Avon wants its army of Ladies to go from “Ding Dong” to “Click Click.”
The world’s largest direct-selling company has long been part of American lore thanks to its army of “Avon Ladies” selling beauty products door-to-door.
But now Avon, urgently needing to halt a years-long exodus of representatives and U.S. sales collapse, wants to help them embrace e-commerce and social media in a big way.
To do that, Avon has just completed the first major overhaul to the avon.com site in 10 years. The result is a site with far more vivid and interactive product images, and a trove of videos with beauty tips and recommendations, and features such as footage from Fashion Week. The e-commerce site also has tools to help “reps” personalize their site and use social media like Twitter, Facebook and Instagram to send advice on new products to customers near and far.
While these are arguably features Avon.com should have had long ago, the New York-based company thinks they will help reps make more money—and crucially, want to sign up and stay on—as well as help Avon itself get a piece of the fastest growing part of the beauty industry: online sales.
The stakes are high for Avon: it needs to quickly show that its U.S. market, its biggest as recently as 2005, can be revived and return to profitability next year, as per CEO Sheri McCoy’s top priorities.
So McCoy, CEO since 2012, has put this digital strategy at the heart of her efforts to fix the troubled U.S. business.
“We are going digital. We think that’s the future. That’s where direct selling needs to go,” McCoy told Fortune in an exclusive interview in her New York office.
While many analysts have whispered that Avon should consider packing it in at home and focus on booming markets like Brazil and Russia, McCoy insists the U.S. is too big a part of Avon’s heritage to give up. “It’s easy to say ‘let’s walk away from it’, but I don’t think it’s the right thing to do. We have a lot of opportunity to stabilize the business,” she said.
She has her work cut out for her. The size of Avon’s North American salesforce has shrunk by about half since 2007 to some 300,000 reps—a major problem for a direct seller. Indeed, domestic sales have fallen by about 45% since hitting an all-time high of $2.6 billion in 2004—in the first half of this year, the decline worsened, with sales falling 21%. Avon has lost $147 million in its home market since the start of 2012.
Avon’s U.S. problems have been the result of everything from erratic changes in its merchandise offerings in recent years to inadequate compensation to computer problems that inadvertently made life more complicated for reps. To fix that, McCoy and her team detailed a big cost-cutting program in February and announced moves like paring the product assortment by 15% to focus on best-sellers.
All that is helping, but there is no escaping a fundamental truth: Avon’s sales have to stop bleeding. And that’s where e-commerce and mobile selling come in.
Avon’s DNA
Avon wants in on beauty’s e-commerce explosion: online sales only make up about 6% of industry sales in the U.S., but are growing four times faster than retail sales.
But the 128-year-old brand has to compete in the same space as newer names like Birchbox, an e-commerce startup, and hot brands such as Sephora, among many others with modern web sites. Avon understood it couldn’t restore, let along replenish, its salesforce with younger reps unless it has similarly up-to-date e-commerce.
“The previous site was outdated compared to Sephora,” said Georgiana Haynes, a 28-year-old architectural designer from New York who has been selling Avon for 10 years. “I feel like this website conveys that this is a younger, trendier company now.” Avon is supporting the web re-launch with a big internet-only ad campaign on Yahoo and YouTube, largely targeted at women ages 25 to 34, said Matt Harker, Avon’s marketing vice president for North America.
Still, there is the sense in some quarters that this effort is just Avon trying to catch up and offers no guarantee of salvation. “Because it’s not new, it’s not a game changer,” said Sucharita Mulpuru, an e-commerce analyst with Forrester Research.
The digital overhaul is also about helping reps generate more sales so Avon doesn’t need to get back up to 600,000 reps to return to earlier sales levels, an unlikely prospect anyway. “I’m not sure we get all the way up to the number of the past,” McCoy said.”It’s more important to us to have a representative base that’s committed, that’s stable.”
To make selling via avon.com more enticing to reps resistant to change, Avon is giving them credit for online sales, even when a rep had no direct contact with the customers. That helps them get to a higher commission rate more quickly. Another selling point Avon is pushing is that using avon.com spares reps from hours of packing boxes themselves. This summer, it gave Avon veteran Dinesh Popat the newly created job of “Chief Representative Officer,” whose primary role is to keep in close contact with reps so Avon is more responsive to their needs. Indeed, Avon tapped a focus group of reps to help it design its new site.
Nonetheless, Avon is eager to serve the one-third of customers its research shows are interested in Avon products but don’t want contact with a rep, or who can’t find one.
“Retention is difficult for us,” Van Vahle, executive director for Avon.com and its global digital business, told reps at a conference last month in Orlando. “People don’t know where to find Avon and they can get tired of looking.” So avon.com is designed to capture those customers.
Still, Avon is trying to make it as clear as possible to reps that the point of the new avon.com is not to cut them out of the action, but rather to help them. The last thing Avon needs at this point is to anger its reps.
“Our heart, our DNA, is the representative,” McCoy said. “And I believe in the power of direct selling. We have a lot of work but we’re going to get there.”
