Projections for the Direct Selling in the Next 5 years
Multi-Level Marketing, or MLM, is an important branch of the direct selling approach, in which a company recruits’ representatives to sell products or provide services directly to the customer. The multi-level or network aspect in this approach is the ability of an individual distributor to appoint sub distributors to facilitate the sales and in turn earn compensations and revenue based on the chain of sub distributors, hence creating a pyramid of sales.
Multi-level marketing was started in the USA and currently has 60% of the country’s population involved in the business. MLM was introduced in India in early 1980s and in the four running decades, has created over 10 million self- employment opportunities. The direct selling benefits from MLM because of the personal contact for the presentation and sale of products, thus providing entrepreneurial opportunities. Employment opportunities have doubled from 2001 to 2012 and continue to go up while the number of MLM distributors has increased from 43.8 million in 2001 to 87.9 million in 2012 and over 106.4 million in 2018.
On September 9, 2016, the Government of India, necessary guidelines of regulate the registration of MLM companies was issued, after which almost 90% of the fake scheming brads where closed down, leaving only the trusted and competitive companies. Today, the top four companies hold 80% of the market with Amway leading at 29% of share and Avon standing second at a registered share of 24%. Brands like Tupperware and Oriflame hold a significant share too.
With a workforce of 12 million generated every year, MLM provides income opportunities as well as management skills, sales expertise and competent human interaction. Not only that, the MLM industry is dominated by omen with 58% female distributors. This proves it beneficial at the gender inequality aspect involved at every corporate level in the business industry.
FICCI and KPMG estimate of the Multi-Level Marketing industry were INR 52 billion in the year 2011, INR 72 billion in the year 2013 and INR 80 billion in the year 2015. A clear growth of 53.8% in a span of five years only shows a promising growth in the coming decades. Besides, with a population predictability of 18.1 million by the year 2025, MLM industry turns to be the economic solution of the country
MLM is the face of the future and there is no doubt about that. The following facts and projections made by various companies and experts will tell you why.
- The direct selling industry has the potential to touch INR 645 billion in turnover by year 2025, from INR 100 billion size now.
- Federation of Indian Chambers of Commerce and Industry (FICCI) – KPMG India report states that countries with a thriving direct selling market have a direct selling market to GDP ratio of 0.2 to 1.2 per cent. In India, direct selling market is around 0.08 per cent of the GDP at the moment, and hence has huge potential to grow.
- ASSOCHAM presented a study it undertook, stating that the Multi-Level Marketing industry in India has almost doubled since 2011 and is predicted to bloom at a compounded annual growth rate of 4.8% to touch 159.3 million in 2021 from a mere 126.2 million in 2016. In the past five years, the states of North India have reported a market size of 22 billion and South India stands second with a market rate of 19 billion.
- Fortune magazine called MLM, the largest segment of direct selling industry, as “the best kept secret in the business world.” MLM industry has experienced a growth of 91% growth in the last 10 years with annual sales in excess of 30 billion USD and 100 billion USD in the States and worldwide, respectively.
- Financial experts call MLM a “recession proof” industry.
- FICCI & KPMG say the MLM companies dealing with wellness are these days contributing players in the MLM business and have the potential to penetrate globally comparable numbers.
- The world’s third richest man, Warren Buffet, investor, after purchasing a Network Marketing company, said it has been the best investment of his life.
- CNN International reported in 2015 that a new home-based business is started in the world every 29 seconds.
- Tom Peters, author of the book, In Search of Excellence, calls MLM the first truly revolutionary shift in the marketing industry in the last 5 decades.
- Sanford Botkin, tax expert, says that a Network Marketing home business can result in tax savings of 3,000 USD to 9,000 USD per year.
The Multi-Level Marketing industry has a strong potential to support the
economic and social growth. The skill set and employment opportunities provided in being a part of the MLM industry prove to be of significance in improving the standard of living.
The optimistic estimates of the robust future of MLM industry only make it easier to be the most promising 21 st century businesses.