More Power to the Entrepreneurs

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More Power to the Entrepreneurs

“We look forward to creating opportunities for people who seek to be entrepreneurs in India and hope to be a big part of growing the business of direct selling in the years to come,” asserts Anshu Budhraja, GM, Amway India. True advocators of ‘everyone can be an entrepreneur’, the world’s biggest direct seller, Amway has given a definitive identity to women in India and it plans to grow that expanse to newer heights, shares Budhraja during this interaction. As they claim, ‘Happiness is best achieved through earned success. Amway rewards what you achieve, and also what you help others achieve,’ the brand totally connects with the new generations’ thoughts and deeds.

Kindly enlighten us on the dynamics of direct sales business.

Essentially, Amway’s business is like a conventional FMCG where we engage in sourcing, manufacturing, distribution and marketing, except that our direct sellers who engage in one-on-one sale of products also provide extensive post-marketing support through personal contact with consumers. For this, the direct sellers rely on the in-depth knowledge about the products gained through intensive training and education provided by the company.

Globally, the direct selling industry is worth more than US$180 billion. According to the Indian Direct Selling Association (IDSA), the direct selling industry size is around Rs8000 crores in India with an impressive direct seller base of more than 5.7 million. There is a huge potential for direct selling in India. This has been validated by various studies including the FICCI-KPMG report which mentioned that with the right regulatory environment, the potential of direct selling in India is Rs72,000 crore by 2025. The direct selling industry in India currently constitutes just 0.4% of the total retail sales. This is much lower compared to other economies like China where it is 1%;and Malaysia where direct selling is 4% of total retail sales.

How are you winning the Indian sub-continent? How is the scenario globally?

We are delighted with the sustained and consistent performance of Amway India. Our sales in India grew compared to 2015 and we achieved our financial targets as well. India is a key market for Amway. It is one of our top ten markets and we believe there is great potential here. We have invested Rs1000 crore in India, including Rs600 crore in a state-of-the-art manufacturing facility in Tamil Nadu. This facility provides a number of jobs and is making high-quality products for the people of India. It also demonstrates our commitment to Make in India, Make for India and is our first facility, which qualifies to be LEED Gold Certified in the world, making it environment friendly and a sustainable plant as well.

We look forward to creating even more opportunities for people who seek to be entrepreneurs in India and hope to be a big part of growing the business of direct selling in the years to come. We have lined up a number of initiatives to spur growth in India and our strategy is focused on delivering value to our consumers through our direct sellers. Consistent innovation will result in high quality products, which address consumer needs. Visibility and easy access are important components of our growth strategy as well. Our plan has four components: a new Preferred Customer program, new express pick-and-pay stores, an expanded product portfolio, and technology and training. We believe this approach will be very helpful to direct sellers as they seek to grow their customer base, showcase the product brands, provide personalized recommendations and further develop their own skills.

Amway has a very different business model. How does supply chain play a crucial role in its operational success? What are the unique aspects that make Amway SCM truly unique?

We sell more than 130 products across categories like nutrition, beauty, home care and personal care in India. We rely on a network of approximately 550,000 active direct sellers to sell these products to the consumers. Recently, we have also launched a preferred customer program wherein customers can buy products directly from our website or from our stores. The program offers the option to choose a direct seller if the customer is already in touch with one, protecting established and valuable relationships. Otherwise, we assign a direct seller so that the customer can be serviced appropriately in the future if they so desire. 

Given the complexity, supply chain plays a critical role in ensuring that all the SKUs are available for our direct sellers as well as customers. Let me explain in detail… Our manufacturing facility in India is located at Nilakottai in the Dindigul district of Tamil Nadu. This is Amway’s third manufacturing plant located outside of USA. The other plants are located in China and Vietnam. We have invested Rs1000 crore in India, including Rs600 crore in a state-of-the-art manufacturing facility in Tamil Nadu. This facility provides direct as well as indirect employment to more than 700 people and is making high-quality products for the people of India. The India facility is touted within Amway world as one of the most advanced with highly sophisticated and latest machinery sourced from around the world. We have acquired 50 acres in Nilakottai, out of which 25 acres has already been developed while balance portion of the land will be developed in the future as per business need.

The manufacturing facility can handle a turnover of Rs6500 crore to meet the needs of Indian consumer. The facility has 9 production lines for nutrition, cosmetics and oral care products including 4 lines for nutrition supplements, 2 lines for Protein supplements, 2 lines for cosmetics and 1 line for the Glister toothpaste. The plant has the annual capacity to manufacture 1.2 billion tablets and soft gels, 7 Million canisters of drink mixes, 19 million cosmetic jars, bottles and tubes and 60 million tooth pastes.

