Deepak Goel

New Delhi , Feb. 6

DIRECT selling companies have grown both in size and in number in the country with some 16 of them becoming members of Indian Direct Selling Association (IDSA) at last count. The turnover of the member companies stood at Rs 1,663.82 crore with the turnover of non-member companies at around Rs 1,047 crore for the last fiscal, according to the IDSA.

The number of sales people too increased to 13.73 lakh from the year-ago figure of 13 lakh. However, the companies face the problem of people joining but not engaging themselves actively, or even opting out of the business. Of the 13.73 lakh, there are only 8.5 lakh active sales people, people who buy or sell at least once in two months, according to the association.

Ms Asha Gupta, Managing Director, Tupperware India Ltd, says, "The dropout rate is quite high for Tupperware as for the rest of the industry. A lot of people leave and rejoin after some time."

While the problem may be huge for some players, it is not so for all. Mr William Pinckney, Managing Director and Chief Executive Officer, Amway India, says, "We have a dropout of 0.5 per cent and an active sales force of 4.5 lakh people." Ms Gupta also makes the point that people leave the profession in around one-and-a-half years.

At present, there are about 400 types of products with over 1,700 variants being sold by these companies. The latest to join the list is insurance. While most companies sell cosmetics, personal hygiene and home care products and health supplements, there are some that sell semi-precious jewellery (Quantum International Ltd), educational products and multimedia (Direct Educational Technologies India Pvt. Ltd).

While most players work on the multi-level sales method, whereby their sales people can add on any number of people who in turn take on more, there are some players such as Tupperware who work on a single-level sales method. Ms Gupta of Tupperware, which works on single-level two-tier sales method, says, "One joins Tupperware as consultant and on doing a certain level of business, graduates to be a manager. We restrict the number of managers to 2,000-2,500 in the country."

The single-level method may not reap large benefits for the sales person, according to Ms Shilpa Ajwani, National Sales Manager, Oriflame India. "In the multi-level method, there is no restriction on the number of people one can make to join, again add an infinite number of sales people — thus one keeps moving up the chain."

The kind of success these companies have seen in India is only the tip of the iceberg, feel the players. Mexico, which has a similar socio-economic level and a tenth of India's population, has a turnover of over Rs 15,000 crore. "Clearly, the potential for the direct selling industry in India is huge," says Mr Pinckney. However, for the sector to grow faster, these companies have been seeking a specific legislation for the sector. "The legislation would prevent fraudulent companies from conducting business in the country and also help this sector grow in a channelised fashion."

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