K Anuradha teaches in Hyderabad Public School. She also doubles as a direct selling agent for Tupperware, the world’s leading manufacturer of plastic food storage and serving containers, and earns an additional `4,000 a month. “I was introduced to the brand by a friend eight years ago. I used and liked the products and ventured into the business. The fact that I didn’t need to make any capital investment made it an attractive proposition and now I earn a regular income as a direct seller,” she says. In Bangalore, S Madhurima is a full-time distributor for Avon India and earns `40,000 a month by facilitating products, providing reference material and motivating her network of direct sellers.
Like Anuradha and Madhurima, more than three million people in India are involved in direct selling (compared to 1.8 million last year) and earn between `500 and `4 lakh a month depending on the amount of business they generate. Over 70 per cent are women—some are housewives, others are part-time and even full-time employees of other companies. All the one lakh registered direct sellers of Tupperware India and Mary Kay, sellers of colour cosmetics and skin-care products, are women.
The picture is the same globally. According to the US Direct Selling Association, 82.4 per cent of the
direct sellers there in 2009 were women. In Japan, it’s 92 per cent women and in Brazil, 94 per cent.
“Studies have proved that the direct selling industry is labour-intensive and has a positive socio-economic impact on individuals. It leads to women empowerment, providing equal opportunity to all, and increases family income,” says Chavi Hemanth, secretary-general, Indian Direct Selling Association (IDSA), which has 18 registered members, including Oriflame, Modicare,
Tupperware, Amway, Avon India,
K-Link and DXN.
According to Ernst & Young and ICRIER, the direct selling industry in India, which started in 1990s, is a `4,120-crore business today and estimated to touch `7,000 crore by 2012-13. For the uninitiated, direct selling is the marketing of products and services by individuals at locations away from permanent retail outlets. Typically, goods are sold among a network of friends and family at homes or workplaces. According to E&Y, health and nutrition products are the most popular categories in India followed by personal care products and cosmetics. So it’s not surprising that Amway, which sells 130 products in four categories—nutrition and wellness, beauty, personal care and home—is the largest direct selling company in India with a turnover of `1,790 crore.
Of course, challenges remain. “The lack of clear legislation regulating the sector allows fraudulent players to masquerade as direct selling companies and cheat the public, but overall the industry is doing extremely well in India,” says Asha Gupta, Managing Director of Tupperware India. “Dubious companies and fly-by-night operators are not unique to India. They exist all over the world. But countries like the US, UK, Malaysia and Singapore have clearly defined guidelines for direct selling. That has helped curb the rise of fraudulent players,” says William S Pinckney, MD & CEO, Amway India.
Unlike a pyramid or prize chit scheme, direct selling companies do not insist on capital investment or maintaining inventory. Instead, they offer training to familiarise members with their products and impart skills to communicate the same to prospective buyers. Tupperware, for instance, spends `4,000 per person to train, motivate and provide them with reference material.
Avon India, Modicare, K-Link and DXN too have annual training budgets that are `5 crore-plus. Modicare—which markets 118 products in nutraceuticals, healthcare, beauty and cosmetics—says it invests heavily in research to provide India-specific products such as cosmetics for Indian textures, food and beverage with local flavours at competitive prices. “India is a price-sensitive market. We undertake extensive research to provide products that are not only price-competitive but also superior when it comes to quality,” says CEO Amrish Anand.
Besides expanding their presence in urban areas, the companies are also making inroads into tier-II and III cities. Avon, which operates out of 14 states, is targeting a pan-India presence in the next 2-3 years. “We grew by 56 per cent last year and expect to see 55 per cent growth this year. India is one of the fastest growing markets globally for us and we intend to be active both in urban and rural areas,” says Managing Director Hemanth Singh.
Direct selling companies face stiff competition from FMCG retailers who indulge in heavy advertising. But experts opine that for direct sellers, whose products are not available over the counter, below-the-line activities and word-of-mouth publicity works best. A case in point is Tupperware’s product placement in Bodyguard and We Are Family and the use of small Tupperware parties to showcase its wares.
Of late, some of the players have begun using traditional media too. For instance, Amway’s Nutrilite TVC has become a regular on prime-time entertainment channels while Avon India’s brand building ad campaigns have begun to run on FM radio and across the print medium.