The growing popularity of online marketplaces is not only hampering traditional retail sales but also the direct-selling industry. Direct-selling companies that include Tupperware, Amway, Eureka Forbes, Oriflame, and HUL’s Aviance & Ayush believe that ecommerce is disrupting their business model.
Distributors selling through online marketplaces
A conventional direct-selling business model meant distributors/agents selling products directly to customers and also converting these customers into selling agents. This way a chain or network of distribution was created.
Although, it has been noticed that these days the distributors are selling through ecommerce portals like Snapdeal, Flipkart and Amazon. Needless to say the direct-sales business model is getting disturbed.
Some refuse to switch to online business model
Amway and Tupperware are two such companies who have refused to embrace the ecommerce trend and let go of the traditional direct selling method.
Marketing Director at Tupperware, Chandan Dang feels that online sellers are diluting the hard work put up by its distributors and sales force.
He said, “We have written to online retailers explaining the above. Unfortunately, many continue their activities. However, in some cases where they have committed a brand or logo infringement, we have been able to get them to withdraw.”
On the other hand, an Amway spokesperson wants to warn buyers,
“People purchasing Amway products from these channels run the risk of receiving products that could be, among other things, out of date, spoiled, altered or even an imitation.”
While some have wisely made the online transition
HUL and Eureka Forbes are the ones who have accepted that online selling is the way to go if they wish to stay current.
Marzin Shroff, CEO of Eureka Forbes puts it astutely, “You cannot stop technology and with consumers going online to buy products, we have launched models specifically for such sites to avoid price wars. At the end of the day, it is a free marketplace and we have to go where the consumers are going.”
HUL that changed its direct selling operations of beauty products to online ordering model early this year also believes,
“In view of the options available in the current market and consumer context, we have strategically decided to leverage the strong equity of the network brands to make them available to a wider set of consumers through e-commerce portals.”
Pleasant or not, convenient or not, the only thing constant in life is change. Ecommerce is the ‘present’ and if companies want to be successful then it is sensible to adopt the changes and infuse it in their business model. Even big retail brands are switching to omni-channel strategy. It’s time direct-selling companies too officially enter the online space.