What is direct selling and which are top direct selling companies in India? Details here

The Central government on Wednesday banned direct selling firms from promoting pyramid and money circulation schemes. The companies that operate on these business models have been asked to ensure compliance with the rules within 90 days. 

As per the Consumer Protection (Direct Selling) Rules, 2021, the companies will be liable for the grievances arising out of sales by their direct sellers. The new rules are to be complied with by both direct selling firms and direct sellers using e-commerce platforms for sale.

What is direct selling?

Direct selling is a business model in a non-retail setting like at home, online or other venues, where people sell products or services directly to end customers. In this model, distributors earn income by selling products to end customers. Direct sellers can also appoint others to join their sales team to increase their sales potential.

The main models in direct selling are single-level marketing and multi-level marketing. In single-level marketing, the direct seller makes money by buying products from the manufacturer and selling them directly to the end customer. In multi-level marketing, also called network marketing, the direct seller can earn money bo both direct sales and by sponsoring a new direct seller to earn a commission.

Modern direct selling includes sales made through one-on-one demonstrations, party plans and internet sales. The party plan sales mean gathering a group of potential customers together and presenting the product to them.

Top direct selling companies in India

Amway, Oriflame and Tupperware are among the key players in the direct selling industry in India. Some others are Vestige, Avon, Modicare, RCM, Herbalife, Keva Kaipo Industries Pvt. Ltd, Mi Lifestyle Marketing Global Private Limited, Asclepius Wellness Private Limited, Atomy India and Forever Living Products. 

Meanwhile, the Centre has asked the state governments to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entities. 

"Both direct sellers as well the direct selling entities using e-commerce platforms for sale shall comply with the requirements of the Consumer Production (e-Commerce) Rules, 2020," the government said. The direct selling companies will additionally need to provide details of goods they are selling, prices, return and after-sale service.

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