Hi Readers,
The arrest of Amway India CEO along with two top executives of the company at Kozhikode, Kerala has brought up the debate of having these direct selling business. Amway India has had a good foot base in India since 1990's. Direct selling business means selling of goods away from a fixed retail location. This is much same as selling products through sale's representative who demonstrate the product to their consumer at their home or office, but they them self do not have a retail outlet.
Amway India works in MLM or Pyramid structure, where as the base grows and performs the higher up get paid. This is not legal as per Indian law and now after the arrest of Amway India CEO William Pinckney, many have condemned the act of Police authority as these direct selling business employ more than 60 lakh employees as its business owner and its turn over is more than 6000 crores and 70% of this is being operated by women.
Other well known company in this model are Oriflame India, Avon India and Tupperware, Modicare etc.
Well, now the business model has changed and the business owners grow their business by adding more people into this business. They conduct workshop and meetings to demonstrate their products and sell to people via representative. Some people in such schemes perform well and grow while some loose their principle amount.
The business model is not very clear and police department has said while investigating, prize scheme, ponzi scheme and direct selling business they do not find any clear demarcation. It is true, understanding MLM and direct selling business model is quiet complex and it is much similar to pyramid and other scheme where people have lost their hard earned money to company which shuts after accumulating huge sum from general mass.
India needs to setup up law that would enable the general public to distinguish between genuine and ponzi fraudulent company that sponsors such business model.The Indian Direct Selling Association (IDSA http://www.idsa.co.in/ ) should enforce strict rules that would identify and distinguish the business model that is appropriate and should take action to make public aware of the business model that is fraudulent. This would ensure Public specially the middle class hard working people are not reaped up off their hard earned money.
The arrest of Amway India CEO along with two top executives of the company at Kozhikode, Kerala has brought up the debate of having these direct selling business. Amway India has had a good foot base in India since 1990's. Direct selling business means selling of goods away from a fixed retail location. This is much same as selling products through sale's representative who demonstrate the product to their consumer at their home or office, but they them self do not have a retail outlet.
Amway India works in MLM or Pyramid structure, where as the base grows and performs the higher up get paid. This is not legal as per Indian law and now after the arrest of Amway India CEO William Pinckney, many have condemned the act of Police authority as these direct selling business employ more than 60 lakh employees as its business owner and its turn over is more than 6000 crores and 70% of this is being operated by women.
Other well known company in this model are Oriflame India, Avon India and Tupperware, Modicare etc.
Well, now the business model has changed and the business owners grow their business by adding more people into this business. They conduct workshop and meetings to demonstrate their products and sell to people via representative. Some people in such schemes perform well and grow while some loose their principle amount.
The business model is not very clear and police department has said while investigating, prize scheme, ponzi scheme and direct selling business they do not find any clear demarcation. It is true, understanding MLM and direct selling business model is quiet complex and it is much similar to pyramid and other scheme where people have lost their hard earned money to company which shuts after accumulating huge sum from general mass.
India needs to setup up law that would enable the general public to distinguish between genuine and ponzi fraudulent company that sponsors such business model.The Indian Direct Selling Association (IDSA http://www.idsa.co.in/ ) should enforce strict rules that would identify and distinguish the business model that is appropriate and should take action to make public aware of the business model that is fraudulent. This would ensure Public specially the middle class hard working people are not reaped up off their hard earned money.
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