As the Indian government drafts a new policy to govern e-commerce, they may want to take a look at how it impacts direct sellers too. Amway India, a leading direct selling firm, faces the challenge of unauthorised selling by some of its distributors through e-commerce platforms, upsetting others.
Like any other selling format, direct selling too has its set of challenges. Around a dozen Amway distributors in New Delhi protested for a week in front of Amway India’s head office in Jasola (south Delhi). The distributors were protesting against some of their fellow distributors who allegedly sell their unsold stocks through e-commerce websites, which is in clear violation of their contract with Amway. “Sale of these products on online platforms not only divert sales from honest distributors like us but also takes away the essence of direct selling,” one of the protestors tells the Media India Group.
“The products are offered at discounted rates online and this has been hitting our incomes. We have been complaining about this breach of direct selling guidelines to Amway for around five years now, but the company has taken no action so far. Since they have turned a blind eye towards our problems, we had no choice but to go on a strike,” he adds.
However, the company has been taking strict actions against this unauthorised selling. The distributors who are selling honestly want Amway to terminate the selling authorisation for errant distributors. But since the company has lakhs of distributors working for it, it will take some time.
Under Amway’s direct selling model, sales are not made through retail outlets. Instead, companies hire distributors who sell products to consumers. These distributors are called ‘Amway business owners’ and are the only authorised sellers for Amway products.
However, availability of same products at a discounted rate on e-commerce sites has been disruptive for the firm’s distributors.
“They (Amway) have asked us to wait for a month to figure out how to tackle the situation. So we are calling off the strike for a month now,” the distributors say.
In 2014, direct selling firms in India like Amway, Tupperware and Oriflame issued notices to e-commerce sites including Snapdeal, Flipkart and eBay, asking them to stop selling their products. They also wrote to the government through the Indian Direct Sellers Association (IDSA) to issue clear guidelines on this matter to protect the direct selling industry. “But we still see no development. We hope some action will be taken soon,” the protestors say.
Amway India that is a wholly-owned subsidiary of Michigan, US-based Amway, one of the world’s largest direct selling business, has also adopted a digital strategy, with its own online selling website that is currently contributing almost 35 pc to its revenues. The brand has also changed its marketing strategy with a 100 pc digital-first approach this year with its two latest campaigns — #AmWayofLife and #Don’tLimitMyAttitude.
As Amway enters into its 20th year in India, it is hoping that the country will be among its top three markets by 2025. In 2017, Amway India’s total sales were at INR 17.85 billion and it is targeting to cross INR 20 billion mark this year.