The Indian direct-selling industry has evolved significantly over the years. It has not only offered various products to consumers but has also created numerous self-employment opportunities. This article dives deep into the industry's growth, trends, and challenges based on comprehensive research conducted in 2023.
1. Overview of the Indian Direct Selling Industry
The Indian direct-selling industry has become critical to the country's retail sector. It employs a unique marketing approach where products are sold directly to consumers, bypassing traditional retail outlets. The industry has seen tremendous growth, particularly in the wellness and personal care sectors, and has demonstrated resilience even during economic uncertainty.
The industry's performance is closely monitored by the Indian Direct Selling Association (IDSA), which works in partnership with the government to ensure a fair and transparent business environment for direct sellers.
2. Growth Trajectory of the Indian Direct Selling Industry
The direct selling industry has shown steady growth over the past few years. The industry grew at a Compounded Annual Growth Rate (CAGR) of approximately 13% from 2017-18 to 2021-22. The sales turnover increased from INR 11,650 crores in 2017-18 to INR 19,000 crores in 2021-22.
The wellness and nutraceuticals sector significantly contributed to the industry's sales, followed by cosmetics and personal care. These two sectors combined accounted for around 81% of the overall sales.
3. Regional Distribution of Direct Sales
The northern region of India significantly contributed to direct selling sales, with Uttar Pradesh being the most significant contributor. The eastern region, led by West Bengal, followed closely. Maharashtra dominated the western region, while Karnataka took the lead in the south.
4. Active Direct Sellers in India
The number of active direct sellers in India increased from 79 lakhs in 2020-21 to about 84 lakhs in 2021-22, registering a growth of around 6% year-on-year. Males outnumbered females in terms of active direct sellers.
5. Key Trends in the Indian Direct Selling Industry in 2021-22
Several trends were observed in the Indian direct-selling industry in 2021-22. The demand for health and wellness products increased significantly due to rising health awareness among consumers. Technology-driven offerings, particularly in wellness and personal care, gained traction among consumers.
The increasing middle-class income and a vast untapped market potential also contributed to the industry's growth. The rising middle class, estimated to comprise more than 250 million people, has higher disposable income and is more receptive to purchasing premium products.
6. Direct Sellers and Preferential Customers
The survey conducted by IDSA and Ipsos Strategy3 among active direct sellers and preferential customers provided valuable insights. The majority of the direct sellers were self-employed or had proprietary businesses. Friends, relatives, and neighbours were the primary source of awareness of direct selling.
The survey revealed that 90% of direct sellers purchased products for self-consumption and reselling. Moreover, 82% of customers mentioned receiving promotional offers from direct sellers.
7. Most Important Reason for Becoming a Direct Seller
The most crucial reason for people to become direct sellers was the opportunity for self-employment and earning extra income. The flexibility of working hours and the opportunity for networking and socializing were other significant factors.
8. Challenges Faced by Direct Sellers
Direct sellers faced several challenges, the most prominent being the availability of products on e-commerce websites. Other challenges included the availability of similar or better products through traditional channels and the non-availability of products.
9. Support Provided by Direct Selling Companies
Direct selling companies provide various support to their sellers. Launch of new/relevant products, online training and development tools, and deliveries were the top three forms of support provided by companies.
10. Consumer Protection (Direct Selling) Rules 2021
The Consumer Protection (Direct Selling) Rules 2021 have significantly shaped the direct selling industry. The rules have increased transparency and customer protection, benefiting companies and customers.
A majority of direct sellers and preferential customers support the rules. However, some sellers expressed concerns about needing more solid guidelines and action to eliminate fraudulent MLM companies.
The Indian direct-selling industry has undeniably demonstrated exceptional growth and resilience despite economic uncertainties. With proper policy implementation, this industry has the potential to make a significant impact on India's economic growth and employment opportunities.