC) still remains a concern at the state level. Hence, relevant amendments are required in the PCMC to mark a clear distinction between Fraudulent/Pyramid / Money Circulation Schemes and direct selling, thereby excluding direct selling from the scope of PCMC.
Consumer Protection Act, 1986, is the most relevant and apt legislation that should govern direct selling for the larger interest of consumers. The direct selling industry appreciates and concurs with the decision of the government to bring the industry under the aegis of the Department of Consumer Affairs.
What is the global market share of the each of the leading players in this sector?
According to IDSA-PHD Chambers Annual Survey 2014-15, Amway accounted for 5.91% of the global market share, followed by Avon, Herbal Life and Mary Kay with 4.87%, 2.73% and 2.19% of share, respectively.
What kind of efforts you (IDSA) are making in order to bring awareness about direct marketing in India?
IDSA, as an industry voice, has had dialogues with Central and state governments in an effort to clearly distinguish legitimate direct selling from that of the fraudulent players. We had submitted recommendations to the government to recognise the genuine direct selling business. The model guidelines that the government issued recently were about relentless efforts to apprise the decision makers about the best practices across. It is promising to note that the government has incorporated several suggestions made by the IDSA. We are making efforts to apprise state governments to adopt global practices.
Also, we have been conducting Knowledge Forums, seminars and conferences in different parts of the country to spread awareness about the best practices. The awareness campaign in different forms will continue so that the government moves one more step further to put in place a proper, legal and statutory regulatory framework for the direct selling industry.
What kind of programmes IDSA has taken up to reach people?
We have conducted Knowledge Forums in Shillong, Jaipur, Hyderabad, Cochin, Trivandrum, Lucknow and Chandigarh in an endeavour to create awareness about the direct selling sector, and its benefits to an individual. Most of these programmes are very interactive, where the audience can get answers to their queries.