Direct Selling: New way to push sales

New way to push sales

Multi-level marketing (MLM), an advanced form of Direct Selling, with its rapid growth pattern, may well emerge as the most common method adopted by marketing experts in the 21st century. It is a wonderful blend of the personalised contact method of direct selling coupled with the high-tech tools of the Information Age. Since 1991, global retail sales in the direct selling industry have nearly doubled, and the trend is very bullish. The motivation of over 22 million distributors in 90 countries currently generates a phenomenal estimated US $ 78 billion in sales. Still, large as this figure undoubtedly is, it is small compared to the global retail sales made from showrooms, shops, supermarkets, boutiques and spot promotions.

Direct selling internationally is stretching to encompass more and more innovative areas. Products and services as diverse as air treatment systems, discount telephone services, credit cards, vacation packages, apparel, stereo equipment, and a wonderland of other catalogued goodies, all from reputed manufacturers, are now within its ambit.

India represents an enormous potential for direct selling. Six leading international companies have already marked their presence in India. They are: Amway India Enterprises, Avon Beauty Products, LB Publishers & Distributors, Lotus Learning, Oriflame India and Tupperware India. This early bird list represents a heady blend of international market leaders.

Amway, shortly to commence operations in India, employs over 13,000 people directly and has over three million distributors worldwide. The Amway approach is to build on the personal contacts of its distributors. Distributors sell to those they6 know and sponsor new distributors who also do the same thing. Thus one gets a continuous outward spiral of growth and a substantial multiplier in sales. Other forms of direct selling include door-to-door canvassing of potential customers within a given territory and the party plan, in which the sales person identifies a host who gives a party where the products are demonstrated and result in sales.

Multi-Level Marketing is the ideal vehicle for entrepreneurs seeking a new opportunity. It offers flexible hours and a low cost entry to being one’s own boss. No special educational qualifications are necessary. This provides a window of opportunity to a host of individuals including executives, housewives, the self-employed, anyone who wants to enhance their earnings with a part-time enterprise. Distributors earn their money through commissions and bonuses.

Direct selling dispenses with intermediaries and is an efficient mover of goods directly to the consumer. The direct sales distributor is free to concentrate on what he or she can do best: identify new customers, demonstrate products, take orders and deliver the merchandise. The company meanwhile takes on the crucial responsibility of developing new products, promoting them and making them readily available. It is the company that forecasts sales and does most of the forward planning.

The future of MLM in India will depend on to what extent it satisfies consumer needs and aspirations. The availability of quality products, reliable after-sales service, competitive pricing and a highly motivated set of distributors should be decisive. Direct selling is a perfect fit for the unique entrepreneurial instinct and originality of the Indian businessperson.

(536 words)

By Gautam Mukerji
First published in The Hindustan Times in the AD-MARK section on November 13, 1997.