The strongest association Dianne Hernandez has with Avon is her grandmother, who sold beauty products to women in East Los Angeles in the 1960s. She built a devoted list of clients by making house calls on foot and Hernandez recalls her purse overflowing with lipstick and perfume samples.
Three decades later, Hernandez has followed in her footsteps, establishing a successful career selling Avon—except the 49-year-old's business looks quite different from her grandmother’s. Hernandez pulls in around $65,000 a year and ranks number two in sales in her district, all without leaving her home.
"I did traditional door-to-door selling the first few months, but who has time for visiting and having coffee? That’s so old school!" Hernandez recalls. "I decided to try it on the internet. There were only a handful of reps online, but I pushed and pushed."
Inside Avon's New York City headquarters. Photo: Getty Images
Five years ago, Hernandez built her own e-store using rudimentary technology available through Avon and began cultivating a loyal following of people who wanted to buy their products with the click of a mouse. She notes, however, that this was her own doing; Avon didn't set her up for online success.
The 129-year-old beauty brand is among the world's largest direct sellers, though its North American division saw a revenue decline of 18 percent in 2014 alone. In response to this loss, Avon ceased operations in its 16 Caribbean markets that fall under the North American umbrella in February, announcing in a statement that the brand would be "focusing its resources on restoring the health of the U.S. business to deliver future growth." If these reports weren’t enough to shake employees and investors, just two weeks ago the Wall Street Journal reported that the company may seek a buyer for its North American division, which accounted for a mere 14 percent of its total revenue last year.
"We need to reposition the brand so that it's not old, tired, legacy."
Avon would not comment on any intentions to sell, but Matt Harker, Avon's vice president of marketing, did admit the brand is grappling with relevancy.
"The challenge for us now is to capitalize on the Avon brand," Harker tells Racked. "We can’t be concerned that it's old-fashioned. The strongest differentiator our brand has is the ability to empower women to service others in their communities by helping them with makeup tips and inspiration. We need to reposition the brand so that it's not old, tired, legacy, but draws on the core parts of the heritage that are just as relevant today."
How to take a brand that everyone associates with their grandmothers and make it fresh and exciting—in the age of successful online beauty startups like Birchbox and Glossier, no less—is the big-money question Avon has only recently began trying to answer. As Pearse McCabe, North American CEO of brand strategy firm Dragon Rouge, notes, "I always wondered why Avon didn’t try to recreate its whole experience as a brand when the birth of transactions on the web made all that noise."
Avon was started in 1886 by traveling book salesman David H. McConnell, who had the revolutionary idea of having women sell beauty products directly to other women. McConnell developed a model where wives who were at home while their husbands went to work could earn commission by selling on their own terms. The "Avon Lady" (the brand now calls them "representatives") made house calls, went on office visits, and hosted parties to sell products. Avon’s model also incentivized sellers to recruit others under them to bring in additional earnings though a strategy known as multi-level marketing. This is a tactic Harker says the brand is keen on preserving.
"Avon’s longevity is based off its fundamental promise to empower women to be independent," explains Wendy Liebmann, CEO of WSL Strategic Retail. "That seems so corny today, but around the world, in developed countries and otherwise, the fact that you could earn a living by selling beauty products to other women was iconic. It created a community of beauty aficionadas who were passionate about being the independent power behind Avon."
"Way before you could learn about makeup by checking a website, Avon was offering access to countless products."
Avon reached peak popularity in the 1950s and '60s, according to beauty historian Rachel Weingarten, since this is when "women were suddenly thinking about ways to be beautiful in the dawn of a new Hollywood." The brand grew its prestige through celebrity endorsements, aligning itself with stars like Rosalind Russell and Claudette Colbert, and by making its clients feel like they were receiving expert guidance from its sales force, notes Karen Grant, NPD’s global beauty industry analyst.
"Way before you could learn about makeup by checking a website, Avon was offering access to countless products and education that wasn’t otherwise accessible," Grant explains. "Malls were only in certain parts of the country back then, and still aren’t everywhere. Avon gave that access to makeup in your home, and it wasn’t intimidating."
The "scents and sensibility" strategy, as the brand called its door-to-door direct-selling model, had Avon raking in $1 million by 1920 and $1 billion by 1972. In 2008, the brand saw sales of $10 billion. Today, the brand still boasts impressive numbers: There are some 6 million independent sales representatives in over 100 countries. Its total revenue topped $8 billion in 2014, notes a recent report by Zacks Investment Research; while that's an impressive sum, it's still a 20 percent decrease from just six years before.
Since the company's early days, it's relied on celebrity endorsements. Photo: Getty Images
Analysts almost uniformly agree that Avon's decline is rooted in its lack of digital innovation. A few years ago, the company tried and failed to roll out software that would help reps move product online, Fortune reports. The company also redesigned its website last year—its first redesign in ten years.
"The concept of Avon, this community of women, is so relevant now because we live in a social world. The development of shopping for beauty with technology didn’t mean people didn’t want to interact with people, it just meant that they wanted access to product faster," says WSL’s Liebmann. "But Avon didn’t see technology as an enabler, they saw it as competition. They were concerned that if they started to sell directly to the customer, they’d cut out their sales force. Meanwhile, everyone, especially in beauty, was selling their stuff online."
"Avon didn’t see technology as an enabler, they saw it as competition."
