It is claimed that network marketing, aka multi-level marketing, has given us more millionaires than any other industry!
We all would have come across the famous company Oriflame International. This was the first major international company to initiate network marketing in India in 1995. Then Avon followed suit in 1996 and slowly but steadily, many other companies started to spread their network in India, including Tupperware in 1996.
When the concept of network marketing entered Indian markets, it wasn’t that popular. These companies wanted to cultivate an image of exclusivity, directly selling to the end-user instead of setting up a retail business. This did not sit well with the Indian job seeker market since job security was preferred over network marketing in India.
Such companies lacked a competent workforce because this was not popular among the Indian social circles. Their unique selling point was to motivate the participants to promote their products, which did not work well. The upside of this? It was very convenient for many, specifically the unemployed, retired, or women since they could carry around this business as per their convenient time and place. There are various network marketing companies in India.
In India, network marketing is widespread in all sectors, including beauty and skincare, health and nutrition, crockery, cutlery, and kitchen appliances. However, its growth is stagnant and only had US dollar 1 billion in sales in 2015, despite India being the world’s third-largest economy with a growing population of 1.3 billion.
Due to the lack of clarity in the law and numerous Ponzi schemes floating around, the Indian market did not warm up to the concept of network marketing in India. However, the process of legalizing to create a regulatory framework for network marketing finally got its due attention in India and the laws around these have started getting stringent, making them safer and more popular.
There are still many such schemes in different states in India which violate Prize Chits and Money Circulation Scheme (Banning) Act, 1978. In 2016, the Union Ministry of Consumer Affairs issued guidelines on code of conduct, after the big MLM companies exerted pressure on them. With the regulations and laws in place, network marketing in India has started to soar once again in the market.
What is Network Marketing in India?
The concept of network marketing can be traced back to the 1920s and 1930s to the California Vitamin Company, today we know this company by the name of Nutrilite; and the California Perfume Company, today we know them as Avon Products. However, this origin is often disputed.
Network marketing is nothing but a market strategy to sell any product or service where the company’s revenue is generated from a participant who is selling the company’s product or service, and the participant’s earnings are generated from the commission system of a pyramid-shaped compensation.
This means that the participant can be compensated only under two circumstances. First is when the participant makes a direct sale to an end-user of the product or the service. The second is when the participant recruits other participants in his or her network, who are referred to as their downline distributors.
In a multi-level marketing (MLM) company, the participant earns a particular compensation depending upon the sales they make and the number of people in their downline. MLM benefits each employee in appropriate proportions in the pyramid and the ones who are on the top of the downline, definitely get intense earning opportunities. This business also allows you to earn unlimited income and it all depends on how wisely you invest your time, money, and labor into it.
Types of Network Marketing in India
Single-tier network marketing
Here, the participant comes on board to only sell the products or the services of the company. The products are directly sold to the end-user. The participant gets compensation based on the sales made by him/her. Avon is an example of a single-tier network marketing company.
Two-tier network marketing
Here, the participant is responsible to directly sell the company’s products or services to the end-user, along with requiting new participants as well. The compensation does not depend wholly on the recruitment done by the participant. Both, direct sales and the sales made by the downline distributors contribute to the participant’s compensation. Avon is an example of a single-tier network marketing in India company. Fiverr and Grammarly are two such examples of this type.
Multi-level Network Marketing
Here, the marketing network has two or more tiers. These can be many tiers deep and are heavily incentive-driven for recruiting new participants. Some of the big examples of this marketing are Oriflame, Amway among many others.
Also Read: How to Start a Business in India
Advantages and Disadvantages of Network Marketing in India
Advantages of Network Marketing in India
The initial investment in network marketing in India is quite low, also, this can get you some really good experience in entrepreneurship. Our academic system doesn’t teach us to become entrepreneurs, at the very least a good employee. This gives us an opportunity at gaining some insights and experience in becoming an entrepreneur at quite a low cost.
Additional Income Source:
This can be earned over and above the income received from a regular time job. This gives options to make extra investments or even planning that long-awaited vacation.
Being part of a network marketing in India company gives you an option to choose the time when to, place where to, and people whom to work with. This means that you can make sure that you work with people whom you can get along with or choose a mentor who can teach you the tricks of the trade.
Making New Acquaintances:
If you already have a good network of people or would like to enhance or create a new one, then network marketing in India surely brings you that opportunity.
No Infrastructure Needed:
There is practically no need for any particular infrastructure or advertising required by the participant. There is no marketing overhead. This leads to easy and fast introduction of any new innovative products into the market.
