Direct selling is another middle-class shortcut to make ends meet

It all started with door-to-door Bible sellers, but much closer in history, in 1851 Isaac Singer decided to break the mold and went door-to-door selling his sewing machines. Direct sales were born, which they are now completely changing hand in hand with e-commerce.

This activity, they say out of sheer tenacity, hosts in Argentina a millions of retailers. They are mostly women who belong to the bottom of the social pyramid. Lately and at the pace of the crisis it has become a refuge for the middle class: is the extra income that allows you to make ends meet.

the Avon case

Avon CEO Rolando Castro loves crowded places where retailers go with their children or grandchildren to meet their customers. This UBA graduate economist is also a retailer to “know firsthand what’s going on with the products”. And so he found cops, teachers, and truck drivers who started selling. Also psychologists, lawyers and graduates in administration, among other professions.

Avon emerged 136 years ago in New York and is experiencing a revolution. It was acquired by Nature in 2019 at 2 billion dollars. This has allowed Natura to become, from its native country, Brazil, the third cosmetics company in the world after Unilever and L’Oreal. Avon has given him a large presence in Europe, Asia and Africa. In turn, Natura is unbeatable in Latin America.

In the process, Avon, which relaunched its brand in 2020 and is managed separately, shakes some of its rigid corporate culture into a dynamic in line with the airs of a Brazilian company.

the digital revolution

And on that path they live the digitization that implies online sales respecting the space of retailers through their own platform or others. This type of marketing is growing rapidly, albeit today it represents only 5% of the business.

The direct sales companies met several years ago in the Chamber of Sector (Cavedi) whose first step was the a code of ethics to protect against scams and pyramid sales that have left thousands of families in the open and caused suicides, here and in the world.

Gonzalo Falcón, Cavedi’s chief executive, points out that direct selling “is a source of money, training and evaluation for the most vulnerable sectors”. By the way, his behavior is countercyclical. That is, it flourishes when the economy collapses. In 2021 they moved $ 122.309 million, 50% more than in 2020, almost on par with inflation. But 2020 “was the best year in history due to the massive incorporation of people into the system due to job losses during the pandemic,” Falcón said.

As for Avon, it counts 300,000 resellers and leads in the country. 70% of its basket is made up of beauty products and the rest of items for the home.

inflationary impact

For them, too, the moment of the boom was during the pandemic and through various platforms. In those years the flagship product was a lipstick that did not stain the covering of the mouth. This year the question turned to articles related to skin care and fragrances.

One of the nine factories that Avon has in the world has been located since 1980 in Moreno, Buenos Aires. where they employ 250 people. There they produce 96% of the cosmetics sold in the region to which they export 30%. Therefore, things are saved from begging for dollars to import.

Incidentally, the ever-increasing costs of inflation occupy a large part of Castro’s agenda: he must set prices in advance for the preparation of the catalogs and his challenge is that they continue. “Standard costs instead of replacement costs”.

Obviously, sacrificing margins. She explains it this way: “I command less than I would like to have a good level of profitability”.