Unlimited potential for direct selling of cosmetics in Africa

  

“The Jingle Jangle Pedlar man shouts ‘Come and buy my wares. I’ve got beads and bangles and earrings too’ ” – so starts the poem, The Pedlar Man, of Anna Selena Mcsevney. In the past a pedlar would cart his merchandise over hills and dales to remote homesteads that were far removed from towns and shops. Peddling was the forerunner of direct selling.

In modern times direct selling is the personal presentation and sale of products directly to consumers away from a fixed retail location, usually in their homes or at their jobs. For many direct selling is synonymous with the so called party plan where a group of friends, some interested, some curious and others coerced, is gathered in someone’s lounge and an agent is demonstrating his or her products. Tupperware plastic containers are probably one of the most well-known products that are sold this way.

Today direct selling is dynamic and rapidly expanding with global sales of US$117.5 billion in 2009, according to the World Federation of Direct Selling Associations (WFDSA). This growth is very visible in the cosmetics industry. In the 2011 South African Sunday Times Top Brands Survey in the Beauty and Cosmetics category, direct marketing companies Avon and Avroy Shlain have climbed to the 3rd and 5th position respectively, bypassing popular brands like Revlon, L’Orêal and Lancôme. According to Brandirectory, Avon holds the second position worldwide for all cosmetics brands with sales of more than $11 billion.

There are many advantages in becoming a direct selling agent. Apart from the obvious extra income, there are no required levels of education, experience, financial resources or physical condition. People of all ages and from all backgrounds have succeeded in direct selling. It offers the opportunity to own a business of your own with very little or no capital investment. In most cases agents are required to purchase a start-up kit, but for some companies, like Sh’zen, even that is free. Training and support is provided by an established company. It also offers the choice of working part-time or full-time.

Direct selling can operate as single-level marketing where the agents are selling products directly to the consumer. Companies can, however, make use of multi-level marketing where the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a down line of distributors and a hierarchy of multiple levels of compensation.

Even in South Africa, the continent’s most developed economy, direct selling has yet to reach its full potential. Success in any business can be difficult to achieve in good economic times, and even more difficult when the economy slows down. While the reasons for such struggles and failures vary, a widespread cause is underdeveloped skills. The Direct Selling Association and the University of Johannesburg developed a practical programme to enable students to build a small direct selling business. The Durban University of Technology and the Tshwane University of Technology have also introduced pilot modules. Cosmetic companies Avroy Shlain and Avon-Justine participate in the programme. Over 9,600 students have completed the programme since its initiation in 2002.

The leading South African cosmetics direct selling companies are Avon-Justine, Avroy Shlain, Sh’zen, Vanda, Annique and Jean Guthrie. Although these companies’ main focus is developing the South African market, most of them are selling in neighbouring countries that belong to the Southern African Customs Union that allows for free interchange of goods between the member countries. Consequently Avroy Shlain and Vanda currently sell products in Namibia, Botswana, Lesotho and Swaziland. Sh’zen is also represented in Namibia and Botswana. Jean Guthrie operates in Zimbabwe and Namibia.

The larger Southern African Development Community (SADC) is also beckoning. SADC has a free trade area (FTA) that has liberalised 85% of its internal tariffs. It is, however, not straightforward. Petros Shayanowako, a researcher at the Trades Centre in Zimbabwe recently said there are countries like Malawi, Tanzania and Zimbabwe that have sought to delay the implementation of the trade agreement. The inconsistency within the FTA is experienced by Sh’zen. Ingrid Alexander, managing director for Sh’zen said that although they have a “thriving business” in Zimbabwe, they find that the duties on products are exorbitant and that it is a challenge to get goods landed at a competitive price. Sh’zen also had enquiries from Uganda, Kenya and Zambia, and they are currently investigating those markets.

With an eye on the African market, many companies have created new products especially with darker skin tones in mind. Avroy Shlain and Vanda are targeting the lower and middle income market by providing not only luxury products, but also attractively priced products. Avroy Shlain has launched its more affordable range, Avroy Pure, 10 months ago and has already sold more than a quarter of a million units.

The South African rural market and neighbouring countries are, however, not without challenges. Deliveries to more rural areas are difficult and moving stock across borders is often fraught with delays. Justin Hewett, managing director of Avroy Shlain, said that the advantage of rural communities is that there is less competition from the retail sector.

“Chris de Kock, managing director of Vanda, explained that although their product offers opportunities to the unemployed, the reality is however “to find reliable partners who are financially strong with integrity.”

Avon, the company who invented the concept of directly selling beauty products 125 years ago, have distributors in Morocco, Egypt, Tunisia, Zambia, Mozambique and Namibia. In South Africa it operates as Avon-Justine. Oriflame, the Swedish direct cosmetics company with worldwide sales of more than $1.8 billion, has a footprint in Kenya, Algeria, Egypt, Morocco and Sudan. In Kenya alone they intend to provide employment for more than 100,000 agents. Apart from market visibility and a product range of over 400 natural cosmetics in the local market, Oriflame had also reduced the catalogue prices of its popular brands by up to 40% in order to make them more affordable to existing and potential consumers.

Enver Groenewald, general manager for advertising revenue at South African media company Avusa, emphasised that today’s consumers are increasingly demanding and “meeting customer needs in this very dynamic environment will call for effective, two-way communications between service and product providers and their customers, to ensure that they have a real understanding of customers’ needs …” Direct selling’s very personal approach is perfectly pitched to fulfil these demands. With the growing African middle class the possibilities are endless.




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