Business India ×
  Magazine:
Corporate Report

Published on: Feb. 8, 2021, 1:03 a.m.
Modicare takes a fresh stance
  • The company has rebranded itself, reinvested in changing the product line

By Arbind Gupta. Assistant Editor, Business India

The last five years have been quite eventful for the home-grown direct-selling entity Modicare Ltd. Part of the $1.5 billion KK Modi group, and in its 25th year of existence, the company has made an impressive turnaround: growing ata compounded rate of over 70 per cent.

With its new strategy, in which it has overhauled the marketing plan, portfolio offering and repositioned itself in the consumer market, with a competitive pricing approach, the Rs1,700-crore Modicare aims to maintain its recently-gained momentum going forward as well. Even in the recent Covid-afflicted marketplace, the company’s performance has been extremely good and it is looking to close the fiscal year with a 40 per cent surge in revenue.

The New Delhi-based marketing specialist has caught up fast. It is now one of India’s leading direct selling companies, with over 4.5 million direct sellers and over 300,000 new direct sellers joining its fold each month. The company offers over 275 products, 600+ SKUs across 12 categories – personal care, wellness, skin care, colour cosmetics, 18-karat gold-plated jewellery, food & beverage, homecare, auto care, laundry care, technology, accessories, and agriculture. The wellness range, which accounts for 27 per cent of its total portfolio, is witnessing impressive traction. With a 30 per cent share, personal care leads the table, whereas food and beverages account for 24 per cent of its portfolio.

Modicare is an ISO 9001:2015 certified organisation and has a national presence through its over 9,000 distribution points and over 50 Modicare centres. The company has partnered with over 30 leading third-party manufacturers (both domestic and overseas, across over 50 production facilities), which help it deliver quality products at reasonable prices. It covers more than 4,000 Indian towns serving around 17,000 pin codes.

This year, its silver jubilee, Modicare has been ranked fifth among India’s 50 Great Mid-size Work 2020 by Great Place to Work® Institute, identified among the Best Workplaces in the FMCG industry. It has also gained a position amongst India’s 50 Best Workplaces for women, as over 60 per cent of its direct selling consultants are women. In fact, Modicare is the only organisation in the direct-selling industry to receive the title of ‘India’s 50 Best Workplaces for Women’.

“We represent an industry that has been steadily empowering women by offering an earning opportunity like none other,” says Rahul Shanker, COO, Modicare Ltd. “With about 300,000 new consultants joining every month, Modicare is growing at an aggressive pace, despite Covid-19. Credit for this growth goes to our culture of diversity and inclusion. It’s a delight to have been recognised amongst the ‘Best Workplaces for Women’.”

“Direct selling or direct-to-home in India is in a high growth phase, with a lot of headroom for growth,” says N. Chandramouli, CEO, TRA Research, a Mumbai-based consumer-analytics & brand insights company, which publishes TRA’s Brand Trust Report. “Modicare has been one of the few Indian companies, which recognised this opportunity early. Direct selling is a business of trust, in which each business partner relies on their close network of family and friends to spread the business. Modicare’s direct selling has become a good option for millions of women, giving them the freedom to do business, with relatively low investment.”

“In this business of direct selling, we sincerely pursue a vision of enabling every Indian to have financial ‘azadi’ or economic freedom, which in turn will lead to freedom across various aspects of life,” explains Samir Modi, founder & managing director, Modicare Ltd. “We have been instrumental in transforming the lives of millions through higher earnings. In fact, our compensation plan commands a competitive edge by virtue of being one of the highest pay out (about 60 per cent) plans in the Indian direct selling space.”

Modi has put up a plan to take the company’s topline to Rs10,000 crore in the next five to six years. For this it is looking to enter overseas markets while also expanding its domestic base. This year, the company plans to launch its business in the UK and the EU, which will be followed by Southeast Asia and the Middle East.

Competitive edge

The company has rebranded itself, reinvested in changing the product line and launched a new colour cosmetics line, Urban Color. Product prices have been brought down by 40 per cent, without compromising on quality, giving Modicare products a huge competitive edge in the overall direct-selling industry. New and old products came under the unique ‘Samir Modi 100 per cent Satisfaction Guarantee’. If the consumers are unhappy with the quality of any product, they are entitled to a 100 per cent ‘no-questions-asked’ refund.

