T he Indian Direct Selling Association (IDSA) has written to leading e-commerce firms, including Amazon, Flipkart and Paytm, seeking action to stop unauthorised sale of products from member companies such as Amway, Oriflame, Avon Beauty Products, Herbalife International, Modicare and Tupperware, on their platforms.
“Such products available online are usually not authorised sales. Most of our contracts with the direct sellers prohibit them to sell the product online. As a concept, they are supposed to sell directly to the consumer,” Jitendra Jagota, Chairman of IDSA told The Hindu .
He, however, added that since e-commerce is booming, direct selling companies cannot turn a blind eye to the online retail channel. “In some cases, the direct seller’s contract with a company allows sales of these products online. Some companies are looking to have a digital strategy.”
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‘Notices sent’
“From IDSA, we have sent notices to these sites that they should not sell these products. Individual companies are also approaching these marketplaces. If you look at the direct selling guidelines, they prohibit any person from selling such products on e-commerce platforms without prior consent of the company,” Mr. Jagota said.
According to a recent IDSA and PHD Chamber survey, active direct sellers in India stood at over 40.31 lakh in 2015-16. The gross sales by the Indian direct selling industry stood at ₹83,085 million in 2015-16 and are pegged to grow to ₹2,58,261 million by 2024-25.
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The association has reached out to Amazon, Flipkart, Snapdeal, ShopClues and Paytm. While the first letter was sent out in November last year, a subsequent reminder was sent to the online marketplaces in January. However, till now, ShopClues is the only firm to have responded positively. “They had told us that they will look into the matter and try to close the gaps. They had said they will ask sellers to furnish an authorisation letter before sale of such products,” Mr. Jagota said.
As per the relevant clause of the guideline, any person who sells or offers for sale, including on an e-commerce platform/marketplace, any product or service of a direct selling entity, must have prior written consent from the direct selling entity to undertake such a sale.
“Since the aforesaid provision requires an express written consent from a Direct Selling Entity for sale of its products on an e-commerce platform/marketplace, it is necessary that the e-commerce websites/marketplaces ensure that such consent is made available to them by persons intending to make such sales, before they permit/facilitate any such sales on the website/ marketplace,” IDSA said in the letter.
Mr. Jagota, however, added that though these guidelines did not prohibit e-commerce firms directly, the direct selling industry wanted them to put in place measures to check the authorisation letter from the sellers.
Asked about direct sellers losing out on the online commerce boom, Mr. Jagota said, “If we can control the pricing, online sales are manageable. However, the discounts you get online, many times because of sheer volume, cannot be matched in offline. Direct sellers work on a very thin margin. In online, price-cutting goes beyond control. If we have a regulated system, where direct sellers sell as per conditions of a contract, we have no problem. We don’t want to replicate the fight between offline and online retailers in direct selling.”