On the supply chain front, we have a nationwide presence with over 130 sales offices; 4 regional warehouses, 3 regional hubs and 34 city warehouses. The distribution and home delivery network set up with the support of independent logistics partners caters to over 8900 zip codes across the country. We have a robust supplier qualification and development program to ensure consistent quality of incoming materials. Besides this, we also have a stringent in-process quality checking mechanism along with complete batch traceability to ensure consistency in quality. We are modernizing our distribution network and are also investing heavily in our support services like warehousing and transportation to ensure a wow delivery experience to our direct sellers as well as customers.

We have also opened Express Pick-and-Pay Stores at premium locations across several cities and are seeing strong results. The locations provide an opportunity for consumer and direct sellers to interact with the product and experience it for themselves prior to purchase. We have opened 32 Pick-and-Pay stores thus far and are targeting to open 50 by the end of next year.

Kindly share with us changing direct selling avenue with the advent of social media. How does Amway's business model fit with e-commerce and omni-channel management?

We are pleased to see the continued and growing relevance of our direct selling model in today’s marketplace as people place real value on personal recommendations, and technology enables our direct sellers to connect more frequently with those people in their networks. Direct selling in the digital age gives customers the best of all worlds – the personal touch of a trusted advisor, top products built on science, and technological support for ordering, education and more.

We are placing a lot of focus on the usage of digital media to reach out to the direct sellers as well as consumers. We have launched a Mobile App to help the on-field direct sellers to retail better. The app with all the product details, videos and tools like product recommenders helps the direct sellers explain features and benefits of the product better to the end consumers.

What’s your sourcing strategy?

Our sourcing strategy leverages on 4 key parameters: speed, agility, flexibility and cost effectiveness. Our structured localization program for India has helped us enhance the localization index from 30% to 70% over past 5 years. 

How do you keep your channel partners motivated to steer ahead the growth momentum? How do you keep them updated?

Constructive engagement with our channel partners has helped us encourage & motivate them to deliver optimum results. We partner with our suppliers in the process of objective setting and expectations of deliveries. Strong emphasis is given on ‘ideation’ through our 30-60-90 day action plan developed in conjunction with our suppliers. ‘Supplier road shows’ are held to discuss ideas. The shortlisted ideas are presented to Amway management. This collaborative approach strengthens our relationship with our suppliers and thus helps us achieve our top-line and bottom line growth ambitions for the organization.

The consumer goods supply chain is sensitive to product quality and sustainability. How does Amway embrace green?

When Amway was founded in 1959, it marketed only one product: L.O.C.® Multipurpose Cleaner. L.O.C. established our environmental commitment because only biodegradable cleaning agents were used in its formula. Its very name – Liquid Organic Cleaner (L.O.C.) – spoke to that commitment. This initial dedication to the environment has become a cornerstone in the Amway corporate philosophy.

Five decades later, our environmental concerns continue to be reflected in our products and philosophies. Whether responding to changing consumer demands or reacting to new scientific findings, Amway has stayed on the leading edge of positive environmental practices. Our manufacturing plant in Tamil Nadu is designed with the most stringent environmental and quality standards. It is a Zero Discharge Waste Facility and qualifies to be LEED GOLD Standard manufacturing plants in the country. In addition, 10% of our total power needs are met through one of the largest roof top solar installation in Tamil Nadu at our facility in Madurai. We are also working on reducing the carbon footprint through bottle weight reduction initiatives.

With the current government policy changes, how do you see shape of things to come for Amway?

We welcome the move by the Ministry of Consumer Affairs in issuing guidelines for the direct selling industry. We believe that the guidelines will safeguard the interests of consumers, as well as identify and help protect ethical direct selling companies like Amway who have made significant investments in building physical infrastructure, including offices, shops, warehouses, IT capacity, and manufacturing facilities. These investments help to bring opportunity to aspiring entrepreneurs. Additionally, Amway provides world-class products to consumers, built on leading science and innovation.

The construct of the guidelines puts obligations on the direct selling entity, as well as the direct seller. The guidelines have correctly placed consumer protection at the center. Therefore, we believe that the guidelines will be effective in weeding out fly-by-night operators. The Ministry is heading in the right direction. As a next step, we believe that appropriate legislation for the direct selling industry will help the industry reach its potential.

Amway complies with the highest standard of industry code of ethics and always offers protection to consumers and direct sellers. Amway India does not charge any joining fee from the direct sellers. Further, direct sellers are free to exit anytime. All of Amway's products are backed by a refund policy. We adhere to the clauses that have been mentioned in the guidelines and we seek to not just comply, but set the Gold Standard in the area of consumer protection.

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