Proposal Analysis Of Avon's Returning To Full-scale Direct Selling In China

ABSTRACT:Avon China has experienced two great transitions since 1998. These two transitions show key strategic errors, which leads to its gradual decline in Chinese market nowadays. Avon lost$11 million during first-quarter of 2010, and lost$2 million during second quarter. In 2009, the sales volume of Amway China was 20 billion RMB while Avon China was only 25 million RMB. The gap between the former two big direct seller giants with main business daily chemical products is widening and widening. Since recent one and two years, Avon has been trying to adjust this embarrassing situation. In May of 2010, Avon China's new general manager Rene Ordonez claimed to return Avon to direct selling model within 18 months. Converting existing marketing mode and returning to international direct selling sequence will lead to high cost inevitably.This paper will research from four directions:First, the advantage and deep-rooted illness of direct selling, direct selling's real power lies in multilevel marketing; Second, The analysis of reasons and problems in Avon China's two previous transformations. Third, How Avon China defuses resistance during full-scale direct selling process and structure rational solutions. Fourthly, Analysis and suggestion of China's direct selling enterprises.This paper aims to study Avon's third transition scheme by methods such as induction, literature methodology, case study and PEST analysis tools. After analysis and research, the following conclusions are obtained:First, direct selling does not equate to illegal pyramid sales, they have distinction in essence. In China at present, single-level marketing is legitimate, and multi-level marketing is illegal. Second, by comparing Amway and Avon's localization of direct selling strategy, concluding the problems brought by Avon's two unsuccessful transformations. Third, during return to direct selling reform process, Avon needs to take both competitiveness, and minimum cost transformation scheme. Scheme mainly includes two parts:product support plan and service support scheme. Fourthly, China direct selling industry enlightenment periods have passed by, now it enters evolution period, national daily chemicals direct selling enterprises can draw lessons from foreign successful direct selling model and reaches internationalization.