In October 2020, Modicare re-launched its compensation plan, ‘Samir Modi Azadi Plan’, making it even more robust, ensuring faster ‘azadi’ or financial freedom to its direct sellers. As one of the highest-paying compensation plans in the direct-selling industry, it is transforming the lives of millions by offering higher earning potential, along with numerous other earned allowances.

Under its new plan and strategy, the company has been aggressive in motivating and recognising its consultants. The motivation and recognition events, which were primarily offline earlier, are conducted online. During Covid-19, the company held 2,000 events and trainings per day (both company and consultants programmes). Moreover, the company has ramped up its distribution and reach, and boasts of a network of about 9,000 distribution points, along with over 50 company-owned Modicare centres. This has helped its consultants to provide easy access to products. In the last six years, the company has increased its reach covering about 4,000 Indian towns from just 600 towns in 2015.

Along with these measures, Modicare has also ramped up its product portfolio, with introductions of new products every month. In the last 90-100 days, the company has introduced 70 products and in the next three months it has plans to introduce about 40 new products as well.

“This change in the business model has a huge impact,” affirms Modi. “Along with other things, the consultants have easy access to products through the distributor points. We also enhanced our online and digital strategy, revamped our website and launched our app. We turned housewives and ordinary folk into business people by putting data on their mobile phones. The consultants have a plethora of information that they didn’t have earlier. We also have a large number of products at attractive prices.”

“Modicare is a brand that is mentioned quite in the same breath as an Amway or Tupperware,” acknowledges Harish Bijoor, brand-strategy expert & founder, Harish Bijoor Consults Inc. “To that extent it is the leader in the Indian pack in the category. The brand is certainly seen to be reliable and solid. An offering that stands by its distributors come rain or shine.”

During the pandemic the company has been expanding its portfolio. With health and safety assuming huge importance in everyone’s life today, Modicare launched about 10 wellness products in December alone and is now all set to launch several products in the coming months in this category.

The pandemic posed challenges as well. While the company tried to ensure the safety of its large pool of direct sellers and employees, it was paramount to stay connected. With the lockdown in place, in-person meetings were impacted severely. However, it displayed agility and ingenuity, and swiftly adapted to the social and digital media platforms to connect with its consultants and keep the momentum going.

“We conducted online meetings,” remarks Modi. “We also enabled digital tools like Chatbot Roshini, Instant Messaging Catalogue and Modicare Online Training Academy, to ensure constant communication with our consultants. Even during the lockdown, our team made sure that we adhered to government regulations and delivered essential products from our portfolio. Our distribution point owners have been silent warriors, who ensured timely delivery of orders to our consultants, even during the lockdown."

“Digital and social media are incredibly important today for every business, regardless of the category in which one operates,” asserts Chandramauli. “In fact, the pandemic has actually propelled the entire digital revolution. Today, even elderly people have become tech savvy and are shopping online.” He is of the view that, in the last couple of years, more and more people have become comfortable with the idea of direct selling.

With rules and regulations being put in place by the government, the sector is moving towards achieving more formal status and heading for an organised structure. Home-grown companies like Ambay, Oriflame, Herbalife and others are gearing up to pose challenges to MNCs. Most of these competitors cater to the high-end market, while Modicare mainly meet the needs of the mass market.

The Swedish direct selling cosmetic brand, Oriflame, has also completed 25 years in India and is betting big on the emerging opportunities in the Indian market, which has emerged as one of the top five global markets for the company. Buoyed by the Indian market, Oriflame has put up two manufacturing facilities in India and a significant part of its portfolio is in the cosmetics and wellness category. The Swedish major is now coming up with its first baby care range in India, where 70 per cent of its salesforce are women.

“We have had a good year (2020), with over 25 per cent growth in sales partners, who we call our salesforce,” says Frederic Widell, VP & head, South Asia, as also MD, India, Oriflame. “Modicare recorded higher growth in sales in the third and fourth quarter and almost covered the losses incurred in the second quarter due to the imposition of the lockdown.”

