Becoming an MLM product supplier in India: A comprehensive guide

Posted by Vidhi Yadav on September 23rd, 2022

Multi-level marketing or network marketing is a modern marketing and sales strategy. MLM companies recruit sales representatives/ distributors, but they are not considered employees of the business. These sales representatives are the points of contact between the MLM company and its consumers. MLM companies do not rely on retail outlets for the sale of their products. 

In India, the multi-level marketing industry has grown exponentially in the last couple of decades. Right now in India, more than 8o lakh people are working in the MLM industry. Most of them are self-employed people or business owners. Every year a large number of new MLM companies enter the Indian market. But only a few of them have dedicated manufacturing units. Most of these companies will have to source their products from manufacturing plants or bulk suppliers. Becoming a supplier for these MLM companies could be a very profitable business. 

How to become an MLM product supplier in India?

Before becoming a product supplier, one needs to choose between these two options. 

• Become a manufacturer of MLM products.

• Source products from manufacturers and then supply them.

Becoming a manufacturer 

 Starting a successful manufacturing business is not an easy task. It is necessary to take into consideration various aspects of the business. From finding raw material suppliers to finding the perfect geographical location, it's a long list of things that need to be considered. Let's discuss some of them in detail. 

• Conducting Market Analysis

It is the first and arguably the most important part of any business planning. There are numerous products that an MLM product supplier could make. Though, most of the sale revenue comes from Nutrition and Healthcare category. Proper market research will lead to a better understanding of the products that are always in demand. It will also help in assessing the profitability of the business.

• Choosing a Geographical Location

Finding the perfect geographical location to start the manufacturing unit is crucial for the success of a manufacturing business. 

Things one should look out for when finding the location

1. The location should be in close proximity to raw material suppliers. It will significantly decrease transportation costs. 

2.  The place should have easy access to transportation services.

3. Availability of cheap labor.

4. Reliable power supply.

5. An adequate supply of water. 

• Securing Funding

Starting a manufacturing unit requires a large sum of money. Most people will have to take out a loan. It is important to have a proper business plan ready before applying for a loan. It will increase the probability of securing the loan. 

• Raw material supplier

Manufacturing units will have to find raw material suppliers. Relying on a single supplier could be troublesome. If the supplier fails to deliver the product in time, the whole manufacturing process could come to a halt. Having at least two or three suppliers will safeguard the business from unnecessary delays.

• Licensing 

Manufacturing businesses are required to produce a variety of documents for registration of the company. It is in their best interest to seek professional help from consultants. 

Advantages 

• Manufacturing units will have better margins on products.

• Manufacturers will be able to supply products on time. 

• Growing demand for MLM manufacturers.

Disadvantages 

• Higher overhead cost.

• Huge upfront investment.

• Higher risk of losing money.

• Complicated registration process.

• Not being able to provide all the products an MLM company needs.

Becoming a Bulk supplier 

The Bulk supplier will source the final goods from various manufacturing companies. It is comparatively easy and less risky to start a supply-based business as it requires significantly less capital to set up. Sometimes suppliers act as agents for the MLM companies. 

Advantages of a Bulk Supplier

• Easy to set up

Starting a supply-based business is considerably easier than starting a manufacturing unit.

• Minimal Investment

Supply-based businesses do not require a lot of upfront investments.

•  Less overhead cost

Significantly low overhead cost when compared with a manufacturing-based MLM product supplier.

• Easy Registration

Comparatively easier to register and acquire licenses. A bulk supplier will need a PAN card, Trade license, GST number, and FSSAI registration. Please note that FSSAI registration is mandatory for businesses dealing in Food and supplement category. 

Disadvantages of a Bulk Supplier 

Ironically the only disadvantage a bulk supplier faces is their over dependency on manufacturers. 

Conclusion

There are specific advantages and disadvantages to both business models. Yet it seems like for beginners in the network marketing sector, becoming a Bulk MLM product supplier is preferable. Mostly because of the low investment required for bulk supplying when compared with setting up of manufacturing units.