New Delhi: India is fast emerging as a key destination for international direct selling companies. Lured by consistent annual growth in excess of 30% for the last four years, at least five international companies selling cosmetics, tableware, home furnishings and health products plan to enter India’s Rs3,300 crore direct selling industry. A senior executive of the Indian Direct Selling Association (Idsa), who did not want to be identified, said Jafra Cosmetics International, Nu Skin Enterprises, Srithai Superware Public Co. Ltd, Sportron International Inc. and Golden Warp Pty Ltd have trained their sights on India and have started the process to enter the market. The method involves marketing of consumer products or services directly to consumers, generally in their homes, at the workplace or anywhere away from permanent retail locations, through explanation or demonstration.
Headquartered at California, Jafra, which sells skincare and beauty products, is a division of the Germany-based Vorwerk group. The company is planning its entry through a joint venture with India’s Ruchi Soya Industries Ltd.
“Yes, we are preparing our introduction into India next year,” said a Jafra spokesperson in an email. While, NSE-listed Nu Skin Enterprises, which sells and markets personal care products is currently talking to consultants here, Thailand-based Srithai Superware Public Co., which makes Melamine tableware, recently opened its first trading office in Delhi. Sportron International, maker of health and wellness products, and Australian Golden Warp, operating in the home furnishing and textile space, are also likely to start operations soon. Mint did not receive any response to queries emailed to these companies. “Direct selling companies from the US, Europe and South-East Asia are eyeing Indian potential. Newer products and services are to come to India, as the market and consumer mind is more open,” Fredrik Widell, chairman, Idsa said in a presentation.
The direct selling industry in India has seen a healthy double-digit growth in the last few years. According to Idsa, which has 15 members currently, revenue is likely to rise to Rs5,000 crore by 2012. Every year Idsa receives numerous queries from companies across the globe on how to do business in India. Compared with last year, the number of such queries received by Idsa in 2008-09 grew 50%. “In 2007-08, we got about 200 queries on the direct selling market in India related to trends and legalities. But in 2008-09, the number of queries went up to 300,” said Chavi Hemanth, secretary general, Idsa.
While new firms are mulling their India entry, the companies already operating in the country are expanding their operations by ramping up manufacturing, introducing new products or increasing their advertising and marketing spends. For instance, Amway, the largest direct selling company in the country, with a turnover of Rs1,128 crore in 2008, is tripling production capacity at its vendor’s plant in Himachal Pradesh. According to the spokesperson, the company is increasing its advertising spends and relaunching the Attitude brand of cosmetics in December.
Tupperware India Pvt. Ltd, which sells food storage, preparation and serving dishes, is expanding its distribution by appointing more consultants in the 50 cities and towns it operates in. “The company is also focusing on developing categories especially for India to suit consumers’ requirement here. Plus, our products are being showcased at retail points such as Big Bazaar for consumers to touch and feel,” said Asha Gupta, managing director, Tupperware India. Even Modicare Ltd, which currently offers products across categories such as personal care, cosmetics and health and wellness is increasing its product portfolio by adding 30 new products besides getting into new categories. In order to ensure transparency in the industry, Idsa is in dialogue with the government to devise guidelines which will serve as entry barriers for non-serious and fraudulent players.