What is direct selling?
Direct selling is a business model where products are sold directly to consumers by independent distributors, instead of going through traditional retail stores. People who sell these products are often called distributors or independent representatives.
Industry Growth:
The Indian direct selling industry grew by 12% in the financial year 2022-23 (FY23) to reach a total value of Rs 21,282 crore (over USD 2.5 billion). This is a significant improvement over the global direct selling industry, which saw a slight decline of 1.5% in the same period.
Reasons for Growth:
- Increased demand for wellness products: The biggest contributor to this growth was the wellness category, which includes products like vitamins, dietary supplements, and health foods. This category made up 73.5% of all direct sales in FY23.
- Other popular categories: Cosmetics & personal care products came in second at 11.3%, followed by household goods and durables at 7.5%.
- Favorable demographics: India has a large young population (25-44 years old) who are increasingly mobile and flexible, making them ideal candidates for the direct selling model. There are also more people becoming aware of the importance of health and willing to invest in wellness products.
- Low entry barriers: Anyone can become a direct seller with minimal investment, making it an attractive option for people looking for additional income or a flexible work schedule.
Who are the sellers?
- The total number of active sellers in the Indian direct selling industry reached 8.6 million in FY23.
- Interestingly, there has been a shift in demographics. Traditionally, this industry was dominated by women. However, in recent years, there has been a significant increase in the number of young men joining the workforce. In FY23, 63% of sellers were male and 37% were female.
Regional trends:
- The Northern region of India (states like Delhi, Punjab, Haryana) was the leading contributor to total sales in FY23.
- The top 10 states, including Maharashtra, West Bengal, Uttar Pradesh, Bihar, and Karnataka, accounted for about 70% of all direct selling revenue.
Challenges:
- While the industry is experiencing growth, there are also some challenges.
- Not all states have implemented the Consumer Protection (Direct Selling) Rules, which were introduced by the central government in December 2021. These rules are meant to protect consumers from fraudulent schemes that may disguise themselves as direct selling businesses.
- The Direct Selling Association (IDSA) is working with state governments to address these issues and ensure proper monitoring of the industry.
Overall, the Indian direct selling industry is on a positive trajectory. With its focus on wellness products, growing youth demographic, and low entry barriers, it is expected to continue its growth in the coming years.
