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Direct Selling Industry: Driver In Pushing Economic Growth & Entrepreneurship

The direct seller earns commissions and profits on the products they market.

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Presently India is facing an economic slump; getting employment is far tougher now, given the rising gap between the number of people looking for work versus the number of job opportunities available currently. So, let’s think about things differently.

The World Bank's South Asia Economic Focus Spring 2018 report stated that between 2015 and 2025, India's working-age population would expand by 1.3 million per month. Consequently, there is an urgent need for exponential job opportunities in India. The World Bank reported that only 50% of the working-age population is actually working.  

That means, whether they are ready or not, half of the working population must become entrepreneurs of some sort.  Although that may seem dire, this will be a positive outcome for India. The economic development of the nation depends upon industrial development and owes its momentum to entrepreneurial skills, motivation, and competencies of the individuals. Of course, the learning curve is steep for new entrepreneurs, but there is fertile ground for these self-made business people to grow

Direct Selling is the marketing of products and services directly to consumers in a person to person-environment, away from any traditional retail location. Direct selling covers both business-to-business and business-to-consumer verticals as it specializes in a new channel of distribution which is neither wholesale or retail. The consumer benefits from the personalized explanation and demonstration of exclusive products by the direct seller. The direct seller earns commissions and profits on the products they market.  

The industry had witnessed major growth post-liberalization with many global players entering the Indian market. They made their entry into India in the late 90s, offering products under varied segments and creating entrepreneurial opportunities for individuals aspiring to purchase and market differentiated products.

A study by ASSOCHAM quantified that the direct selling industry will reach INR 15,930 crore by 2021. The survey also stated that in a remarkable sweep, the industry has doubled since 2011 reaching INR 12,620 crore in 2016. The format of sales and work culture in direct selling not only creates job opportunities but has also given a boost to entrepreneurship in India. The World Federation of Direct Selling Associations (WFDSA) states that approximately 117 million people around the world are involved in the industry, out of which a staggering 74% are women. In India, 5.1 million people are involved in direct selling of which 60% of them are women. India has witnessed a total number of direct sellers rise to 5.7 million in 2018-19 from 5.1 million in 2016-17, equivalent to the addition of 800 people every day. This growing number can be accredited to the flexibility and creative nature of the direct selling industry. 

Direct selling provides additional income opportunities and promotes micro-entrepreneurship. With the growth in the industry, the workforce in the sector is set to rise exponentially. Not only does Direct Selling provide income opportunities, but the industry also imparts transferable skills in sales and management. The industry has the potential of offering self-employment opportunities to 18 million individuals by 2025.

 Furthermore, direct selling has been able to provide women, who found it difficult to work away from home, an alternative earning opportunity in their own homes. Women get the flexibility to manage their time and balance their work and personal lives in the direct selling entrepreneurial setup. The industry in FY18 is estimated to have provided self-employment to 3.4 million (34 lakh) female distributors, with the potential to economically empower 11 million women by 2025.

In summation, the industry has continued to rise despite the challenges it faces. The employment creation opportunity it presents is sizeable and hence there needs to be adequate policy support for the sector. In the age of gig economy, direct selling has indeed emerged as a viable option for those who seek flexibility and work-life balance while still enjoying the financial freedom the sector offers. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Rishi Chandiok

The author is Regional Director (South Asia), QNet

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