Errant operators give direct selling business a bad name

SALES growth in the domestic direct selling industry has remained stagnant in recent years due to unscrupulous operators out to make a quick buck, says Malaysian Direct Distributors Association (MDDA) president Datin Sylvia Koh.

The sector saw sales of RM8 billion in 2006, but the numbers have been on the decline since. Sales were RM5.6 billion in 2007, and RM5.5 billion last year.

Koh blamed unscrupulous operators for tarnishing the image of registered direct sellers, attributing the drop in sales volume to negative perception among consumers about the direct selling business.

"They (unscrupulous operators) are giving us a bad name. Consumers are having negative perceptions due to this group's irresponsible activities," she told Business Times in an interview.

Koh was referring to a spate of scams such as the pyramid-type of business and get-rich-quick schemes that were purportedly linked to the direct selling industry.

"Consumers now are sceptical about direct selling companies. These irresponsible activities are actually mostly done by illegal and unregistered direct selling companies," she said.

Koh noted that out of the 100 complaints of cheating lodged with the Domestic Trade, Cooperatives and Consumerism Ministry, 90 were found to be committed by unregistered companies and 10 by registered companies, out of which only one is a member of the MDDA.

Currently, there are 670 direct selling companies registered with the ministry, although less than 20 per cent are members of the MDDA and its counterpart, the Direct Selling Association of Malaysia (DSAM).

"We have about 60 members, and DSAM has about the same figure. We hope to be able to attract more than 50 per cent of the registered companies to become our members or DSAM's," Koh said.

With this in mind, the MDDA will launch its homepage on Wednesday, which will be officiated by Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob.

"They (consumers) would be able to check whether the products and services offered to them are from the registered or legal direct selling companies as the website will provide a full list of MDDA members for them to counter-check," Koh added.

Koh expressed confidence that the direct selling industry in the country would prosper in future.

"Bear in mind that Malaysia is currently ranked 12th in terms of sales in the direct selling business worldwide. The potential here is huge," she said.

Source: Business Times