World's largest direct seller sees rosy prospects

MANILA, Philippines - The cash register at the counter rings. In unison, the employees in the room clap and cheer: “Be the best with the best!”

This chant echoes every time a dealer makes a single purchase order of P5,000, net of commission, in any one of Avon’s about 160 stores nationwide. The amount ensures the dealer at least P1,700 outright commission, plus some product incentives and, if she gets luckier, instant cash bonus of P3,000, a paid vacation, or an ego-boosting company award.

For someone who has a meager income, lost a job or can’t find one for lack of credentials and can hardly make both ends meet, being an Avon dealer can be a logical option. Why not? Listed at the New York Stock Exchange, Avon is the world’s largest direct-selling company, making over $10 billion in annual revenue. It competes with other international beauty and personal care giants like Procter and Gamble, L’Oreal, Estee Lauder, and Revlon, which are all, however, using the retail sales channel. Avon has been around worldwide for 125 years now.

In the Philippines, Avon has been operating since 1978, when it bought local beauty company Beautifont. Today, Avon has a good command of the market, holding about 50 percent of the direct-selling market share in the country, based on industry estimates. This means about half of the personal goods sold through direct-selling in the Philippines are from Avon. The rest is shared by some local direct-selling firms like Natasha and Boardwalk, and imported brands like Tupperware and Mary Kay.

With its long-standing presence in the country, Avon has literally become a household name, making it easier for agents to sell its wares without having to introduce the brand. Aside from making and selling beauty products, Avon also markets intimate apparel and fashion accessories, as well as housewares, toys, and health products.

 “We’ve seen how this business brings food to tables of countless families, build dream houses, and simply made a big difference in their lives,” says Robert (Bob) Briddon, Avon senior vice president and CBU head for Asia Pacific and China. Briddon is also Avon Philippines president and general manager.

As head of the company’s Asia Pacific unit, Briddon is responsible for Avon’s business performance in the Phillippines, Malaysia, Thailand,Vietnam, India, Korea, Taiwan, Australia, New Zealand and China.

In 2006, Briddon led an aggressive advertising and dealer recruitment campaign in the country, when he first became general manager of Avon’s Philippine operations, his first assignment as an Avon officer. With Briddon, Avon Philippines started adopting a multi-level sales structure, where dealers would not only sell, but recruit and train new dealers as well, offering the dealers more earning opportunity.

“But we’ve intentionally restricted the sales structure to four levels to make the earning opportunity more meaningful,” says Briddon. The 57-year-old Briton became chairman of the Direct Selling Association of the Philippines in 2008.

In 2009, a whopping 16 percent rise in Avon Philippines’ income under Briddon’s watch offset the continued weakness in the company’s business in Japan, which was eventually sold in 2010.

Since 2006, Avon’s sales dealers in the country have increased three to four times yearly, says Briddon. Majority of them are women, who are unemployed and did not finish college. A number of them, though, Briddon notes, simply like using Avon products and recommending them to friends and family, saving and earning money in the process. Perseverance has also led some Avon dealers to make six-figure monthly incomes. Some have even made it a family enterprise.

To those affected by the still ongoing global economic crisis, Avon offers an attractive, recession-resistant income source that fits many Filipinas to a T – a small business where capital outlay is nil, no downsizing, no fixed time schedule and no retrenchment. Since it involves a door-to-door and a more personal way of selling, all the dealer needs, perhaps, are some level of social skills, time management, and the ability to control the purse.

How to deal with difficult customers is one thing that the company teaches its dealers who decide to get serious in the business. A handy, colorful, and shiny brochure virtually serves as the dealer’s retail shop, making it easier for consumers who don’t have enough time, energy, or extra cash to go to the malls.

New look

Last December, Avon completed a series of renovations on its Avon stores in the Philippines to make the stores more comfortable and convenient to dealers. The renovations included more spacious training rooms, special displays for featured products, reception areas equipped with Internet access, and larger counters for faster queuing.

“More than just improving the overall shopping experience, the new Avon look initiative also hopes to strengthen the relationship between the sales representatives and the company,” says Briddon. “Our dealers see Avon as their second home, and more than the enhanced convenience and ambience, each branch now provides it’s the people and the relationships that really make each branch special,” he adds.

Strong partnership

Truly, Avon has a beautiful, win-win partnership with its dealers. Avon’s 6.5 million dealers worldwide, mostly women, have also kept the company afloat amid the global economic turmoil that started several years ago.

“From a wider viewpoint, the global macro-economic situation is making people more cautious in spending money,” observes Briddon. “Although this global economic development has seen some retail shops contracting, direct-selling has remained a viable business,” he adds. Avon recorded a global revenue of $2.8 billion in the third quarter of 2011, six percent higher from a year ago. For the first nine months of 2011, the company posted a total revenue of $7.7 billion, up seven percent from a year ago. During that period, the company put more money in taking care of its existing dealers and enticing more dealers to join the business than in media advertising. For the third quarter of 2011, the company recorded an advertising spend of $76 million, down 34 percent from a year ago. On the other hand, Avon invested an additional $34 million on its sales dealers worldwide during that period.

Avon calls such investment in its dealers “Representative Value Proposition.” This includes analysis for best product pricing and discount structures, timing of sales campaigns, enhancement of Avon’s multi-level recruitment structure or its Sales Leadership Program, and making better use of technology and online tools. All these are meant to raise productivity in the long run.

Consumer uncertainty amidst a volatile macro-economic environment across several of our markets further pressured revenue growth,” online newsreports quoted Avon chairman and CEO Andrea Jung as saying. “In light of the changing landscape, we are assessing our long-range business plan and are targeting an operational and financial update at an investor meeting in the first quarter of 2012.”

Today, Avon stays true to its motto of being “the company for women” not just because it sells cosmetics and lingerie. It has embarked on other advocacies in support of women. The Avon Foundation for Women is the largest corporate-affiliated philanthropy focused on women’s causes, particularly breast cancer awareness and domestic violence. The company also raises money to aid victims of natural disasters and foster environment protection.

“We believe so strongly in our mission as the company for women to improve women’s lives and make a difference,” says Jung. “Our belief in our purpose has been our guiding compass for 125 years, and it will remain our roadmap for the future.”

As for the company’s Philippine operations, Briddon said: “Avon’s future is stronger, bigger and bolder. Whatever shape our plans will take form in, they will always be in the best interest of our representatives and in line with our commitment to providing them with the best earning opportunities than ever before.”