Future of Direct Selling in India: Today’s post will be helpful for those who are associated with any MLM Company or thinking of.
This post is not about any particular MLM company, but it is about the existence of the entire MLM industry. From the past few years, the Indian Government started considering Direct Selling as a legit industry and update legal direct selling company list regularly.
Network Marketing not only requires money to be invest but also requires valuable time. In most cases, people aged between 18 to 30 join MLM, Hence it is important to spend the golden period of life at the right place.
Here the questions arise, should I join MLM or not, and What is the Future of Direct Selling Industry?, So now we will discuss the Network Marketing Future in India, and we will try to know whether the claims on MLM will be fulfilled till 2025 or not.
This article will be a bit long but read it carefully to understand the actual facts, that you have never heard before.
Future of Direct Selling in India
Before predicting the future of MLM, it is important to understand What is MLM? and Why it was started?
MLM is a type of marketing and distribution method where the company allows its customers to become the sellers and work with them.
Any person can join the MLM company and earn money by selling products and building their downline by adding new members under them. In MLM, direct sellers also earn from direct and indirect downlines, i.e. they earn passive income.
According to the structure of people involved in MLM, there are different types of MLM plan.
MLM was started in America in the 19th century by Avon. At that time, various options for the marketing of products/services were not available, hence the Direct Selling concept was formed on the basis of Word-of-Mouth Marketing.
After the launch of Amway, a sudden increase in the Direct Sellers and Companies was noticed.
After 1995, the MLM industry boom came to India, and as a result, many companies got developed between 1995 to 2005. Few of those companies are today on the list of top Direct Selling Companies in India.
But now a new decade has started, and the question arises, what will be the future of Direct Selling?
Because it takes years to achieve success in MLM, So the question remains whether Direct Selling will continue to the next decade or not.
Benefits of Direct Selling
Firstly we will understand the few benefits of MLM and why it should be practiced even in the future.
In Direct Selling, a person has to promote his plan and products to others. Initially, it seems next to impossible to work as a direct seller. But with the passing time, a person learns various skills and teamwork to grow the network.
Communication, Presentation, Marketing, and other Interpersonal skills are learned, that can help to start any other business in the future.
A person faces various rejections in MLM. Hence, many people undergo stress due to rejections and step back, whereas few keep hustling.
The self-confidence of such people reaches to top, and as a result, they never step back from any rejection in their further life. It is a crucial lesson for a successful life.
MLM and Direct Selling can be joined by anyone, from anywhere and at any time. There is no specific requirement of age, degree, gender, caste, or anything else to work in the direct selling industry which is very convenient for the Indian population.
In MLM, there is no work barrier, i.e. the more you work, the more you earn. Other than the skills no other qualification required. There is no fixed salary and a person can earn as much as they want by working hard.
Evolution of MLM
There is no second thought that the development of MLM has been at its peak in the last 2 decades.
If we talk about the international level, India is behind in the list, whereas America, Japan, and China are at the top.
According to IDSA (Indian Direct Selling Authority), in 2018-19 the entire Direct Selling industry’s turnover was more than 13,000 crore INR.
13000 crore seems a huge amount, but comparatively, it is very low while referencing an industry.
For a clear comparison, take the example of Dmart established in the year 2000. Dmart is a Supermarket Chain with only 216 supermarkets across India and has a turnover of Rs 25,000 crores INR.
On the other hand, there are more than 450 legal Direct Selling Companies in the country and the turnover of such an entire industry is near half of Dmart’s turnover.
As per the report of FICCI-KPMG released in 2014-15, the Indian Direct Selling Industry would have a turnover of Rs 64,500 crore by 2025. As per the current circumstances, the prediction seems false.
No doubt, the MLM participation rate increased in covid-19 lockdown, but nothing achieved as the claims that were made by leaders.
The MLM leaders often work on the basis of showing luxury life, false claims, and other chaos, whereas the real figures are worrying.
MLM’s dark side
We show MLM as the best business opportunity, and the leaders call it the business of the future, but many of us are not aware of the dark side of MLM.
