P&G to fight it out with HLL on direct selling turf

P&G to fight it out with HLL on direct selling turf

Author | Source: The Economic Times | Tuesday, Jan 02,2007 8:46 AM

P&G to fight it out with HLL on direct selling turf

P&G India could well be competing with rival Hindustan Lever on yet another platform. The company is exploring the possibility of entering the Rs 3,000-crore direct selling industry. Sources told ET that P&G has already made queries about prospects of network and multi-level marketing with the Indian Direct Selling Association (IDSA).

A P&G spokesperson said: “P&G continues to explore several opportunities with several partners across industries. As of now, there are no formal plans with the IDSA.”

Rival HLL, the country's biggest FMCG company, has met with marginal success in the direct selling business through its direct selling arm Hindustan Lever Network. But unlike HLL's parent Unilever which also practises direct selling in countries like South Africa and Thailand under the Unilever Network banner, P&G has by and large stuck to the traditional retail model globally.

P&G India currently follows a distributor-owned sales representative model. Other FMCG players who have tapped different formats of the direct sales model are Dabur and Emami. While Dabur has been supplying herbal supplements to consumers through a multi-level marketing agency, Emami has adopted a door-to-door model for some of its ayurvedic products.

However, traditional FMCG companies haven't found much success through the direct sales channel, with combined sales accounting for less than 10% of the Rs 3,000-crore industry. “Straddling both the retail and direct channels is tough.

Challenges include balancing recruitments and target sales, high drop-out rates and sustaining consultant bases. Besides, gestation periods are longer and consumer demands are very region-specific,” said an analyst.

HLL Network, for example, got its act together with first-time profits four years after it entered the direct route. It had to relaunch its network marketing model as HLL Network, when its original direct selling channel, introduced in 1999 as Aviance, failed to take off.

Globally, personal care major The Body Shop is among the few companies that have succeeded in straddling both, traditional retail store operations and the home shopping model.

Meanwhile, leading IDSA members such as Amway, Tupperware, Oriflame and Avon, have been pitching for legislation for the industry and protection against fly-by-night pyramid operators to the commerce and consumer affairs ministries. The industry has been growing at a steady 10-15%.

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