Direct Selling Millions in India

Direct selling

A global industry empowering

Millions in India

KPMG in India (Report)

Direct selling is one of the oldest, most traditional forms of selling globally, involving a direct
interaction between the seller and the buyer. Today, it is a successful industry operating in over 100
countries with a market size of USD167 billion.
The direct selling industry in India is estimated to be INR72 billion (2012-13), and forms only around
0.4 per cent of the total retail sales. This is far lower than other comparable economies (one-half of
China and one-tenth of Malaysia). With growth in consumer markets and increase in its penetration
to globally comparable levels, the industry has the potential to reach a size of INR 645 billion by2025.

Rajat Wahi
Partner and Head
Consumer Markets

In India, the industry has contributed significantly to women’s empowerment, skill development,
technology percolation and the growth of the SME sector, besides contributing to the exchequer.
In addition, the industry also provides a viable form of alternative income, which promotes selfemployment.
Over five million people are already associated with the industry as direct sellers.
With the success of the industry, which relies on individuals to accomplish sales, a number of
fraudulent businesses have also tried to emulate the form, but with malicious intentions and
outcomes. This has impacted the industry, which recognises this as one of the biggest challenges to its growth. 

There is a need to revisit existing laws and bring about regulatory clarity to build an
environment of trust in order to reap multiple benefits that the industry has to offer.

Single-level and multi-level marketing are prevalent

models in the direct selling industry.

Operating Model

Single-level marketing rewards the
sellers for their personal sales activity.
They cannot sponsor any other
distributorship or sales personnel.
Income comes only in the form
of commission, or bonus, or retail
markup, i.e., they receive payments
through the sales they make.

A direct seller buys products from
the parent company and sells them
directly to his or her customers. Homebased
business people have been
pursuing single level marketing for
years. Single-level marketing is suited
for those sale people whose focus lie

on the product and service.

In the MLM compensation plan, each
direct seller recruited can potentially
recruit new distributors and create
a down line of direct and indirect
distributors/sellers. Distributors
purchase products to sell to the
consumers. 
They receive commissions
and bonuses on the sales made by
them and the sales made by their
downline direct sellers and retail
markups.

Person to Person Selling is the dominant form of selling

witnessed in the direct selling market.  

Methods used for selling 

While some direct sellers maybe employees of a direct sales
company, authorised to act for the company in business matters,
most direct sellers are independent business operators or selfemployed.
They enjoy the advantage of deciding when and how
much time will be devoted in selling the company’s products.4
Traditional Direct selling methods include:
• Person To Person Marketing
• Party Plan Groups.
Person to Person is the most popular amongst direct selling
companies followed by Party Plan Groups.

Person.

Person to Person (P2P)
Majority of the direct sales around the globe take place through
person to person contact making. This method is most widely used
by direct selling companies.
Person to Person direct selling can be defined as a one on one
interaction between the salesperson and the customer in which a
product is promoted for sale by the former to the latter. This method

of direct selling can use both single-level and multi-level marketing.

 Person to Person (P2P)

Party Plan Groups

The party plan is a method of direct selling in which social events are

organised where products and services are promoted and offered

for sale.

Direct selling through party plan mostly uses multi-level marketing.

Sales people approach other people to host events during which the

products are demonstrated. In return the host is given a part of the

revenue from the goods sold. The salesperson is paid a commission

on the sales or on the sales made by the sales people recruited by

him/her.

Party Plan Groups