Gail Reynolds started selling beauty products door to door, but now she does it via YouTube. Picture:YOUTUBE
Gail Reynolds started selling beauty products door to door, but now she does it via YouTube. Picture:YOUTUBE

A raven-haired young woman, after smiling straight into a camera, smudges dark eyeliner onto her brunette counterpart in a make-up chair.

The minute-and-a-half video, one of millions of make-up tutorials on YouTube, aims to show viewers how, with the help of Avon's eyeliner and eyeshadow, they can achieve a "cool girl rocker look".

Another promotional video shows a woman in hot-pink stilettos, singing to the tune of Aretha Franklin's I will Survive, changing the lyrics to: I grew strong, and learned how to sell Avon.

The clip has been viewed 1.7 million times.

These are the modern "Avon Ladies" - a legion of vloggers Avon has enlisted to launch the 131-year-old juggernaut into the future.

"Our top sellers today are running their own store on Facebook from Brazil," says Sheri McCoy, who this week said she would step down as CEO, after overseeing an 85% collapse in Avon shares in the past five years.

McCoy says today's social-media "influencers" are a new version of the Avon Ladies of the 1800s, who peddled perfume at neighbours' doorsteps.

More relevant

Avon has its work cut out. The company has been in restructuring mode for a decade. McCoy has spent her tenure trying to make Avon more relevant in a world where shopping is increasingly occurring on Amazon or through links on slick Instagram pages.

But, like her predecessors, she has failed to turn the world's largest direct seller around. Sales have shrunk from $11-billion in 2011 to less than $6-billion last year.

As the digital revolution disrupted shopping in the US, Avon has shifted focus to countries such as Brazil, where slower adoption of technology and weaker infrastructure have kept doorstepping relevant.

The most common Avon Lady in 2017 is not the 1950s American housewife, but millennial women selling mascara in Rio or Manila through YouTube.

Avon still has more than six million representatives - of which about 95% are women and half are millennials - slinging products across 100 countries.

Founded in 1886 by a male bookseller in Manhattan, Avon offered employment for women decades before they were able to vote. But the company has become "a testament to the challenges of getting too stuck in a business model and not evolving with your customer", says Kathy Gersch, a former Nordstrom executive and now a vice-president at consultants Kotter International.

"They've been hoping that their representatives figure it out on their own on social media. That's not fast enough."

Some secular trends are working in Avon's favour.

Marketers say word of mouth is undergoing a renaissance through a younger generation that trusts their peers or YouTube personalities over corporate ad campaigns.

New crop of direct sellers

After the financial crisis, a larger pool of underemployed people cobbled together part-time gigs and freelance work, and, as social media has grown, a new crop of direct sellers has popped up.

Last year, 20 million Americans earned more than $35-billion through direct-selling companies, according to the Direct Sales Association. Meanwhile, beauty has outperformed a grim showing by the wider US retail industry - people still want to touch and see the products rather than buy online, supporting sales for retailers such as Sephora.

This underpinned Avon's business model in the aftermath of the recession, with sales peaking in 2011.

However, since then, mis-steps, reputational hits from bribery investigations and slowness to adapt to e-commerce have depressed sales.

In the US, "we got behind, and then it was difficult to catch up", says McCoy. "When I came in 2012, I thought: really, can we fix it?" she notes, adding that "it was more important for us to invest in emerging markets".

In 2015, Avon spun off its North American business and revealed a three-year turnaround strategy that targeted $100-million in cost savings.

Its North America unit is now run by Cerberus, the private equity group that bought a $435-million stake in the parent company in an attempt to focus on salvaging the emerging-markets business.

Less optimistic

But even in Brazil, which makes up nearly one-fifth of sales, the company has been outpaced by rivals such as Natura, a local upstart.

McCoy insists there is still value in women selling feel-good products to other women, face to face.

"Women still want advice. And particularly in places like South Africa, women need jobs," she says.

She boldly bets that, rather than going extinct, the Avon Lady will endure for another century.

Investors and analysts are less optimistic. While news of her departure had been rumoured for months, confirmation sent shares tumbling more than 10% on Thursday as the company reported its third consecutive quarterly loss.

"If Sheri was asked to leave, she is a convenient scapegoat for a disastrous business," says Ali Dibadj, an analyst at Bernstein. "If she left of her own volition, it's a good call by her." - The Financial Times

Please sign in or register to comment.