Direct selling Cos bank on e-commerce to generate biz

Taking a cue from the boom in the e-commerce industry in India, direct selling companies have also started leveraging the power of the online platform to sell their products to their business owners.

And while some like Amway has seen its online sales grow from a meagre 3 per cent in 2007 to 28 per cent of their net turnover at present, others like Oriflame say that online sales comprise 85-90 per cent of their business volumes in the country.

Direct selling companies do not retail their products to the consumer; else they sell through their network of business consultants, who, in turn, sell their products to individual customers. At a time when leading fast moving consumer goods (FMCG), apparel, furniture, personal care and fashion accessories companies are tying up with e-commerce websites to make their products available online, the direct sellers have also taken notice and in the last couple of years have generated significant business volumes through this route. “In 2007-08 we revamped our platform, partnering with Microsoft and ever since we have witnessed a substantial upward movement in sales”, informed A Banerjie, vice president, west region of Amway India. Nearly 28 per cent of its net sales in India come from online sales. Amway recorded a turnover of Rs 2,130 crore during 2011 fiscal (company follows a calendar year fiscal). Banerjie explains that the greatest driver behind the pick-up of online sales is ‘time saved’.

Companies like Avon India, which caters to the beauty and personal care space as well sells fashion accessories, is witnessing a 30 per cent compounded annual growth rate (CAGR) in online sales. “Currently, around 20 per cent of our overall sales comes through the online route”, informs Ujjwal Mukhopadhyay, managing director - Avon India.

Keen not to miss the bus, some direct selling companies have decided to invest in infrastructure. Ajay Khanna, country head, Herbalife India said, “We are investing in creating robust infrastructure, for example, we have created a portal for our distributors wherein they will be able to place an order online. As we grow in the tier II and III cities, this platform will prove even more useful in ensuring consistent supply.”

Amway India too has started an e-learning initiative through its portal, whereby Amway business owners can learn different modules on the four categories homecare, personal care, health and wellness as well as cosmetics through the website, that helps them take an informed decision while placing their orders.

For Oriflame, whose online sales has doubled in the last two to three years and now comprises around 85-90 per cent of its sales, internet sales is definitely the way forward. Sharmili Rajput, marketing director, Oriflame India explains, “One of the reasons why online sales have picked up so much in recent years is efficient use of time. However, through the online route our consultants can review our entire range of products. We take out a monthly catalogue which features the latest offers, but all our 650 products do not feature on the catalogue.”

While direct sellers cannot tie-up with e-commerce websites to sell their products as they do not retail directly to customers instead sell through their consultants, these companies have, nonetheless not remained behind in leveraging the power of the internet medium to boost sales, said Chavi Hemanth, secretary general of the Indian Direct Sellers Association (IDSA). “Most of our members are generating significant business through the online route”, she adds.