Direct selling - Marketing and Retailing of products to people in places other than fixed retail locations.
It’s primarily a B2C (Business to consumer) model with some exceptions (where the agreement is entered into between the Direct selling company and an Entity/Organization- Proprietary, Partnership, Limited liability Partnership, Private limited, Trust, Publiclimited, etc.)
Also known as Direct sales, Network marketing, Referral marketing, Affiliate marketing, etc.
Company - A business organization that manufactures, buys, or sells products or provides services in exchange for money i.e. the organization may be a manufacturer or a trader of the product/s.
Direct selling company - The company which utilizes the services of self-employed individuals (or direct seller as per the definition) to recommend and retail product/s. The company may calculate incentives / commissions to the direct sellers by deploying Direct compensation plan or Single level marketing compensation plan or Single level marketing compensation plan or Multi-level marketing compensation plan to calculate incentives / commissions.
Direct seller - Any person (or an entity / organization formed specially to engage in direct selling) above the age of 18 years on the date of enrolment or a legal entity entitled to do business with eligibility to enter into a business contract who/which enrol/s with the direct selling company for gainful association including but not limited to purchasing the product/s at a discount for self-consumption and / or earn money by retailing product / s and / or by helping others earn money by doing the same.(Where the organization may be a Proprietorship / Partnership / LLP / Private limited) A direct seller may be a consumer or a reseller or both.
Direct sellers are commonly knowns as distributors, associates, independent business owners, consultants, networkers, members, advisors, independent business associates, affiliates, independent representatives, etc.
Enrol - introduce / register / signup formally as a participant or an individual including any names mentioned under the definition of a direct seller.
Active Direct seller is a direct seller whose minimum monthly purchase from the company is worth INR.50 or above as per the criteria of the direct selling company.
Consumer - the term consumer refers to any person/s to whom selling activities are directed, whether as an individual or as a company as an end user.
Product - The term product refers to anything, goods or services, tangible or intangible that constitutes the subject of an intended direct selling transaction.
Network structure / Tree structure / Marketing organization – The way of representing the tiered nature of the direct sellers in a graphical form to help them recognize their relative positions to the company / direct sellers above / below them.
Types of Network Structures of Direct Sellers
Types of front line (or leg) structures (maximum number of direct sellers in the frontline):
Where Front line direct sellers mean the Direct sellers mapped directly with the direct seller in his Network Structure/Tree structure/Marketing organization are known as the front line direct seller/s.
Types of Generation (or Level) Structures (of Direct Sellers):
A company may choose to have the direct sellers structured in a Direct, Single level or a Multi-level structure.
Generation is generally referred to as level.
Incentive / Commission - Material remuneration given to an individual in exchange of acting in a particular way.
Compensation plans – A method to calculate the commissions/incentives and/or the rewards to be given to/among direct seller/s from the turnover achieved by them and/or their marketing organization.
Compensation plans encourage different types of behaviours – Personal purchase for self-consumption or retail, Supporting the direct sellers in their marketing organization for sales, Enrolling individuals (though compensation on enrolment of individuals is deemed to be an immoral practice), etc.
Types of Compensation Plans
Types of Compensation Plans (Paid on Generation/s):
Types of Compensation Plans (Level/Rank/Title achievement):
Frequency of Compensation Payouts:
Quality - The ability to perform satisfactorily in service and is suitable for its intended purpose. As indicated on the literature including brochures, labels and presentations developed / distributed / retailed by the company.
Satisfaction guarantee - The promise to the consumer to empower him / her to return the product if he / she does not get the results as per the expectations. This is to address the Quality issues with the product/s.
Money back guarantee - The promise to the direct seller to empower him/her to return the products if he/she is unable to sell the purchased product/s to the consumer/s or use them for self-consumption. This is to address the issues of overstocking of products by direct sellers.
Direct marketing is a type of method in which companies communicate directly to the consumers through formats like online advertisements, direct mailing (postal mail and email), text messaging and telemarketing.
Ecommerce means the Sale or purchase of goods or services conducted using the internet. This method of distribution may or may not be a part of the direct selling model.
Virtual currency (also known as e-currency, e-money, electronic cash, electronic currency, e-vouchers, digital money, digital cash, virtual cash, digital currency, cyber currency or any other name) is money that is only exchanged / redeemed electronically. This currency may or may not be backed by any collateral or any government.