Improved ranking

With regulations and structure getting in place, the Indian direct selling industry is expected to show impressive growth. In 2019, the domestic industry recorded sales of about $2.50 billion, clocking a growth of 12.1 per cent, as per a report by the World Federation of Direct Selling Association (WFDSA). This helped the Indian direct selling industry improve its ranking to 15th from the earlier 19th a year before. Moreover, in terms of the number of direct sellers, India was ranked at sixth position, providing employment to 5.8 million people. Wellness topped the chart of leading segments in direct selling, followed by cosmetics and personal care. As against this, the global direct selling industry reported an overall decline of 4.3 per cent in sales to $180.47 billion in 2019.

Today, Modicare has a considerable presence across all social media platforms, Recently, it undertook two influencer campaigns for its new product launches – ‘kachi ghani pakka promise’ and ‘Too good to be matte’ for Soul Flavours, Kachi Ghani Mustard Oil and Urban Color London Too Good To Be Matte Lipstick, respectively. Both the campaigns were well received by their target audience.

The company has outlined several plans and initiatives in the pipeline to keep both its consultants and customers engaged through digital media. “The pandemic has severely impacted the job market and livelihood of many,” contends Modi. “People are now looking for opportunities and more secure avenues of income. With our meticulous systems aligned with the new normal, we are more prepared than ever before to take on bigger challenges and scale newer heights. People today are increasing looking at direct selling as a secure income avenue.”

He believes that being a consultant with Modicare provides one the unencumbered freedom to pursue and realise not only one’s own dreams, but also the dreams and aspirations of the entire family. After almost 25 successful years in the business, the company today has countless such ‘azadi’ stories, which are extraordinary tales of ordinary people, who have achieved phenomenal success and transformed their lives by partnering with the company.

“Modicare came as a blessing in my life,” says Akshi Dutta, a Faridabad-based Modicare consultant. “At an age when people are still looking for a direction in life, I was already living my dream. All I had to do was put my heart and soul in work and the great plan laid out by Modicare took me to new heights. Through Modicare, I have been able to prove that when a woman is given an equal opportunity, she is unstoppable. My family’s support and Modicare has not only given me a strong footing in life, but has also inspired me to motivate others to take the first step towards joining Modicare and script a success story.”

“These are the stories of what a person can achieve with sheer grit and strength, and they need to be taken to the world to inspire many others in their pursuit of azadi. This is what led us to the #KhushiyaanUnlimited campaign. The three films portray Azadi stories of three different individuals, who come from different walks of life – a homemaker, a millennial and a middle-aged man, who left his regular 9-5 job to become a Modicare champion. We wanted to showcase that anyone, regardless of their gender, age, profession, or educational background, can be successful if only they dare to dream big,” states the founder of Modicare who, driven by his personal philosophy of soch badlo, khudko badlo, duniya badlo, also believes in ‘meraki’, a Greek expression that means ‘whatever you do, do it with love and creativity’. It was with this thought process that the alumnus of Harvard Business School launched his direct selling business on 30 March 1996.

Having set up the business and steered it for the initial five years, Modi, who is also the managing director of Modi Enterprises (the KK Modi Group), focussed on setting up two new successful companies – Colorbar (a cosmetics company) and 24Seven (India’s only chain of round-the-clock convenience stores) for the next 12 years. However, in 2014, he once again got actively involved in its direct selling business, in order to take it to the next level. In the last few years, he has tried to position it afresh in the market, backed by a completely new vigour and strategy.

“In the last five years or so, Modicare, as a company has undergone a complete transition,” says Modi. “We revisited our business model and strategy and carried out changes that were imperative for the given market condition. We wanted to start afresh, with the energy of a start-up and this time around the key focus shifted from sheer profiteering to empowering Indians. Today, our compensation is the best in the industry, even as we rebranded ourselves with an attractively priced portfolio without making any compromise on quality.”

Modi’s grandfather, Rai Bahadur Gujarmal Modi, had started the group way back in 1933, while his father, KK Modi (1961 onwards) was the one who scaled up the family business to a conglomerate with diversified business interests and a presence in over 120 countries.

The group is in a diverse range of businesses, which include agro, specialty and performance chemicals, tobacco, pan masala, mouth fresheners, confectionary, retail, education, cosmetic, entertainment, direct selling, fashion, travel and gourmet restaurants. Enterprises like Godfrey Phillips India and Indofil Industries are renowned leaders in their respective industries. Modicare is the first Indian company to bring multilevel marketing to Indian consumers. 24Seven Stores are round-the-clock convenience stores while Colorbar is a leading brand of colour cosmetics from the USA marketed and distributed by Colorbar Cosmetics.