In 2003, Avon did try to fight its old-school associations, not by embracing e-commerce, but by launching a new line, Mark, aimed at a younger clientele. A separate sales force was originally tasked with selling the higher-priced brand, but "ultimately that model proved to not be the right success, and so the separate sales force collapsed back into Avon," Harker says. Mark is still sold by Avon, but is a decidedly small part of the business.
Harker posits that Avon actually was an early adopter of the internet, launching a website as early as 1995; there was in fact an e-commerce component, as well as a portal sellers could use to establish their own personal e-stores. But Avon sellers tell Racked the company only began to emphasize digital in the last year or so, and that many reps have been forced to take matters into their own hands, learning how to operate digital businesses without any corporate guidance. Hernandez says when she joined Avon, she was very much left to her own devices.
"When I first started selling, I spent hours combing through its website pages, trying to learn the system," she says of Avon's primitive technology. "It’s layers and layers of web pages. You could get lost, their site has so much information. Everything is there for you, but you have to find it and then commit to learning it on your own."
Avon launched Mark, a sub-brand aimed at younger consumers, in 2003. Photo: Getty Images
Lisa Monoson, a mother of three living in Jacksonville, Florida who has been selling for 15 years, says that Avon "e-stores have been around for a while, but it wasn’t something that anyone was pushing. No one knew how to promote it, and only in the last two years have we been able to ramp up our presence with the help of Avon."
In 2014, Avon unveiled a comprehensive social media hub where Avon reps could download images and messaging to use in their own online selling strategies. But for years prior, many Avon sellers, like Monoson, spent hours creating promotional content for Facebook and Twitter and filming beauty videos for YouTube all on their own. "Now there’s a social media center to help people who have no clue how to promote a brand that is so huge," Monoson says. "But Avon was late on offering that—I was creating my own pins way before them."
"We had to come up with our own training products because Avon didn't have the resources to get an online presence."
Lynette Bledsoe, an Avon representative from Texas who has recruited a team of 400 sales reps in true multi-level marketing form, notes that the company did not have the capacity to help her recruit a team of that size, so she took to the web to attract sellers. Today, Bledsoe manages these reps with her husband and pays for their training on her own.
"When we first started, people had so many questions about how to do things and how to get online, so we had to come up with our own training products because Avon didn't have the resources to get an online presence," says Bledsoe. "Especially in the beginning, my husband and I were doing calls and webinars to reach people how to run a digital business."
Of the technology available to sellers, Harker says that the company has "made a number of improvements already, and we are working on simplifying the [internal] site for our representatives." But modernizing a company like Avon is trickier than people think, he adds. Harker believes that strong-arming representatives into starting websites and selling items through platforms like Instagram would disturb a flow that’s worked fine for decades for many sellers.
"We have people who have been selling Avon for 15, 20 years," he says. "I meet representatives who are 50 years old that still love the brand and have an active customer base they serve. To have them stop what they’re doing and flip them into a digital world would be very disruptive, and a bad experience."
But other direct-selling operations are indeed thriving online. There is a whole slew of new multi-level marketing companies advertising themselves as "social retail" brands—Chloe & Isabel, Stella & Dot, Origami Owl—that have legions of young sellers. Even Mary Kay, Avon’s most comparable competitor, saw revenue increase from $2.5 billion in 2009 to $3.5 billion in 2013; the company has been pushing digital, and social media in particular, for several years.
"To have them stop what they’re doing and flip them into a digital world would be very disruptive, and a bad experience."
Hernandez notes that while Avon is finally making moves online, it still values traditional sales over digital ones. Currently, online sellers see 20 to 25 percent commission, while those who sell items in-person enjoy a commission up to 50 percent. The company says this is because when customers order via a seller's e-store, Avon handles the processing of the order, payment, and shipping.
Then there's the fact that despite its reputation as a cosmetics giant, beauty only makes up 74% of Avon’s sales, according to the company's 2014 annual report. It also sells apparel, footwear, accessories, gift and decorative items, housewares, entertainment and leisure products, children’s merchandise, and nutritional items.
"They’ve turned into this complex business model in terms of categories, offers, and channels of distribution," says Liebmann. "The Avon model can work itself out, but it needs to lose the complexity."
An Avon rep in China tends to a customer. Photo: Getty Images
"When a company like Avon begins to sell everything, you run into a question of credibility," echoes Weingarten. "How is jewelry that’s made in China branded to help Avon? If you’re throwing everything out there—‘Buy this, buy that!’—your core consumer no longer knows where to focus. Avon is just going everywhere, and I think it’s a sign the company needs to reevaluate what it's giving to consumers and who the women are that created the brand. It’s time to go back to the proverbial drawing board. It’s time to go back to being Avon."
There are plenty of Avon beauty products that still enjoy a cult following. The Skin So Soft skincare line and Glimmerstick eyeliners have been consistent best-sellers for years; Avon's top-selling mascaras and eyeliners have thousands of reviews on the company's website. Weingarten believes taking the brand's original mandate—affordable beauty sold by an educating sales force—online is the way Avon can capitalize on this popularity and revive the brand.
"When I think of Avon, I don’t think of the Avon Lady—I think of a corporation," she says. "It’s gotten too large and lost sight of the women who are actually the lifeblood of the brand. It feels like it lacks authenticity. You can’t have it both ways, being an intimate brand, but also a mega-corporation. You have to pick which you are going to be, and if you still want to be the brand that comes into people’s living rooms, you have to connect with them."