HOW DIRECT SELLING IS GOING TO HELP IN REVIVING THE INDIAN ECONOMY: By Aseem Sood
Direct selling has been one of the oldest and the most traditional forms of selling platform globally. Today, it is a successful industry operating in over 80% of countries worldwide with a market size of $200 billion. The World Federation of Direct Selling Associations (WFDSA) states that approximately 117 million people around the world are involved in the industry, out of which a staggering 74% are women. At present, India has 5.1 million people associated with direct selling of which 60% of them are women. We are seeing growth in terms of direct sellers in India, 2016–17 there were 5.1 million direct sellers that rose to 5.7 million in 2018–19. This is figures indicates that almost 800 people join the industry every day. This business model is one of the major contributors to the economic development of most of the developed countries majorly in India. In more than 20 years+ of its existence in India, the Direct Selling industry has been able to make a meaningful contribution to society. Direct Selling’s key factor ‘low investments and high returns’ — makes it a key driver of balanced growth in the country. It is estimated that by 2025, the direct selling industry in India will be worth INR 645 billion.
Why Direct Selling is gaining popularity.
- Upsurge in income level: Employed as well as non-employed people are opting for direct selling business as it is a good source to make decent income.
- You own the business: Most of the people like to be the owner of their own business and above that the USP of direct selling — ‘low investment and low risk’ makes it more popular and attracts a huge number.
- Extra Savings: This platform enables members to earn fixed plus variable incomes by which they can save more money for themselves. This helps in improving their financial conditions.
- Connect Socially: This platform gives opportunities to be well connected with the society as it is focused on making more and more networks for the business which at last results in the development of society.
Direct selling in India
The direct selling concept is considered to have been kick-started in India in the late 1980s. Post-liberalisation, the industry witnessed major growth with many global players entering the Indian market. Today, the direct selling market in India is estimated to be around INR16 billion. Industry investors has seen how this platform created a positive impact on several other social and economic parameters:
1). An added income source: Direct selling is one platform that offers opportunities for additional income to a significant number of people and promotes micro-entrepreneurship. At present, over 5 million direct sellers are estimated to be connected with the industry. Besides, direct selling also imparts handy skills in sales and management, which can be used in general life routine, as well.
2). Promoting women empowerment: Women have gained significantly from the direct selling business as it offers self-employment opportunities. Around 2.1 million women have now become a successful entrepreneur in the direct selling industry.
3). Growth of the SME sector: Many direct selling companies bank on SMEs for manufacturing their products. In many cases, the direct selling companies help the SMEs with the manufacturing know-how, technology and processes to enable them to manufacture world-class products. Some of these companies also provide the right equipment and machines to the SMEs for production. Driven by these initiatives, many SMEs have now developed capabilities to cater to the needs of other MNCs and have commenced supplying to them, and thus promoting India as a manufacturing destination.
4). Generating employment: Besides offering an additional source of income to direct sellers, the industry also generates employment. The majority of the direct selling companies outsource the production, packaging and distribution of their products, which creates direct employment across the value chain. Every year 8 million newly graduates are looking for jobs but only 10% will get the job and many of them are underpaid. Direct Selling allows them to enhance their skills and develop a mindset of an entrepreneur.
5). Initiates CSR acts: In terms of serving the society, direct selling companies have been at the forefront. Many of the companies involved in direct selling actively contribute towards social activities like providing food, clothes, education and sanitation to the needy.
6). Contribution to the government treasury: The operating model for direct selling generates tax contributions to the government across its value chain. This comprises of direct and indirect tax contributions through corporate income taxes, import duties and VAT. These has created a significant social and economic impact in India. As mentioned earlier, that the industry is likely to become a worth of INR645 billion by 2025, driven by growth in consumer markets.
In summation, the industry has been helping the Indian economy since its inception, but last year, the industry grew manifolds. Other initiatives like ‘Vocal for Local’ and Aatmanirbhar Bharat’ has encouraged people to purchase locally made products this has given a boost to the industry as well and motivated upcoming entrepreneurs to succeed. Players like Proveda India has seen a great number of people joining and benefiting from the business. Direct selling has indeed emerged as a feasible option for those who seek flexibility and work-life balance while still enjoying the financial freedom the sector offers.