Backing of a strong group

Modi, who also shouldered the responsibility of continuing his family’s philanthropic tradition by setting up the Modicare Foundation in 1996, serves on the board of other group companies in various capacities (such as director, Godfrey Phillips India; director, Indofil Industries; founder & president, 24Seven Convenience Stores and founder & managing director, Colorbar Cosmetics).

In November 2018, Modi took over as president, Confederation of Asia-Pacific Chambers of Commerce & Industry. He also serves as a member of the FICCI National Executive Committee, FICCI Steering Committee and NACS Asia Pacific Committee (National Association of Convenience Stores).

Modicare Ltd has the backing of a strong group with diversified business interests and this is something that will lend a definite edge to the company which has repositioned itself in the market. In its new ‘avatar’ with a new strategy, the company is looking sharper and more agile in a direct selling space which is taking an organised shape at the back of regulatory support by the government. All these years, MNCs have dominated the domestic market, but the success of Modicare can go a long way in attracting more domestic players to the market and create a vibrant ecosystem for the direct selling business.

Most importantly, this is a business which has huge employment generation potential and hence augurs quite well for a country like India. The overall consumer market is changing with the diversification of distribution networks. Online channels and e-commerce are transforming the market in a big way. There is an increasing emphasis on reaching out to consumers and households with minimum barriers and in the process both supply and demand sides are benefitting. Going forward, the whole process of retail transformation will continue to achieve the desired momentum and that is where direct selling companies like Modicare and others will also play their role in a big way. However, it remains to be seen how these direct selling companies position themselves in the market with strategies that call for more agility and quick responsiveness.

Don't miss this

Cover Feature

Spotting turnarounds

They provide good opportunities to smart investors; but hard work and a stomach for risk is essential to achieve alpha returns

Special Report

Government, social media companies at war

The government and the platforms are sticking to their own stands

Focus

Can Sitharaman save her budget?

As the second wave threatens growth targets, the government needs to step up its game

Corporate Report

Deepak Fertilisers gets future-ready

The company gears up for its next growth phase

Our letter to you, once a week.
Register with The CSR Weekly for free!

E-MAGAZINE
Turnarounds-the new mantra
BI 1100 Digital Stalin-a-moment-to-seize
BI 1099 digital-covid-hiding-the-pain
FROM THIS ISSUE

Startup

Retailing

Tourism

Tourism

Government

Government

Social Responsibility

Healthcare

Goodyear India partners Americares India Foundation

Published on Feb. 2, 2021, 9:21 p.m.

The partnership will support COVID-19 healthcare facilities in Faridabad and Aurangabad

Environment

Tata Motors launches a 'Go Green' initiative

Published on Dec. 23, 2020, 10:34 a.m.

The company will plant a sapling for the sale of every new commercial vehicle

Women Empowerment

Tata Starbucks ties up with Educate Girls to empower women

Published on Dec. 2, 2020, 3:10 p.m.

The partnership aims to provide volunteering and educational support to those who have relocated to urban cities from villages

Environment

Indian Oil has a social initiative for a clean and green world

Published on Nov. 25, 2020, 2:53 a.m.

The public sector company is planting a tree for every retail customer visit during its TreeCheers campaign period

Climate Change

Environment

Low maintenance, sustainable green spaces

Published on Feb. 4, 2021, 10:48 a.m.

The Center for Environment Concerns launches a pilot for greening road medians and urban areas

Energy

Husk Power uses rice husk to generate electricity in rural India

Published on Dec. 23, 2020, 9:32 a.m.

The company provides grid compatible and reliable power to customers

Energy

Smart Joules and energy saving solutions

Published on Nov. 17, 2020, 10:17 a.m.

The company's full-stack solution guarantees 15 per cent energy savings and zero upfront costs to the customer

Green Buildings

The GreenPro Ecolabel Standard for steel rebars will help a green built environment

Published on Nov. 5, 2020, 9:33 a.m.

Eight companies have already achieved CII’s Green Building Congress 2020 new standard

Stay ahead of the times.
Register with The Climate Change Weekly for free!