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  • Indian government to soon issue the guidelines for Direct Selling Industry

    Indian government to soon issue the guidelines for Direct Selling Industry

    Key Highlights:

    • Indian Government to regulate new guidelines barring entry fee to a direct selling/network marketing /MLM company
    • All direct selling companies operating in India to comply with the new guideline within 90 days
    • The guidelines to specify the cooling period for both the direct selling company and the agent

    NEW DELHI: Guidelines prepared by the consumer affairs ministry to regulate the sector reveal that Direct selling companies like Amway, Oriflame and Tupperware will be barred from levying  any entry fee on their agents or pressing them to buy back unsold inventory as per TOI.

    The companies will also have to guarantee a full refund or buy back products and services sold to their independent representative. This will safeguard thousands of housewives and professionals who work part-time as agents.

    The policy is expected to help end the ambiguity between a direct selling firm and a “pyramid scheme.”A typical pyramid scheme is a business model which encourages recruitment of members with the promise of commission for enrolling others into the scheme without any actual sale of products or services.

    The direct selling industry has been urging the Indian Government to amend the existing Price Chit and Money Circulation Schemes (Banning Act) 1978 and to come up with a clear legislation that will differentiate them from “pyramid” schemes. According to the industry , “pyramid schemes” companies  are  not registered with the  local authoritarian bodies in the country they operate in, neither do they obtain the license under existing laws of the land, unlike the direct selling companies.

    According to a report by ICRIER (Indian Council for Research on International Economic Relations) between 2004 and 2009, the direct sellers in India have almost doubled. The report also stated that in 2009-10,India ranked 11th among the top direct selling countries.

    In the absence of a clear legislation, the direct selling industry has suffered a lot and has often been confused with pyramid schemes. The industry is known to offer self-employment opportunities to individuals and is spreading to Tier 1 and 2 towns across the country. The direct selling industry is expected to reach Rs.15-20 billion by 2025

    Currently, individuals who wish to become agents or independent representatives with a direct selling company have to pay a certain amount towards their registration as agents, as well as, buy some products for selling. The agents are expected to buy back the products in scenarios where they fail to sell them which puts an extra burden on them.

    The new guidelines are expected to be rolled out soon and the states will be asked to implement them swiftly. All direct selling companies operating in India will have to comply with the norms within three months post the issue of the new guidelines which will also include mandatory registration with state government agencies. As per this proposed guidelines, direct sellers can only be engaged through a “legal contract.”

    As per the sources, the new guidelines will also specify the cooling period during which both the parties, i.e. a direct selling company and the agent, can request to cancel the contract and claim a refund. It is also expected that the companies will not resort to any form of misleading advertisement to attract consumers.

    As stated by an official, “the policy will take care of direct selling agents and consumers as well, which will include the manner in which companies operate and agents approach the consumers.”

  • Amway’s priority is to engage with the government constructively: Anshu Budhraja

    Amway’s priority is to engage with the government constructively: Anshu Budhraja

    #Tupperware #Oriflame #Microsoft #FSSAI #AnshuBudhraja #Amway

    Even after being engulfed in the controversial arrest of its CEO, Amway refuses to give up its promising Indian Market. It has decided to come back even stronger by engaging in constructive participation along with the Indian government. The GDP of India’s direct selling market is around 0.08 per cent, which means that there is a huge potential of growth and once a clear guidelines are made, the Direct Selling Industry has the potential to grow from a current Rs. 7200 Crore to a whooping Rs.64500 crore by 2025. The Indian economy has also seen the raise in the demand of products patterning to wellness, cosmetics and personal care in the last couple of years. Keeping this in view Amway has decided to focus on manufacturing nutrition and cosmetic products in its Chennai based plant. This not only will cut down their import cost but will also reduce the cost of the products to their end customers which could be a good strategy in capturing the untapped Indian market – Networking Eye.

