[Direct Report Network Beijing, November 30th] (Interface News) Recently, the news that Guangdong old-fashioned direct selling giant Avon is about to withdraw from the Chinese market has been frequently reported. Although the news has not been officially confirmed, in recent years, Avon’s performance has continued to decline and marketers continue to Loss is a fact. And another well-known direct selling company in Guangdong Amway has been declining for five consecutive years since 2013. In this regard, Amway has continuously adjusted its strategy in recent years to seek a breakthrough, but the results are still unknown.

 

As the earliest provinces that introduced the concept of direct sales, the number and volume of direct selling enterprises in Guangdong, the number of employees, sales, etc. have always ranked first in the country; the earliest direct selling giants entering the Chinese market, such as Avon, Amway, Infinitus, and Perfection, Its headquarters in China are located in Guangdong. With the rapid development of consumption and the rapid development of the Internet and e-commerce, the dividends in the direct selling industry are gradually losing. Under the new economic era, how should Guangdong's old direct selling companies achieve transformation?

 

Avon lost for years, it’s too late to switch to e-commerce

 

"As a 70, it is no stranger to the brand of Avon. I remember that Avon was very hot at that time, and many people couldn't afford it; now I rarely see Avon's products." Mr. Lin, a citizen of Guangzhou, said this.

 

In the 1990s, Avon entered the Chinese market in direct sales, and its headquarters was in Guangdong. During the heyday, many product lines covered the young and middle-class consumers at that time; in 1997, Avon China's direct sales personnel reached 35. With an annual revenue of more than 1 billion yuan, it is a brand with good product quality and image in the skin care market.

 

Since last year, news of Avon’s withdrawal from the Chinese market has continued. The direct sales of the direct sales personnel, the replacement of the head of the game, the strategy of uncertainty, has become the core of its criticism. According to Avon's latest earnings report, as of the third quarter of 2018 (September 30), the number of active sales representatives of Avon decreased by 5% year-on-year, and comparable sales also fell by 4% year-on-year.

 

In addition to the company's internal problems, the deep reason for Avon's failure in years has been that it cannot keep up with the development of the times.

 

The industry believes that compared with other similar enterprises to actively adapt to the development of the Internet, it is too late for Avon to enter the era of "e-commerce". It is understood that in the summer of 2014, Avon redesigned the website for the first time in ten years to adapt to the development needs of the network personality era, and for the first time enabled social tools such as Facebook to send new product suggestions to customers. However, the new generation of consumer groups of the Internet has been taken away by other similar businesses.

 

At the same time, with the popularity of the mobile Internet, the rise of the millennial consumer groups and the emergence of various cosmetic skin care brands, the direct sales model is no longer. In the vast ocean of the Internet, the entire sales environment has changed, and the advantage of direct sales has been replaced by the Internet. For example, in terms of word of mouth, online word-of-mouth communication is now more efficient and effective than offline, and the traditional direct sales model encounters bottlenecks.

Amway is actively deploying social e-commerce, and it is not known whether it can save the dilemma of revenue.

 

Also as a veteran direct selling giant in Guangdong, under the impact of the Internet and e-commerce, Amway is also actively seeking transformation in recent years.

 

Under the background of the rapid development of China's social media, e-commerce, online payment, and logistics systems, Amway has set its sights on the O2O social e-commerce startup platform. As early as March 2016, Amway has officially released its “Internet Plus” strategy in China, announcing the establishment of a mobile social e-commerce centered on Amway Internet, Amway Cyberport APP, Amway Cloud Service Micro Signal, and Amway Mobile Studio. system.

 

It is understood that at present, more than 90 of Amway's 267 self-operated stores nationwide have been upgraded to offline experience facilities; on the online, Amway launched the e-commerce platform "Amway Cloud Shopping", and the home delivery system has also covered the whole country. , to achieve delivery to the home.

 

In September this year, Amway also launched another e-commerce project "Amway Micro-Purchasing". Amway marketers can purchase products for their own use at a preferential price on the micro-purchase platform, or they can promote the products for the company by sharing the micro-purchase platform product links.

 

Compared with the Internet transformation from the wind and water, Amway's performance in the Chinese market has been declining for five consecutive years. The original performance position was replaced by Infinitus. The performance in 2017 is almost the same as the third place. .

 

In this regard, Huang Yingzi, an associate professor at the School of Management at Sun Yat-sen University, who specializes in the direct selling industry, believes that although Amway is actively transforming social e-commerce, as a direct selling company, its core direct sales model has not changed. It is only a superficial thing that is difficult to reverse. The overall situation. "Amway's fist product is NUTRILITE, NUTRILITE's sales once occupied 65% of its turnover, but sales have declined in recent years, which led to a decline in overall performance."

 

In addition, Huang Yingzi also said that the increasingly fierce competition in the industry is also an important reason for its decline in performance. “Amway’s entry into the Chinese market was dominated by nutraceuticals. At the time, due to fewer competitors and less awareness of brands, Amway once occupied the position of the leader of direct sales; however, in recent years, health care companies have proliferated. In particular, there are many brands and products that focus on Chinese medicine health products. These products are more in line with the Chinese consumer culture and will inevitably impact them."

 

Zhu Danpeng, an analyst in China's food industry, also said that on the one hand, the health care products market is getting bigger and bigger, and more and more companies are entering the health care products industry. The competition is becoming more and more fierce. On the other hand, because Amway is a direct selling company, Many consumers will mistakenly think that it is a pyramid scheme, or that their product price bubble is large, they will tend to choose other brands.

 

"Overall, Amway still has to work hard in product innovation, channel mining, service system construction, etc. It is difficult to change its revenue dilemma by transforming social e-commerce alone." Zhu Danpeng told reporters.

 

The transformation of Guangdong old-fashioned direct selling enterprises should be integrated and innovated from many angles

 

"Guangdong's direct selling industry has developed to this day, and has been hit by various factors, and has already encountered a 'kan'." Huang Yingzi said.

 

In terms of market performance, the number of established direct selling companies in Guangdong ranks first in the country, but sales performance in recent years is not very good. Taking the industry's three giants as an example, Amway's revenue has declined for five consecutive years since 2013; while Infinitus and Perfect have declined for three consecutive years since 2015.

 

"We have done relevant research, and the results show that most consumers think that the biggest advantage of direct sales is shopping convenience, but today, with the rapid development of the Internet, the convenience of direct sales has been replaced and surpassed by e-commerce." Huang Yingzi said. The loss of the advantage of the direct sales model is the main reason for the dilemma of the entire industry.

 

So in this context, how should Guangdong's old direct selling companies achieve transformation?

 

Huang Yingzi believes that in the era of the new economy, direct selling companies should fully exploit their new advantages, such as the organization of the community and the stickiness of the team. "How to use social e-commerce, WeChat platform, etc. as an effective tool, better combined with its social organization, is a problem that current direct selling companies need to think about. If properly combined, you may be able to find a new way out."

 

"In addition to the transformation and expansion of channels, the original product strategy, marketing model, and internal reward and punishment policies of direct selling companies should be adjusted and innovated with the development of the times." In Huang Yingzi's view, the old-fashioned direct selling companies must To seek new breakthroughs, we must not only work on one aspect, but should fully understand the market and innovate from multiple angles.

 

"Quality is the core, the brand is the endorsement, and the service system is the landing. This is the three dimensions that Chinese enterprises must do in the future. Direct selling companies are no exception." Zhu Danpeng concluded that the old-fashioned direct-sales enterprises are transforming, products, brands, All aspects of channels, technologies, and services must be upgraded.