In the states such as Bihar, Rajasthan, Uttar Pradesh, and West Bengal, a different side of MLM is found.
In small villages, poverty and unemployment are targeted and frauds are committed in the name of MLM.
In these frauds, few leaders of any Direct Selling Company call the people for jobs with a fixed salary or take the name of giant companies such as Tata and Reliance. Considering their weaknesses, the leaders show them big dreams and takes thousands of rupees for training which is against direct selling guidelines as well.
Many times, people are forcibly kept at a place for one or two months and are trapped to join MLM with wrong or incomplete information.
We have personally talked to some people who were held as hostages to join MLM.
Also, the Direct Selling Guidelines released by the government in 2016 are just for the sake of the name.
Knowing the future of MLM is a second thing, but currently, the future of many people especially youth connected with MLM is in danger, and it is a vital matter of concern.
We are not claiming that the entire MLM industry is deceptive, but we are just trying to show up the dark side where the misleading activities are carried out, and no one is concerned about it.
Pyramid Scheme and Fraud Leader
In the name of MLM, the fraud pyramid scheme has been practiced in the country right from the beginning.
The pyramid scheme seems more luring than the normal MLM Company due to which the leaders promote them more. Lastly, the leaders earn well and make a profit, but the money of thousands and millions of innocent people get stuck in fraud.
The pyramid schemes like eBiz continued for 2 decades in the country, but whenever any questions are raised on such companies, their Direct Sellers try to be more Intellectual. Not only eBiz, but many other companies were running such pyramid schemes, but now due to some legal action against some companies, their plan and products have changed.
Also, there is no shortage of fake leaders in the industry.
Recently I attended an online webinar hosted by a respected MLM Leader. The leaders promised to teach the online Direct Selling in the free webinar, but instead, he just told few stories, then lured to earn 1 lakh from MLM in 1 or 2 months, and lastly promoted his course.
Even after 1 week of attending, I received sales-pitch calls from his team for purchasing that course.
There is nothing wrong with promoting the course, but it is absolutely fraud to mislead the youth by making false promises and luring them. From the past 4-5 years, it has become the custom of most leaders.
If the pyramid scheme and fraud leaders continue working like this, the future of the direct selling industry will be dark and outsiders will keep assuming it as a fraud. And for the bright future, direct sellers themselves need to get awake.
MLM Success Rate
When we are discussing the future of MLM, it is important to keep its success rate in mind.
Today millions of people in India are connected with Direct Selling, but who knows how many of them are earning well?
While It is common for the Direct Selling Companies to make big promises and showing fake payouts in the seminar. Presently, how many companies show the actual stats such as,
- How many people are associated with the company?
- When and how much payout is given?
- And what is the average commission of the Direct Sellers?
Every month, companies never forget to show the payout of the top 10-20 leaders. It is so because such selected leaders are their ambassadors and companies work on their imaginary empires. It is the prominent reason, why fraud MLM leaders are bided in crores.
Herbalife once revealed the average earnings of all its US Direct Sellers. The Direct Sellers associated with Herbalife earned an average of $2700 annually. On the other hand, if one is working on the lowest salary in America, a person will earn $14000 annually. Average Herbalife Direct Sellers earning 5 times lesser at the same time promises are made to make millionaires.
Not only Herbalife but all the companies have such shocking figures. Hence, it is beneficial for the company to not show the internal figures.
In MLM, only 4 out of 1000 i.e. 0.4% people get success.
In one of our articles, we discussed who are the 0.4% successful people in MLM, and it mostly includes the mean leaders of the company, who can go to any extent to promote the company.
Also, in the Job Vs MLM article, we have analyzed Job and Network Marketing in depth.
MLM & Other Marketing Mode
Till now, we discussed the statistics and facts related to MLM. Now, we will compare MLM with other marketing and distribution methods.
MLM is a marketing and distribution method, hence we will try to understand whether it has dominance over other methods or not.
Here we will keep one rule in mind, the Survival of the fittest, i.e., the one who has more benefits will remain forefront and in practice.
