Direct Selling is a segment not much familiar to us. But the fact of the matter is that Direct Selling (DS) was happening for a long time now. Remember in the 1990’s Marketing Executives visited our homes one after the other with various products? They used to demonstrate the products in front of us. They have been selling the products for almost half of the market price. Ever thought what was the secret behind it? How could they sell items at a throw away price like that?
Concept of Direct
Selling
Say, the cost for
which the manufacturing company sells a product to its authorized supplier is
Rs.40. It will pass through many levels of distributors and will reach the
wholesale agent of the region. From there the item will come to the local
retailer. He would charge Rs.100 from the customer. This is how the
traditional markets operate.
So, there is a clear margin of 60% which is
shared by all these supply chain links and advertising agencies. Whereas, in
Direct Selling, the product will be delivered directly to the customer from the
company outlet. As per the systems adopted by the companies, the customer will
get it for Rs.50-90. The profit would be shared among the customers- the
network of customers. This is the reason why Direct Selling is also known as
Customer Empowerment when it is done through Network Marketing or Multi-Level
Marketing (MLM).
Concept of
Network Marketing
Network marketing
is actually a very noble concept. Put simply it’s an arrangement wherein people
help each other. The beauty of it is there is no envy or jealousy among
participants. On the other hand, everyone wants the other one to flourish as
the growth of the other one will certainly aid growth of the self too. One’s
growth depends on the growth of the other. It’s a win-win situation for all. No
losers in the game! All are Winners!
About Kevin | Kevin J Donaldson
When bureaucracy works on centralisation of
power and distribution of it through a flow chart of subordinates, Network
Marketing works on decentralisation of power by giving more importance to
Teamwork. The trend of the time is to win together and gain equally rather than
gain according to the level of position in a Pyramid hierarchy that leaves only
insignificant gain to those in the lowest level. When hierarchies encourage
moving up and getting ahead or growing, stress, tension and anxiety become the by-products.
But the focus in Network Marketing is on how to best serve the people leaving
no chance for developing a stressful atmosphere. On the other hand, a congenial
atmosphere prevails in the network. Therefore, many businesses are changing
over to this style of operation.
See that some have networks under them and
some do not have anyone under them. Those who have a network under them are
business owners and they get a benefit out of the sales volume created by those
in the network. Those who do not have a network are just consumers. Obviously,
they are not interested in the business angle at this point of time. Certainly,
they may change their mind and start building a network of their own on a
future date. Right now, without a network, they enjoy the 10-20% discount in
the MRP, which is their only benefit.
Doing More With Less Effort
Despite the higher
level of efficiency and talent one may possess, she/he would have a constraint
that only 24 hours are there a day. This constraint is universal. But one can
overcome this constraint through Network Marketing. It allows anyone to
duplicate oneself into many persons. That is, at a time you can have many
copies of you working for you.
The concept of “Free Enterprise” is creating
something from nothing. Network Marketing makes it possible to create an
Enterprise from literally zero investment. Is there any other option for those
who have encountered big losses due to Covid-19 pandemic to get on with life
and achieve a better lifestyle for self and family?
Copyable and Duplicable
Suppose you are an
employee and due to some reasons are unable to go to work for a month or two.
Your income naturally stops as you won’t get your salary. In Network Marketing
that will not happen. You will continue to get an income as even in your
absence many copies of you are still working. This is the power of Network
Marketing. Network Marketing helps you to create an income not dependent on
you. This income would continue and grow indefinitely with or without you.
Arithmetic Growth Vs Geometric
Growth
A Paisa-a-day
example is the best way to explain network marketing.
If you start with 1
Paise on the first day and double it every day, how much would you have on the
30th day?
Day 2 you will have
2 Paise, Day 3 you will have 4 Paise, and then 8, 16, 32 and so on. On the 30th
day it would be ₹53,68,709.12. Quite a sum, isn’t it?
This is how the network works. If I teach
you I have doubled. If both you and I teach someone else, we have doubled. And
it goes on and on. The result will be amazing and unbelievable.