     

    Direct seller Amway India is looking to put behind it controversies stemming from the arrest of its top leadership over allegations related to various irregularities and regain growth momentum while charting out a new phase of engagement with the government.

    Anshu Budhraja, the Rs 1,900-crore direct selling firm’s first India head in 16 years, said his immediate priority is to engage with the government constructively and take Amway forward from what he said is a “point of inflexion for the next growth phase.”

    Amway has consistently denied any wrongdoing on its part. “An Indian leader understands the sensitivities of Indian culture,” Budhraja said in an interview. “He has the benefit of growing up and being part of system. It’s very simple… the way an Indian will interact with key stakeholders will be different from what a person from outside India will be able to do.”

    Budhraja, who has been with the company for about 15 years in roles such as sales and finance, succeeded expat Bill Pinckney, who has relocated to a global role within the $10.8 billion Amway Corp.

    “China is a $30-billion direct selling industry, while in India direct selling is just 0.4 per cent of retail sales.That’s one big opportunity to double the numbers… it has a leverage of 10 times,” Budhraja said.

    Amway’s first company-owned plant in India, in which it has invested Rs 600 crore, will start commercial production in November.The India unit is looking to service Southeast Asian markets and turning itself into a regional product, innovation and research hub.

    “Commodity prices are the lowest in some time now like crude and some other sensitive raw material prices. This is the time to really leverage these. We are reducing dependency on imports,” Budhraja said. Amway’s import content is down to 1-2 per cent from 2025 per cent two years back, he said. The new plant will also make Artistry super premium cosmetics, which are currently being imported. Amway has dropped prices of its largest selling protein supplement Nutrilite by 10 per cent and is signing a brand ambassador both firsts. A new category of child nutrition products, global energy drink XS and home-tech cookware are in the works, he said.

    The company is also setting up 10 digital stores in consultation with Microsoft, in line with the growing switch to online. Amway India’s top line contribution to its parent is just 3 per cent, but it’s a top 10 market for the company in terms of growth and is targeting to be in the top three over the next decade. “We are targeting tripling turnover over the next 10 years and investing ahead of the curve,” he said.

    The Indian direct selling industry, which includes peers such as Oriflame and Tupperware, is about Rs 7,200 crore. “As the industry and players mature, and as the government’s awareness of the potential and economic and social impact of this industry matures, then you definitely have a playing field which I believe we are getting to,” he said.
    On food regulator Food Safety & Standards Authority of India (FSSAI) directing Amway to recall some products two months ago for allegedly selling them without approvals, Budhraja said, “There’s no conflict of interest with the FSSAI. It’s an education process which both of us are helping each other with. For a few products, we are looking at required changes.”

    Amway has a portfolio of about 50 products in nutrition, three or four of which have been affected. These are not top growth drivers, it said.

    The company has been an active participant in discussions with the government on the model that involves selling directly to consumers through distributors.

    “The ministry of consumer affairs has now taken complete ownership of issuing guidelines on direct selling,” Budhraja said.”Amway is making sure the ecosystem has the right facts and has a face who it can go to. That does make a difference. I have personally made it to all meetings we have had with the ministry of consumer affairs. I feel their level of understanding with the Indian piece is much better than what it was earlier.”

    source economic times

  • Direct Selling sector as a retailing medium in India is yet to gain momentum

    Direct Selling sector as a retailing medium in India is yet to gain momentum

    #DirectSelling #Retail #Amway #Oriflame #Tupperware

    The past history of direct marketing dates back to the days, perhaps, when we used to acquire vegetables as well as family products from the cart vendors. Gradually, the principle as a tool of selling gained approval, yet, the section has actually not attained its best position in the country. A closer Look!

    Direct selling is a worldwide market, running in over ONE HUNDRED nations, with a market dimension of USD 167 billion. It describes the selling of products and services to the customers, far from a taken care of retail outlet, normally in their residences, work environment etc, via description and demo of the item by direct sellers. (more…)