Actually, Network Marketing works on Word of Mouth, but whenever the word Network Marketing is brought up on the tongue, people’s actions change often.
There is a simple thing behind this behavior. If we advise others by keeping our economical benefit in the middle, it is obvious that people will consider it as publicity and promotional activity.
Above all, At the present time, direct sellers do not consider the Company’s products but instead, focus only on the plan and promote anything that provides them more profit.
Traditional Marketing Vs MLM
At the MLM companies’ seminars, always a comparison is made between Traditional Marketing and MLM, and people are told how Network Marketing removes the middlemen. But the reality is something else.
Traditional Marketing and Distribution consists of wholesalers, advertisers, retailers, and stockers, whereas in MLM, there are Direct Sellers.
When we look from the customer’s point of view, Network Marketing companies’ products are often expensive.
There is no doubt that Network Marketing companies provide an earning opportunity to people, but in the end, customers always require quality and inexpensive products. Even though Direct Sellers work day and night, Traditional Marketing stays far ahead of MLM
We believe that MLM does not have middlemen like Traditional Marketing, but there are middlemen in MLM too.
All the Direct Sellers (upline) in the company’s network get some part of the commission whenever any product is sold. This is a major reason behind MLM companies’ products being expensive, and it is the main thing not liked by both customers and Direct Sellers.
In Traditional Market compared to any MLM Company, customers get more options for price, quality, and brand as per their requirements.
Online Marketing Vs Network Marketing
A few decades back, the internet and technology were not there, hence MLM was a good option for marketing and distribution.
But in modern times, it is easy to sell products over social media and e-commerce, we call it Digital Marketing.
The advantages we discussed removing intermediaries while comparing Traditional Marketing and MLM is achieved with Online Marketing. Here in Online Distribution, the products are directly delivered from the warehouse to customers through logistics.
Due to this, online products are way cheaper than the traditional market. Opposite to this, due to the distribution of commission in the network of people, the products in MLM are expensive.
By Online Marketing you can showcase your products worldwide with a few clicks.
In the future, the trend of Online Marketing and e-commerce will be even more due to the internet’s acceptance. Millions of people from small cities and villages are connecting to the internet every year which developed various business opportunities such as drop shipping, local e-commerce, etc.
Flipkart has not even completed 15 years of existence in India, but its turnover is more than 43,000 crores INR in 2019. At the same time, Direct Selling has existed for over 2 decades in India. Therefore, MLM is not yet effective beyond both Traditional Marketing and Online Marketing.
Of course, the leaders will show MLM bigger and better because it is the source of their income. But when the real figures and facts are considered, MLM lags behind.
Nowadays Affiliate Marketing is considered a better option.
In Affiliate Marketing, it is not required to buy the products; instead, you just have to send customers towards the company. If people like the product or service, they will directly buy it from the company, and you will receive your profit for giving reference.
In Network Marketing, it is compulsory to buy the products first, and if you cannot sell them, the loss is yours. Whereas in Affiliate Marketing, there is no requirement of such investment, and also you can promote as many products you want without purchasing those products actually.
In Affiliate Marketing, the price of a product or service does not increase much because only one person needs to be paid the commission.
Companies such as Amazon and Flipkart allow people to do affiliate marketing on most of their products, which is also one of the reasons behind their success.
The same opportunity to join as the Affiliate Marketer is provided by the various hosting and domain companies, online shopping sites, and other Apps on PlayStore. They give a good amount of commission for each sale.
The main requirement for success in Affiliate Marketing is to have the right audience.
Affiliate Marketing is also not perfect. There are frauds that exist in affiliate marketing as well. Many times to get more commission, people promote wrong or expensive products. So one should be aware of these frauds as well.
Currently, the world is changing quickly, and as a result, every person has to be part of such changes and keep updating their working styles, life, and mindset.
So don’t get dependent on anyone industry or others’ opinion, instead build your own way. Remember, opportunities are everywhere; you just need to find them.
We hope you liked this article, and you got to know something new about the future of Network Marketing.
If you have any questions or suggestions, please let us known through the comment section.