Low Start Up Cost
There was a saying:
“It takes money to make money.”
It’s absolutely true in the case of traditional business. In fact, it’s
inconceivable to start a business without investing reasonably. And the size
and turnover of the business would depend on the size of investment. More
investment means more turnover and high profit. Even people used to say that
there is only one way to make money without investing and that is winning a
lottery. But, the truth is there is another way to make huge money without any
significant investment and that is Network Marketing.
The No Much Encouraging Past of Direct Selling in India
You may ask me why
go for Direct Selling and Network Marketing when they are legally banned or
prohibited. My answer is very simple and straightforward. Neither Direct
Selling nor Network Marketing was ever made illegal or prohibited in India or
anywhere else at any point of time. The problem is we are mixing up things and
not distinguishing clearly between Direct Selling-Network Marketing and Money
Chain-Pyramid Schemes. It is true that Money Chain business and Pyramid
Structure of organisations were under legal scrutiny and were prohibited in
2012 in some Indian states. The companies engaged in those illegal operations
claimed themselves to be in the business of Direct Selling and Network
Marketing in order to escape legal actions and public wrath. Or, in other
words, those companies engaged in money chain and pyramid schemes took shelter
behind the banner of Network Marketing while continuing their illegal
operations. As a result, many direct selling companies ran into problems during
the period from 2011 to 2104.
Amway India-
problems in Andhra Pradesh
Amway India- problems
in Kerala
Guidelines Issued
by Govt. of India
Based on
recommendations of an inter-Ministerial committee constituted to study the
problems in direct selling, Govt. of India issued guidelines to states and
union territories on 9-Sep-2016.
Guidelines Issued
by Central Govt.
A clear definition
of Direct Selling and Network Marketing was drawn in Clause-1 of this document.
Prohibition of Pyramid/Money Chain Schemes
Clause-8 of the
Guidelines issued by Central Govt. reads as given below.
It’s evident from the above clauses that
Pyramid Schemes and Money Circulation Schemes were prohibited and Direct
Selling and Network Marketing were permitted. Over and above, States and
Union Territories were advised to formulate Monitoring authorities to monitor
and regulate the activities of Direct Selling/Network Marketing entities.
Appointment of
State Level Monitoring Authorities
Clause-9 of the
Guidelines reads as given below.
Therefore, every state government shall
have a Monitoring Authority to monitor the activities of Direct Sellers. Issues
arising in Direct Selling shall be dealt with by the Department of Consumer
Affairs at the Union and the respective state governments.
Future of Direct
Selling in India
Financial gurus
affirmed as early as in 2015 that 21st century is of Direct selling and Network
Marketing. When they predicted in 2015 amazing growth (turnover of Rs.64,500
Cr) of this sector by 2025, there was no indication of Covid-19. (Read a report of
08-Dec-2015)
When a turnover of
Rs.64,500 Cr. by 2025 for Direct Selling industry was predicted in 2015 there
was no any sign of Covid-19 pandemic. The pandemic came all of a sudden in the
beginning of 2020. It changed everything including the employment, education
system, lifestyle, thought processes and behaviour of human beings. While
businesses in most segments were affected very badly, companies in
Pharmaceuticals, Wellness, Direct selling, eCommerce etc marked remarkable
growth during the pandemic. As such, there are indications that the actual
turnover of Direct Selling would be much higher than the predicted Rs.64,500
Cr.
During the
pandemic, we have seen a massive inflow of manpower to Direct Selling. Those
who lost jobs or those who could not open their small-scale business firms due
to lockdowns imposed from time to time, entered into Direct Selling/Network
Marketing business that was feasible even in the pandemic period. Also, the
facts that such businesses could be launched without making any investments and
were totally risk-free increased the appeal. To sum up, there is no other
business opportunity available at this point of time other than Direct
Selling/Network Marketing that anyone can get into without investing any fund
or without any risks or fear of loss.
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