What is Direct Selling ?


Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling.[1]Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales.[2] A textbook definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs.

Direct selling refers to the selling of goods and services to the consumers away from a fixed retail outlet,generally in their homes, workplace, etc., through explanation and demonstration of the product by direct sellers. It is one of the oldest modes of sales, and is similar to the traditional consumer goods retail model. In 2014, the direct selling market in Delhi was estimated in the range of INR4.0-4.5 billion2. Our interaction with industry stakeholders suggests that the industry has created a positive impact on several social and economic parameters.

Direct selling is essentially the marketing of products and services directly to consumers in a person-toperson manner, away from Permanent retail locations .

Direct selling is a dynamic and rapidly expanding channel of distribution for the marketing of products and services. While there is no universal definition of direct selling, different countries, associations and individuals have defined the sector differently. It can be broadly understood as 'selling of goods and services to the consumers away from a fixed retail outlet, generally in their homes, workplace, etc., through explanation and demonstration of the product by the direct sellers'. Direct sales generally benefit from the explanation and demonstration of products made by an independent direct sales person to the consumer. Being a specialised channel of distribution, which is neither wholesale nor retail, it covers both business-tobusiness and business-to-consumer aspects.

Despite its differences, in many ways, direct selling is similar to traditional consumer goods retail. In both cases:

  • (2) the distributors/direct sellers can earn a commission, when the sale of the product takes place.
  • (2) earning of sales commission may be based on one's own sales as well as on the cumulative sales of the group built by the seller, similar to commissions in traditional sales environment.

FICCI

With economic development and growing consumerism various store and non-store retail formats have evolved to cater to the growing retail sector in India. The Indian direct selling market at INR75 billion (2013-14) is one of the fastest growing non-store retail formats, recording double digit growth of more than 16 per cent over the past four years. The growing Indian market has attracted a large number of Indian and foreign direct selling companies.

KPMG in India

Direct selling is one of the oldest, most-traditional forms of selling globally, involving direct interaction between the seller and the buyer. In 2015, it is a successful industry operating in over 100 countries globally with a market size of USD183 billion The direct selling industry in India is estimated at INR75 billion (2013-14), and forms only around 0.4 per cent of the total retail sales. This is far lower than the industry's market share in other comparable economies (one-half of China and one-tenth of Malaysia)1. With the growth in consumer markets and an increase in its penetration to globally comparable levels, the direct selling industry has the potential to reach a size of INR645 billion by 2025 in India. with a high rate of economic development, the direct selling market is growing in Delhi.

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