The New York Times Business Section had a great article/ interview last week with Avon chairwoman and chief executive, Andrea Jung. www.avon.com Jung, the daughter of Chinese immigrants in Toronto moved to a suburb of Boston when she was 10. Jung discusses with the Times how she thinks both Avon and the direct sales model, can help improve the lives of woman around the world.
The article focuses on how the direct sales model can help build communities and strengthen women around the world by empowering women to achieve financial and personal freedom. Ms Jung also speaks to the times about what countries she feel will be in the future for the cosmetic company.
The direct sales model has become extremely profitable and successful around the world, particularly within the cosmetic industry. Avon has been a leader in both the cosmetic world and within the direct sales industry over fifty years.
During Jung’s tenure with the company Avon has both increased sales on an annual basis and has expanded their global presence. Over 5 million distributors now sell Avon products in countries all over the world.
It’s a great interview- short and worth the read. Ms Jung has done an amazing job with Avon and it’s interesting to hear her insights into the industry and where she thinks Avon will go in the future.
Here is the transcipt.
Source: New York Times
THE cosmetic company Avon Products traces its roots to the horse and buggy days of the late 19th century, when sales representatives sold perfume door-to-door, often to women who lived far from big department stores. This American frontier model has translated well to countries like Brazil and China, where large populations are dispersed across a vast countryside. Today, more than two-thirds of Avon’s sales are outside the United States.
The direct-selling model — where independent sales representatives do not work directly for Avon — makes it easier to break into new markets, says Avon’s chairwoman and chief executive, Andrea Jung. About 5.5 million sales representatives now sell Avon products, be it lip gloss in Shanghai or face powder in Rio de Janeiro.
The company, reporting its third-quarter earnings Thursday, said the only region where sales fell was North America, which it defines as the United States, Canada and Puerto Rico. By contrast, revenue rose 25 percent in both Latin America and China and 8 percent in Western Europe, the Middle East and Africa.
Ms. Jung, who was born the daughter of Chinese immigrants in Toronto and moved to a suburb of Boston when she was 10, recently discussed how she thinks the company’s direct-selling model can improve the lives of women in developing countries and where the next big growth opportunities are for Avon.
Q. Since you became the chief of Avon in 1999, the company has expanded into emerging markets. Why do you think your direct-selling model works so well in developing countries?
A. It is part of a movement around the world for women to have more economic independence. From her very first order, a representative does not have to pull the money out of her pocket. We send her the products, and she pays us after she sells them. The direct-selling model does not have to be centered around where there is heavy retail infrastructure, either. For example, China is going to be one of Avon’s largest market opportunities. It has a large geographic expanse, with hundreds of thousands of women in small villages really striving to make an earnings opportunity for themselves.
Q. And the majority of your independent sales representatives are women?
A. Well over 95 percent are women and the men are often in Avon couples. I love those conversations, where the husbands tell me that they quit their jobs because their wife’s business was doing so well, so they’ve joined forces to run the business as a couple.
Q. Given the fact that your sales representatives are not employed by Avon, how do you establish new markets?
A. We hire recruiting managers, who are Avon employees. They start canvassing for representatives in work places, in religious gatherings, in school fund-raisers. We also run recruiting advertisements in a dozen markets today. And we train our representatives how to manage their businesses online. For example, in Turkey, where there is not much Internet penetration, we have close to 100 percent of our sales representatives entering their orders online. They go to Internet cafes or libraries.
Q. How do you deal with economic uncertainty in emerging markets?
A. With what’s going on the last couple of weeks, it reminds me of the very difficult time we had in Russia. I recall in the late ’90s, with the massive devaluation of the ruble, our Russian business really became quite challenged. Some companies were retrenching, but we looked across Russia and saw 11 time zones, with women in every small town and village who wanted the opportunity to be economically independent. So we were committed to staying.
Q. Do you feel that your experience growing up as the daughter of Chinese immigrants has influenced your career?
A. It has given me a global vantage point, being the daughter of immigrants from China, who had nothing when they came here. And now I am leading a company. It speaks to something deep in me, the concept that you don’t have to start with anything. The direct-sales opportunity allows people to change their lives.
Q. Many of your customers are familiar with the work of the Avon Foundation, but they might not know that you have similar programs in countries like Mexico and Malaysia. How global is your philanthropy now?
A. We’ve got programs in around 50 different countries. Together, we have raised $580 million, mostly for breast cancer research, diagnosis and treatment. A couple of years ago, we added a second issue: violence against women. We have made educational pamphlets about breast self-exams and about domestic violence, which our representatives can give to their customers. We have donated mammography units to underserved hospitals in Spain and created mobile mammography units in China.
Recently, I had one of those amazing experiences where life and work intersect. My maternal grandmother, who was from mainland China, died of breast cancer in Singapore in the 1970s. It was diagnosed at a late stage and she just passed away. It was something that wasn’t talked about back then. It was the “c” word. About a year ago, my mother discovered that she had breast cancer. She was diagnosed at an Avon breast cancer center, which our people worked so hard to donate to Mass. General. It was detected at a very early stage, with digital mammography, and one year later she is cancer-free. When I look at the two generations in my own family, it shows the progress that has been made on this issue over the last 30 years.
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