Direct Seller – Eye Opener
Direct Selling companies provide an excellent entrepreneurial opportunity for people. The direct selling companies market and/or manufacture consumable products and consumer durables which are sold in the market through individuals or entities known as direct sellers.
Who are Direct Sellers?
Strategy India, a direct selling consultant company, defines Direct Sellers as:
"Direct Seller" is an individual or an entity / organization (formed specially to engage in the act of direct selling) above the age of 18 years on the date of enrolment or a legal entity entitled to do business with eligibility to enter into a business contract who/which enroll/s with the direct selling company through a legally enforceable written contract to undertake direct selling business on principal to principal basis including but not limited to purchasing the product/s at a discount for self-consumption and/or earn money by retailing product/s and/or by helping others earn money by doing the same. (Where the organization may be a Proprietorship / Partnership / LLP / OPC / Private limited).
A direct seller may be a consumer/user or a customer/purchaser/buyer or a reseller or all of the three.
Direct Sellers are also known as Distributors, Associates, Independent Business Owners, Consultants, Networkers, Members, Advisors, Independent Business Associates, Affiliates, and Independent Representatives among others.
How Are Direct Sellers Related To A Company?
Direct sellers are independent business owners. They are not on the payroll of the organizations. Neither do they have a stake in the company nor are they a part of its executive team. Direct Sellers earn commission only on the sale of products.
Direct Sellers are the salespeople for the direct selling companies. They promote the company, the concept of entrepreneurship and its products. Direct sellers are different from salespeople employed by traditional businesses as they may also be the consumers of the products.
Requirements for a Direct Seller
Unlike traditional business entities that lay down some eligibility criteria for hiring people, direct selling companies do not demand any qualification.
- A direct seller does not need any educational qualification. Anyone can become a direct seller and pursue their dreams.
- All direct sellers must be above the age of 18 years as mandated by law.
- Success in direct selling like all other career options requires hard work and learning. Direct sellers must be willing to put in the effort for succeeding.
- There is no bias on the basis of gender, caste, or region and there are no reservation quotas either. Individuals irrespective of their background can enroll as a direct seller.
- There are no time constraints for working as a direct seller. While regular jobs require people to dedicate a minimum amount of time at work, generally 9 am to 5 pm, direct sellers are free to work on their own time.
What are the roles of direct sellers?
Direct sellers have multiple roles to play when engaged with a direct selling organization.
The primary role of direct sellers is to promote and sell the products to their friends and relatives. The direct sellers may use or consume the products before promoting them as it will build their confidence in the product.
The secondary role of direct sellers is to expand their marketing organization once they are confident about the products. They can assist and lead the direct sellers enrolled in their marketing organization and guide them to success.
Roles Regarding Products
Direct sellers are the users as well as the sellers of products. They can consume products manufactured or marketed by the direct selling company. Besides using products for themselves, direct sellers may sell or promote products. Direct sellers are not obligated to sell products. They can use the products personally. However, they are only paid incentives on the volume of products they refer, resell or retail.
Roles In Relation to People and Other Direct Sellers
Direct sellers can enroll more individuals in their marketing organizations. They might be paid incentives in the form of points (not in rupees) for the products they have sold personally as well as those that have been sold by other direct sellers in their marketing organization.
Direct sellers who are serious about building their marketing organization can guide the individuals they have enrolled personally in the business. They can use their experience and knowledge to assist newcomers and help them grow their marketing organization and sales volume.
Direct sellers who have been working on their business may find it hard to steer it singlehandedly. They can inculcate leadership skills in direct sellers within their marketing organizations to coordinate different aspects of the business.
Ranks and Titles for Direct Sellers
A direct selling company has a ranking terminology for the direct sellers. The ranking is based on the volume of products sold by direct sellers and their marketing organization. The naming terminology is different from one company to another. The popularly used terms for ranks achieved by a direct seller include pearl, emerald, diamond, and crown ambassador. The criteria for every rank is the total volume of sales made by a direct seller and his or her marketing organization. The sales may be calculated for a specified time or could be in the entire lifetime of direct seller.
The Payout for Direct Sellers
Direct sellers receive percentage commission on all sales that have been made by them or other direct sellers in their marketing organization. The amount of incentive will depend on the rank of the direct seller and the criteria laid down in the compensation plan of the direct selling company. Direct sellers who perform exceptionally well may also receive performance bonuses in the form of monetary remuneration, gifts or travel packages.
How Direct Selling Companies Assist Direct Sellers?
The success of a direct selling company is directly proportional to the sales volumes of its direct sellers. Direct selling companies provide assistance and support to their direct sellers for enhancing their business growth. They may hold training programs and business development sessions for direct sellers.
- Companies hold business development sessions wherein they educate the direct sellers on how to grow their business and enroll direct sellers in their marketing organization.
- Direct selling companies provide live product training and digital media like CDs and DVDs to impart knowledge about the products.
- Direct sellers may receive marketing and promotional materials from the company which will assist them in improving their sales volume and enrolling more people.
- Code of conduct training is also organized which lays down ethical boundaries for the direct sellers. Direct sellers must adhere to the code of conduct and strictly follow the listed practices.
Direct selling companies provide infrastructure for supply chain and manage products delivery on behalf of direct sellers. They extend after sales support to the customers of the products.
What licenses or permissions or registrations may be required by direct sellers?
Direct sellers may require one or more of the following licenses and permissions after enrolling in a direct selling business.
FSSAI License: All direct sellers who are engaged in the selling of edible goods may be required to get an FSSAI license as mandated by law. FSSAI license is necessary for selling products both online and offline. A few direct selling companies may acquire FSSAI licenses on behalf of their direct sellers to make the process simpler.
GST Registration: Individuals and business owners including direct sellers who have an annual turnover greater than ₹20,00,000 are required by law to register for GST and pay applicable taxes. Direct sellers who are operating as a legal entity or want to claim input credit under GST must have a GST registration.
IT (PAN) Registration: All direct sellers are required to register for a PAN number before they can receive remunerations for their sales. They have to present a PAN number for becoming eligible for receiving payouts and filing their income tax returns.
What Should Direct Sellers Avoid?
Direct sellers are the brand ambassadors of the companies they are enrolled with. They are responsible for the reputation of the company and its brand image. There are a few things that direct sellers must keep in mind while promoting their business.
- Direct sellers must avoid misrepresentation of the business model of the company, especially to prospects. They must state the facts as they are and should not lure buyers with promises of quick returns in a short time.
- Direct sellers must refrain from exaggerating and misrepresenting the benefits of the products manufactured by their company.
- Direct sellers must avoid financial transactions with their peers to prevent future differences.
- Direct sellers should not create their own marketing material without the approval of the direct selling company.
What Should Direct Sellers Be Aware Of?
There are a few things direct sellers must be vigilant about while promoting their company and enrolling new distributors.
- There are different guidelines/regulations formulated by the government that direct selling companies must adhere to. Direct sellers must ensure that the company they are enrolled with is complying with the direct selling guidelines.
- Direct sellers must establish the fact that the products that are being manufactured by the company are of acceptable quality and carry a justifiable price tag.
- A direct seller should determine the feasibility of the compensation plan of their direct selling company. If they find that the compensation plan is over-estimated, they can switch to a company with a feasible plan.
- The direct sellers must be aware of the roadmap of their direct selling company and its future prospects.
Direct sellers must be knowledgeable about the code of conduct of their company and refrain from malpractices.
