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The consumer as brand ambassador

In direct selling, the distributor has a job that goes beyond plain selling

Strategist Team 

It is well documented that many around the globe are enjoying a lifestyle envied by others, thanks to the rewards earned by becoming a direct seller. If all that is true, the question that needs to be asked is: why does the industry attract so much negative media attention leading in many cases to criminal prosecution?

Our history books are full of instances of scammers, and con-men, those people who try to take advantage of the weak and the uneducated for personal gain. And now with the advent of the internet, people have access to an even bigger audience whereby they can promote their "elixir of life" or amazing "money making opportunity" that will "change life forever". The point here is, we all wish to change our lives, we all want a bigger and better lifestyle, and there is nothing wrong with that. But when it is offered with the message conveying that you don't have to do anything; there is no selling required; just go out and introduce your friends and make money, things begin to go wrong. It is this attitude by a small minority that is causing serious damage to this sector, generating confusion within government, police departments and the public at large.

The business model of direct selling is a mobile enterprise that involves one-on-one contacts between the seller and the buyer, enabling the transaction of products or services without the role of a middleman. In this model, authorised individuals buy products or services from a company at a discounted price. These individuals, the direct sellers or distributors, then sell the items to their peers, relatives etc at full retail price, pocketing the difference. The direct seller's remuneration depends on the turnover on the sales of the products or services for the week or the month.

Being a direct seller is like having your own company but without the hassles of high investments, paperwork, and recurring costs of salaries, office rentals and logistical burdens. The logic is simple: the better the turnover, the more the incentives and vice versa. This is quite unlike traditional retail models where the costs - initial and recurring - are fixed. The direct seller enjoys an edge over a traditional shopkeeper, as he is not just the seller but also the consumer - and therefore a brand ambassador in true sense - of the product in most cases.

The one-on-one interaction between the direct seller and the potential consumer enables them to communicate about the product or service with the buyers through word of mouth, which builds trust - something that may not happen in traditional retail. Despite the growing popularity of online shopping, in India, a big chunk of consumers still prefer directly sold products, as they have more faith when the seller directly approaches them. The direct sellers who introduce people to the products and the business opportunity are seen to be the leaders in their network. They have an important role as motivators of their team members. They must keep their team focused by providing them regular updates on new product offers, training, workshops and new launches. Leaders must also clear doubts of their team members regarding products and compensation plan, helping them conduct meetings and training, logistics, and handle business-related challenges. Therefore, it is important for a company to have a compensation plan and training programme that incentivises people and develops them into leaders.

For the highly motivated, organised, determined individual the rewards are extremely high - life changing. But that is not the case for everyone. We are not all natural leaders, many of us are just followers. But for those with ambition the world of direct selling is invigorating, exciting, and potentially life changing.

The demand for entrepreneurial opportunity is alive and must be encouraged but it now needs monitoring, requires educational programmes. Companies must come forward with training modules to demonstrate that they recognise the world is changing and are prepared to assist the government and are ready to take responsibility for the sellers' actions.

Daniel R Pranjal, chief strategist, Strategy India

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First Published: Mon, March 03 2014. 00:13 IST