In this article, we will tell you about What is a direct selling company? Direct selling companies sell directly to consumers, instead of selling them through their products and services stores. These Independent Sells Sellers on Person-to-Person Basis through Sales Representatives. Amway, Oriflame, Avon, and Modicare are well known direct selling companies of India.
How Direct Selling Company Operates?
Direct Selling Company creates a network of Independent Sales Representatives, which sell products by using their personal network or contact. These are not employees of the company. These people are considered self-employed and they get a commission. Nowadays Direct Sellers also use the Internet and social networking sites.
How do Sales Representatives earn?
There are two types of direct selling companies – Single Level Marketing (SLM) and Multilevel Marketing (MLMA). SLM companies give sales representatives a commission of income on their personal sales activity. Sales Representatives in MLM can connect other people to the Sales team and create their Distribution Network. They get a commission or bonus on the sales of their recruits. This is the most popular model of Direct Selling in India.
What are the regulations to regulate the industry?
There is no clear policy framework or regulation for direct selling in India. Some working aspects of Direct Selling are covered under the existing rules. It does not come with clarity and there is a problem with definition.
Why is the direct selling industry controversial?
Industry entangled in controversy by not following rules made by many multi-level companies, Direct Selling Association of the US and Prices Chips and Money Circulation Banning Act, 1978. Rules say that no member of the chain can earn by simply recruiting or referencing new salespersons. If the members earn only through recruitment, then Chen Ponji becomes a scheme in which the income of the people increases when new people join it (these constitute the base of the pyramid). According to the rules, the recruiter should be in income only when he does some sales. New economic activity starts from sale and the commission of the seller can be divided into other people in the chain. Multi-level marketing companies, which take the cost of the start-up marketing kits sold to new recruits as recurrent sales, they earn a new seller recruitment in a way.
Why does direct selling firms say that the prize chits and money circulation banning act, 1978 is not effective?
He says that direct selling system pricing chits are different from all schemes. He does not run any such scheme, which would make people dream of making a wealthy distributor overnight. Distribution of commission payments or sales incentives directly to end users is connected to products based on cell-based performance. They just can not earn by creating new distributors.