"Network Marketing an insight into its Indian perspective"


Abhideep Kar
MBA Semester III Student from Lucknow (Uttar Pradesh)

New Economy Businesses are today characterizing the robust growth and development in the global economy- large investments, hi-tech projects and lots of business opportunities. Specially talking in context of developing nations, this fact becomes more prominent. Countries like India and China are today leading the whole world when it comes to fast-paced development and investments. Infact, such nations today are the biggest centres of attraction for international investors and moreover for the whole world.

Talking specifically of India- one of the most promising & potentially viable business destinations in the world, it is witnessing a super paced era of growth and industrialization. Almost all the important new economy sectors of world economy, be it Telecom, Real Estate, IT, Biotechnology or even Retailing- all are evidently gaining strong footholds in India with many of them being established industries today. And more importantly, all this is happening when the nation has just started reaping the real long-term benefits of globalization and open-economy.

Taking the discussion to a narrower talk, the country of India has in its fast-paced move of industrialization and development, forgotten to look back and do justice to some industries and businesses which are potentially very promising but rather ignored. Such industries, if seriously looked forward to, could give the country yet many more add-ons to its global competitiveness, thus creating more value and business. Such one industry is the Direct Selling or Network Marketing or Multi Level Marketing (MLM) industry. Being a well-established & prominent industry in almost all parts of the world, Direct Selling is still in an evolutionary phase in the Indian subcontinent. Lack of knowledge & education on Direct Selling is perhaps the biggest block in the rapid development of this industry. Although the industry boasts of annual global revenues exceeding $100 billion and apprx. Rs. 2,400 crores in India, yet keeping in mind the great and enormous potential of the industry, its present development scenario is not at par with the global industry trends. Thus, laying stress on certain decisive & influencing factors, the industry can be given the right kind of setup/ atmosphere it needs, which should ultimately give the industry a really robust push and hence the rquired growth. 

India & Network Marketing

It won't be out of turn to say that today the Indian economy stands to be indeed one of the most crucial destinations of economic development and the whole world is keenly watching it grow- more & more. With this, it goes obvious to say that the Indian economy would perhaps be one of the most important and attractive destinations for investments and business opportunities sought after by the international business community around the globe.

Talking of Network Marketing in India, the country has experienced slow but rather reasonably steady growth in this context. Early players like Amway India, Modicare and Oriflame India are some of the ones who really introduced the concept of direct selling & MLM to the people of this country. At least, today, not many people would be unaware of the strong presence of a brand like Amway or Oriflame, for that matter, and it, by virtue of being so, truly represents that the direct selling industry has therefore gained at least a reasonable minimum level of footage in the country.

Network Marketing in the present Indian context

Talking of the present times, the Indian MLM industry is witnessing, especially for the past 4-7 years, a tide of MLM & direct selling firms operating in the market. A large portion of this tide is mainly characterized by mushroom growth of unorganized small players who are not serious with the MLM business, rather they are portraying it as a "get rich overnight" opportunity. With this, the image of the industry in India has been tarnished to much an extent. Many people now see MLM as a scheme run by fraudulent fly-by-night companies. This perception is also true keeping in note the fact that innumerable unorganized & small MLM companies have flown away and vanished from the market after collecting subscription/ joining fee from thousands of customers, the amounts being running in millions of rupees.

The other side of this story should also be given a proper reference. It is now a well understood and an appreciated fact that often quality has to be searched from within quantity. Referring to the above scenario of the MLM industry in India, it can well be said, from other side of the coin, that the industry is witnessing positive notes from business sector, as more and more companies are going the MLM way. Thus, involvement of hundreds of companies into MLM and the abovementioned MLM tide are then to be recognized as true representatives of the potential recognition of the direct selling & MLM industry. It is from these numerous companies & firms that the potentially good firms would carve a niche for them, thus resulting into reputed players in the industry. A good corresponding example of this perspective of MLM industry in India is the Indian Pharmaceutical industry. Alike the direct selling industry, the pharma industry is also characterized by mushroom growth of small companies. But today, the pharma sector in India is a high-booming sector and an important one when it comes to sectoral performance and growth. The entry of numerous firms in the pharma industry shows its potential recognition and it is from among these companies that many emerge out finally as good performing & profitable entities. Small cap firms in the pharma sector have already shown their importance both in terms of results and on the Indian stock exchanges. The same can hopefully be expected of the Indian direct selling industry.

Indian Direct Selling Association (IDSA)

Being the apex body of direct selling firms in India, the IDSA has a tedious list of to-dos that will go a long way in ensuring proper and healthy growth of the industry in India. IDSA's affiliation to the World Federation of Direct Selling Associations (WFEDSA) and its networking with direct selling associations around the world will definitely help it improve upon its practices and methods, but then the IDSA has to chalk out a customized plan for the structured and proper growth of MLM in India, keeping in mind the country's special conditions and circumstances.

Prime challenges before IDSA and Indian MLM industry today

* To familiarize and educate people about the concepts of Direct Selling & Network Marketing/ MLM.

* To build a perceptual appreciation about MLM in the minds of people.

* To positively portray MLM & Direct Selling as a means of marketing/ selling & distribution rather than a "get rich overnight" scheme/ opportunity.

* To explore the employment potential of MLM by involving more & more people into Direct Selling as Independent Direct Sellers.

* Ensuring least failure of direct sellers by imparting proper training & development programs/ inputs.

* To lobby with industry associations like FICCI (Federation of Indian Chambers for Commerce & Industry) & CII (Confederation of Indian Industries) for better networking and industry support & recognition.

* To maintain a common code of ethics.

* To identify and stop fraudulent, fly-by-night firms endorsing MLM business as a "get rich opportunity" in India.

* To coordinate with the Government of India to come up with a comprehensive set of policies & rules for the Direct Selling industry in form of a Direct Selling Act.

* To encourage reputed & established business players in India to venture into MLM/ Direct Selling, portraying the same as a very viable & profitable futuristic business opportunity cum means of sales & distribution.

Threats before IDSA & Indian Direct Selling Industry

Unrestricted entry of small mushroom growing players into the industry.

* Ignorance relating to direct selling on part of people.

* Growing acceptance of direct selling by people as a fraudulent & misleading business.

* Lack of knowledge on MLM resulting from improper/ inadequate education & training.

* Lack of government's interest in the industry and absence of proper legislative enactment/ rules for regulation of the industry.

Prominent Direct Selling Firms In India

Amway India 
* Sunrider India  
* Forever Living   
* Oriflame India 
* AMC Cookware 
* Hindustan Lever Network
* Modicare  
* Direct Educational Technologies   
* Daehsan Trading India  
* Avon Beauty 
* Herbal Life    
* Tupperware India        
* PS Press Service

NB: Relevant data & information have been referred from information sources of FEDSA
(World Federation of Direct Selling Associations), Amway India & Hindustan Lever Network.

Abhideep Kar
MBA Semester III Student from Lucknow (Uttar Pradesh)

Source : E-mail October 18, 2006




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