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Beauty and cosmetics rule the direct selling industry due to the sheer size of the demand. Apart from providing a rich consumer base, India is also rich in human capital and natural resources. This is attracting many foreign companies to set up manufactur
A large number of direct selling companies have ventured into Indian market with wide array of products and services. The concept of direct selling has become very popular in India due to innumerable benefits like high profits, low investment and home comfort. However, one fact that stands out in many of these companies is that they include a broad range of cosmetics and beauty products or are exclusively catering to beauty business. The rapidly growing beauty and cosmetic market in India is paving way for more and more companies to enter the Indian market in this segment. Apart from providing a rich consumer base, India is also rich in human capital and natural resources. This is attracting many foreign companies to set up manufacturing facilities in India.
Cosmetic rules the direct selling industry
There are a number of national and international direct selling companies dealing in skin care and cosmetic products. There are a few companies which exclusively market skin care products only while many others have a wide range of products, including cosmetics and skin care. The companies that are exclusively into cosmetic and skin care are Mary Kay Cosmetics Pvt. Ltd, Avon Beauty Products India Pvt. Ltd, Oriflame India Pvt. Ltd, Jafra Ruchi Cosmetics India Pvt. Ltd, etc. Companies having a wide range of products in their portfolio are Amway India Enterprises and Modicare Ltd. Marcus Sandstrom, Managing Director, Oriflame India, says, “In Oriflame, we offer a unique combination of natural Swedish cosmetics and an income opportunity for enterprising women and men. With this combination, Oriflame has been helping consultants live their dreams. They earn name and fame, gain self-confidence, get a chance to spend quality time with their family and fulfill all their dreams.”
Hina Nagarajan, Country Manager, Mary Kay Cosmetics Pvt. Ltd, India, says, “With increasing globalisation, young Indian women are realising the importance of being financially independent and looking good. All this has translated into a demand for better career opportunities and high-quality and high-end skin care.”
Looking at the large number of companies into cosmetic selling it can be surely said that majority of direct sellers are in this segment only. Let us now have a look at the various reasons for this.
Wide range of beauty products in the portfolio makes for a perfect success recipe for any direct selling company. This is evident by seeing the success graph of many cosmetic companies in direct selling. Sandstorm informs, “Oriflame offers a complete range of high quality cosmetics in five categories- colour cosmetic, skincare, personal and hair care, fragrances and accessories. In terms of the market share, we are way ahead of our competition. We have been growing at an average rate of 40 per cent in the last five years.”
The prominent reason for this is the presence of women in direct selling opportunities. According to the Ernst & Young (E&Y) report for Indian Direct Selling Association (IDSA), almost 70 per cent of distributors in direct selling consists of women. Regarding the preference for cosmetic selling, Nagarajan says, “Most direct selling companies offer opportunities for women. At Mary Kay India, we have a women-only sales force. Cosmetics is a natural product fit for an opportunity addressing women.”
Sharing her views Manisha Amol, Vice President-Marketing, Modicare Ltd says, “Direct selling is home based business and women participate in this business more than men worldwide. Beauty and Skin care products come naturally to women and they are able to sell them comfortably.”
Another factor that works for direct selling is the word of mouth marketing. Direct selling companies mostly depend on word of mouth advertising. Cosmetics and skin care products are brought by customers after they have been used and recommended by known people. Amol says, “These products are demonstrable and it is easy for a customer to decide on the touch and feel of these cosmetics. This industry has a definite advantage over the retail segment. There are a number of players in the market and with a huge basket of products, a customer is not able to decide what products will suit his/her skin type. In a direct selling environment the customers are educated on the skin types, products are demonstrated, benefits are explained in detail and thereby decision becomes easier and also beneficial. Hence there is a surge in direct selling companies to introduce these product categories in their product portfolio.”
Another factor that adds to the business is the usage of cosmetics mostly by the fairer sex. As mentioned earlier, presence of more than 70 per cent women in the direct selling industry gives a boost to brands to sell cosmetics as well as skin and beauty products. William S. Pinckney, MD & CEO, Amway India Enterprises Pvt. Ltd, says, “Since direct selling is a part-time business, it is suitable for women, who can utilise their spare time to sell products to her friends and relatives. Moreover, women have a better say when it comes to influencing buying decisions at home, especially on health products, cosmetics, etc.”
According to the Ernst & Young and ICRIER Report, the direct selling industry is expected to reach an estimated market size of Rs 7,120 crore by 2012-13. In the last two decades, the direct selling sector in India has witnessed a CAGR growth of about 20 per cent. This shows that the future would be as bright as the present. Nagarajan states, “In India, what is driving change is not the increasing number of women who are working but the increasing number of women who are acquiring a working woman mindset. The forces of change are better education, television role models, etc. This phenomenon has only just begun and is likely to increase as we move in this new decade.” Sandstorm shares, “In 3-5 years horizon, Oriflame India will be the most important market for Oriflame group, both from a sales and profit perspective.” Amol informs, “Beauty and cosmetic business is growing at a pace of 20 per cent and will continue to do so in the coming years. The future is very bright and there is ample scope for all the players to survive and do a good business in this segment.”
According to Pinckney, “Direct Selling in India has reached just the tip of the iceberg. With proper guidelines from the government, I foresee the industry in India to cross the Rs 15,000-crore mark in another few years.”
As far as word of caution is concerned, it can be said that the sales force cannot face any problem till the products being sold are up-to-the mark and authentic. Another challenge as shared by Sandstorm, “ Like any other profession, the only challenge I see is balancing between home and work life.”
Bouquet of Brands
Mary Kay Cosmetics Pvt Ltd: Originally from Texas (America) Mary Kay entered India in 2007 with the mission of 'Enriching Women's life'. Mary Kay is a perfect example of home-based direct selling business, because it presents a highly rewarding opportunity while being flexible. Mary Kay products are sold in more than 35 markets around the world.
Avon Beauty Products India Pvt Ltd: Another direct beauty seller in the world, Avon was launched in India in September 1996. The company has more than 60 lakh representatives in over a 100 countries. The secret of its success is that Avon has understood that successful selling is about people connecting with people.
Oriflame India Pvt Ltd: Oriflame with its wide portfolio of Swedish beauty products entered India as a direct selling cosmetic company a decade back. It is marketed through a sales force of 3.6 million independent consultants around the world.
Jafra Ruchi Cosmetics India Pvt Ltd: is another direct selling beauty company in India which has made its mark in direct selling arena.
Amway India Enterprises: Amway, a direct selling brand came into existence in Michigan (USA) in 1959 but entered India in 1998. The brand has wide range of products in its portfolio but makes lot of profits from its cosmetics and skincare products.
Modicare Ltd: The company started in 1996 with its broad range of products including skin care and cosmetic items.