Avon's still calling, but shifting to online channels is taking time

Stuart Lauchlan Profile picture for user slauchlan February 17, 2019
One year on from his arrival as CEO at Avon, Jan Zijderveld can see improvements in the digital transformation of the troubled firm.

Last week I picked out cosmetics giant LOréal as a digital transformation champion in the field of so-called Beauty Tech, with CEO Jean-Paul Agon arguing:

Strong brands get even stronger.

Sadly, while that might be true for L’Oréal, it’s not always the case for others. This time last year the plight of Avon was flagged up, with the 130 year old company struggling to adapt to the digital world, ironically held in check by the Avon Lady direct sales business model that was once a retail innovation.

Incoming CEO Jan Zijderveld said at the time:

Avon is operating a dramatically changing consumer and competitive environment and business as usual is not an option…We’re taking a fresh look at everything, with a sense of urgency that you would expect.

Flash forward a year and there have been clear efforts to apply a foundation layer, but the wider makeover remains a work in progress. There are huge challenges involved in what needs to happen in practical terms, even though Zijderveld has some clear high-level objectives - repeatable models to reboot direct selling, unlocking what he sees as e-commerce opportunity and a radical simplification of the business model and corporate culture

The frontend is a case in point. Avon’s army of saleswomen came to the door armed with catalogs. As other catalog-based retailers have found - hi, JC Penney! - that’s a hard habit to break. Zijderveld admits:

We need to de-leverage. We need to think about what [the Avon Lady] needs to become more successful. Whether this is printed mini-brochures or think about what we can now do with the online brochures which are the digital versions of that. We can have many digital brochures, which you can make in a couple of days and send out to different audiences, at different times around different themes. I've seen some countries that have done the e-brochure, the online brochure dedicated for Valentine's Day, which then the representative can spread across her Facebook friends or Instagram network.

As for e-commerce, the business case here is obvious, he argues, and follows on from the catalog crisis:

Almost everyone in all our countries knows us, but they can't buy from us unless you know a representative or have access to the physical brochure. So that's the really huge opportunity and that's why we're doubling down on e-commerce.

To that end, online brochures are now available across the 60 markets in which Avon operates. Zijderveld points to 5.5 million views of such collateral over a three month period, arguing that this demonstrates both increased adoption and growing understanding by Avon reps of how to make use of this facility:

So one use is obviously, we just repeat with physical brochure as an online brochure, but what we also start seeing is that we can do different brochures at different times ,maybe even targeted of different groups..We’re also adding extra functionality to the online brochure including which we're testing now direct delivery. So the online brochure now gets delivered by the representatives. We're now testing the online brochure that you can order it and get it directly delivered to your home.

My Store

The other big development is the My Avon Store, an online store-face platform for Avon Ladies across 20 markets which allows individual reps to create their own personalized shopfront. To date, around 16% of the sales team has opened their own online shop, says Zijderveld, to considerable effect:

Leanne, who I met last week in the UK, had built her business without any physical contact. The way she builds her business is all through My Avon Store, driving new customers, driving her business electronically using My Avon Store. What we're now doing is My Avon Store gets updated in terms of the program, in terms of the app, every two weeks. We're building a better app every two weeks. So we get a cadence a bit like you see on your iPhone, new update every two weeks with new functionality better programs. So that's one thing.

The second thing we're doing with My Avon Store is making sure that we provide better content for her. Our new marketing team I'm also very excited about, we got some really good new marketing people. We've appointed a new agency to every week release new assets, i.e. new little films, new little demos, new little photos and ideas that we then spread out to these e-reps who then spread it out across their network to make them really micro influences. And we've now set up a pipeline of asset generation which will grow every week to help her drive her business back to My Avon Store….It’s educating her to use it and then giving her assets and ideas and products and promotions and gifts so we can drive her sales.

Alongside these practical developments, there’s a wider mission statement to “reboot social selling”, a goal of which Zijderveld says:

This company-wide priority is well on the way, and already showing promise as we move from a one-size-fits-all mindset to renewed focus on de-leveraging and a segmented approach, designed around repeatable and scalable models around recruitment, training, representative tools and incentives designed to energize, engage our representatives, while improving their satisfaction and earnings. We are already seeing change with significant signs of improvements coming from many areas of our markets.

He points to Avon’s biggest market, Brazil, as a case in point:

Brazil has step-changed its focus on e-commerce and social selling. They have set up a dedicated e-commerce business unit and this unit already achieves five times the online sales in the second half of last year.

My take

Progress undoubtedly, but as Zijderveld admits, there’s still an awful lot to fix. The company turned in a £17 million loss for its latest full year and announced plans to cut 10% of its global workforce. That said, Zijderveld is working with a brand that has a lot of loyalty and affection attached to it, even if too much of that is based on nostalgia for a business model that’s now out-of-date. There’s no danger of Avon catching up with the likes of Estée Lauder or L’Oréal any time soon, but there’s been a lot of progress made in Zijderveld’s first year at the helm. Not one to write off just yet.

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