Direct Selling Business Model
Direct selling is a retail channel used by top global brands and smaller, entrepreneurial companies to market products and services to consumers. Companies market all types of goods and services, including jewelry, cookware, nutritionals, cosmetics, housewares, energy and insurance, and much more.
The direct selling channel differs from broader retail in an important way. It isn’t only about getting great products and services into consumers’ hands. It’s also an avenue where entrepreneurial-minded Americans can work independently to build a business with low start-up and overhead costs.
Direct selling consultants work on their own, but affiliate with a company that uses the channel, retaining the freedom to run a business on their own terms. Consultants forge strong personal relationships with prospective customers, primarily through face-to-face discussions and demonstrations. In this age of social networking, direct selling is a go-to market strategy that, for many companies and product lines, may be more effective than traditional advertising or securing premium shelf space.
Millions of Americans from every state, congressional district and community in the United States choose to become involved in direct selling because they enjoy a company’s products or services and want to purchase them at a discount. Some decide to market these offerings to friends, family and others and earn commissions from their sales. The most successful consultants may decide to expand their business by building a network of direct sellers.
Eighty-nine percent of direct sellers decide to work part-time, offering busy parents, caregivers, military spouses, veterans and others flexibility and work-life balance. As advancements in technology create a new American economy whose foundation is built upon entrepreneurial spirit and independent work, it’s important to remember that direct selling is one of the oldest ways millions of Americans have chosen to work independently – long before the advent of the Internet. Direct selling has a long history of both substantially contributing to the economy and supporting the millions of Americans involved.
An Independent Salesforce
Direct selling is unique among retail channels because of the way in which products and services are marketed to customers. Instead of relying on traditional retail outlets or online marketplaces, direct selling companies maintain a salesforce of millions of independent workers that added $36 billion to the U.S. economy in 2015. Real estate, insurance, travel and technology companies and well-known brands also rely on independent workers to deliver products and services to consumers. Independent work adds value to those who choose to pursue it, to the economy and to society.
Independent direct selling consultants earn commissions on sales but work for themselves. They set their own hours, create their own marketing plans, determine whether to build a sales team and how to mentor those within it and how to serve their customers.
Millions of independent direct sellers see advantages in working for themselves. The most obvious is the chance to build and grow their own business and run it how they see fit. The freedom and flexibility to set their own working hours draws all types of people to direct selling, including parents with young children, students, caregivers, retirees, military spouses and many more.
Start-up costs for most direct selling companies are a few hundred dollars or less because direct selling isn’t reliant on overhead like real estate, facilities and equipment or traditional advertising that can cost tens- or even hundreds of thousands of dollars.
source: https://www.dsa.org/about/direct-selling
Direct Selling in India
53% entrepreneurs in Indian direct selling industry are women: Report
Business Standard , Aug 19, 2018
Women contribute 53 per cent of entrepreneurs engaged in the $1.5 billion (Rs 98.5 billion) direct selling industry in India, a report by the World Federation of Direct Selling Associations (WFDSA) said.
The Indian direct selling industry provided entrepreneurship opportunities to 5.1 million people in 2017 of which 2.7 million were women. This reflects a healthy trend of growth in contribution to the sector by women entrepreneurs at a time when India is witnessing a rise in unemployment rates, the report said.
The report further says that despite India and China having a similar number of direct selling entrepreneurs, China is far ahead in terms of sales generated. Around 5.1 million entrepreneurs in India were involved in direct selling in 2017 compared to 5.3 million in China. However, sales generated in China stood at $34.29 billion compared with $1.5 billion in India in 2017.
“India is a thriving market for direct selling. Even without the appropriate legislation, the industry has become a billion-dollar market. The direct selling industry doesn’t just provide people with entrepreneurship opportunities, it is a great training ground for skills development, and for empowering women,” said Pramodh Manda, Regional Advisor – South Asia, QNet.
Meanwhile, a report by FICCI-KPMG predicts that with adequate regulatory support, retail sales in direct selling could reach Rs 645 billion by 2025 and provide self-employment opportunities to 18 million Indians by 2025, of which 60 per cent could be women.
“Direct selling opportunities are a great way to generate self-employment opportunities in India which faces challenges for employment generation today. The potential for this industry to grow and provide direct and indirect employment, contribute to the economy and help with skills development for women and youth is enormous, provided a clear regulatory framework protects all the stakeholders of this industry,” says Vijay Sardana, Chairman, Task Force to Direct Selling Assocham.
The Indian direct selling industry has been growing at an exponential pace over the last few years to become a part of the ‘billion-dollar club’ of the multi-billion-dollar global direct selling industry.
Among the world’s top 10 largest direct selling markets in 2017 in terms of sales, five countries are from Asia, says the WFDSA report. While the United States is the world’s largest market, China is at the second spot. Asia Pacific region, however, has emerged as the largest contributor to the global direct selling industry in 2017. The Asia Pacific region contributed 46 per cent to global sales generated by the direct selling industry in 2017 with more than 65 million people in the region involved in it. Rajesh Kumar, Managing Director, Glonutra Corporation, said, “Entrepreneurship is the core foundation on which business of direct selling runs. Due to its entrepreneurial mode, the industry will continue to consistently have double-digit growth. The latest WFDSA data on India showcases the progress made by the industry over the years and credit for achieving this goes to our sales force which continuously works hard in the field, even as we speak now. India is a huge marketplace with unlimited market potential”
Industry experts attribute India’s lower rank due to lack of regulatory direction to the industry so far.