Disadvantages of Network Marketing in India
Like any other businesses, this also does not start giving returns overnight. It will not be like working as an employee. The income completely depends on your marketing, networking skills, and your skills of convincing others to join your team.
Many times there will be instances that your proposal or product will be rejected. The customer will not show any interest in heeding your thoughts, and worst they might ignore you altogether.
More often than not, we hear work from home or age has no criteria as one of the strategies to get new people to join the scheme. But, as we all know, network marketing in India requires a lot of talking and convincing. This might not be everyone’s cup of tea. It might not be possible for everyone to go up to unknown people and make a convincing sales pitch.
Even though marketing and infrastructure are not required, it does need to buy its brand through the customers. This relies more on word of mouth which may not be that effective sometimes.
Many ponzi scams are floating in the market that need to be avoided. It gets very challenging to determine which are genuine and which fraudulent. It is extremely necessary to be vigilant about it and carry out their market research to make sure.
Top 10 Network Marketing Companies in India
Oriflame was founded in 1967 in Sweden by Mr. Jonas af Jochnick and Mr. Robert af Jochnick. This is a multi-level marketing company. They use the concept of direct marketing and are the leading brand in cosmetics. Customers can also buy products directly from their websites. In 2019, 96% of their products’ orders were placed online.
Amway stands for “American Way”. This is a multi-level company and sells products in beauty, health, and home care. It was founded in 1959 by Mr. Richard DeVos and Mr. Jay Van Andel. They came to India in the 1990s and became a very popular name in network marketing in India. In India alone, there are more than 1.5 million Amway Business Owners (ABO).
Tupperware is the second-largest in India as a network marketing company. Their head office in India is in Gurugram and was established in 1948 by Mr. Earl Silas Tupper. They specialize in plastic leakproof containers and have performed remarkably in the market. They are even listed as one of the Fortune 500 companies.
Modicare is the first network marketing company established in India in 1996 by Mr. Samir Modi. It has a wide range of products for health care, personal care, skincare, wellness, and many more. They have over 2.5 lakh members in India as part of their network.
Also Read: Top 15 Manufacturing Companies in India
Vestige started in 2004. They specialize in luxury products, health, and personal care products. They are constantly developing new and improved products. They generate revenue from both direct marketing as well as the performance of your downline distributors.
6. Mi Lifestyle Marketing Global Private Limited
Mi Lifestyle Marketing Global Private Limited is one of the top 10 networking market companies in India, established in the year 2013. They offer a wide range of products in agriculture, personal care, health care, etc. with aloe vera as their base.
Herbalife was established in 1980. They are a network marketing in India corporation that creates and sells health care and dietary enhancements items. The Herbalife products are sold by its associates and not available in any store.
8. Safe Shop
Safe Shop is relatively new in the networking market in India and have a lot of potentials to grow. They have a wide range of products in fashion, personal care, essentials among many others.
9. Forever Living
Forever Living is a US-based network marketing company, founded in 1978. They entered the Indian market in the year 2000 and captured the market with their aloe vera-based products.
Altos started in Ludhiana with seven healthcare products in 2000, now have over 150 products. They have a span of products from skincare to health care, agricultural aid, aroma, natural beauty, personal care, hair care, and many more.
Also Read: Top 20 Manufacturing Business Ideas in India
India is a growing market for network marketing. There are many genuine schemes out there in the market, but also a lot of fraudulent ones too. Whether you choose to join a network marketing company or have one of your own, it sure is a lucrative market out there. One must do their research and study before investing on their own.
Frequently Asked Questions
When did network marketing start in India?
In 1995, when Oriflame came to the Indian market, it introduced network marketing.
Who is the no 1 network marketing company in India?
Amway is the largest network marketing company in India.
Which network marketing company is the fastest growing in India?
Modicare Limited, they are the leading company in the health and personal care in network marketing. This company was established in India.
What are the types of network marketing in India?
There are three types of network marketing: single-tier, two-tier, multi-level. Single-tier involves only selling their products or services. Two-tier involves selling and very little recruiting. Multi-level involves two or more tiers.
How does a participant get paid through network marketing in India?
This may vary from company to company. However, there are two basic premises to get a compensated:
1. Direct selling of the products or the services
2. On the sales of their down line distributors
How is it different from a pyramid scheme?
A pyramid scheme is an illegal business model that recruits and promises compensation based on the future enrollments brought in by the participant. This business does not have a product or a service. This structure is only profitable for those who are higher up on the pyramid and becomes unsustainable as more and more people join in to form more levels. The money only funnels upwards.