Network Marketing – Definition, Benefits and Legitimacy

Network Marketing – Definition, Benefits and Legitimacy

October 11, 2021 04:21 Created by Admin, Last modified on November 02, 2021 05:17

Direct selling is a noble concept of selling products and services directly by the entity to consumers through personal referrals, product demonstrations and training programmes/presentations. Direct selling model excludes long distribution channels and intermediaries such as wholesalers, retailers and forwarding agents.In traditional marketing, the companies typically sell their product through a defined channel of super stockiest, wholesalers, retailers and forwarding agent. As a result, the cost/margin of these channels gets included in the MRP of the products along with the cost levied for advertising the products. Whereas in network marketing, the products are marketed through independent distributors to customer.

The margin of wholesalers, retails and forwarding agents etc. is saved in this channel and distributed among the independent distributors and customers in the form of incentives (commission) for selling the products further to the consumers. A reputed independent association named Indian Direct Selling Association (IDSA) affiliated to World Federation of Direct Selling Association (WFDSA) regulates the good and ethical practices of network marketing companies in India.

IDSA works as the apex body/ representative of industry with government and regulators. This enables industry policies and code of ethics such as fairness, explanation & demonstration, prohibited practices, respect of privacy and remuneration claims etc. which are mandatory to be followed by all the direct selling companies. 

These guidelines cover all of Indian Direct Selling Association (IDSA) members, their staff, contractors, distributors, agents and independent sales consultant /Direct Sellers, including full and associate members while engaged Direct Selling, for the sale of either products or services. Any company not following these guidelines might be falling in the ambit of money circulation because of unviable company plan and/or compensation strategy.

Now, many people have a bunch of questions in their mind while associating with Network Marketing companies because there are lot of non-legitimate companies in the market. People want to associate only with genuine, legal and top direct selling companies to prevent themselves from any fraud. So, one should check whether the prospect company is the member of IDSA or not. In addition, they can also check the legitimacy/registration of the company on MCA (Ministry of Corporate Affairs) website.

 Now, let’s talk about the growth of the industry. It has been observed recently that network marketing companies have become extremely popular marketing model across the globe because it involves minimum cost and low risk. In addition, distributors in network marketing companies in India and abroad does not require any formal educational qualification, but demands humongous amount of trainings and awareness programs to sell products successfully in the market. According to ASSOCHAM, the direct selling industry in India had embarked its success at ₹12,620 Crores in 2016 which increased with double the numbers since 2011. ASSOCHAM has also predicted an expectation of touching ₹15930 Crores by 2021.

Anyone can start this business part time and increase time involvement gradually with their network growth. In a sense, direct sellers are their own bosses. Moreover, products of good direct selling companies are high-quality products accompanied with good customer services. In short, one can evidently see the real power of networking.

Another reason, network marketing business is considered effective because it also gives you benefit of new emerging technological advances such as use of digital media is increasing day by day. With its help, a person can explore business opportunities nation-wide and not limited to a local area as when you are doing promotions off-line, you're limited only to the local people within your reach. Generally speaking, there are various business plans rotating in the market today such as binary plan, level plan, board plan etc. but with experience and time the industry has learned that the best plan is re-purchase plan because this plan gives an opportunity to earn from your network regularly.

This results in a steady stream of revenue from recurring customers who become loyal to the business' brand. To conclude, the future market for direct sellers is predicted to be rising by different market leaders. This business model not only gives financial benefit or product quality to its users but it also improves the standard of life-style for every individual as they are considered to be an entrepreneur and they earn income with the convenience of their own timings and product confidence. Not only this, direct selling has played huge role in women empowerment as well.


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