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Markets & trends

Direct sales channel grows alongside eCommerce

Defying all forecasts that the direct sales channel would decline, the latest figures show that door-to-door sales continue to play a vital role in the distribution of cosmetics in Brazil. According to data from the Direct Selling Association of Brazil (ABVED), the segment recorded R$ 41.6 billion in business in 2013, with an increase of 7.2% in the year, outperforming GDP growth for the same period by 4.9%.

Coming fourth in the global ranking by the World Federation of Direct Selling Associations (WFDSA), Brazil falls behind only the U.S., Japan and China, with a fleet of more than 4.5 million independent sales representatives throughout the country. The door-to-door sales model, as well as the franchise channel, has emerged due to the gaps left by a timid multi-brand retail, which has only recently begun to gather pace in Brazil. Regions of the country where traditional commerce is less significant represent even more attractive business opportunities.

Roberta Kuruzu, ABVED

Roberta Kuruzu, ABVED

Propelled by the work of sales consultants, the convenience and the wide offer of products, the direct sales channel is no longer merely a way of supplementing one’s income; it also attracts entrepreneurs interested in starting up their own business without the need for a large initial investment. “Direct selling is done through personal relationships, and consumer behaviour in Brazil is heavily influenced by recommendations from family and friends,” says Roberta Kuruzu, Executive Director at ABVED.

Although new product categories have been increasing their share of the market, including clothing and home care, cosmetics and personal care still account for the biggest slice of the global market (35%), according to data from the WFDSA. In Brazil, the category holds 80% to 90% of market share.

Market leaders Avon and Natura, which reigned absolute for decades, have been feeling the weight of the competition in recent years. Peruvian company Belcorp arrived in Brazil in 2012, while Jequiti and Eudora came onto the market backed by powerful groups.

In a scenario dominated by the big players, is there any room left for small companies? Roberta believes there is. “Small and medium companies can add value through innovative and unique products, as well as presenting an attractive business opportunity for potential sales consultants,” she says. Roberta does not believe the recent rise of multi-brand retail, with the entry of Sephora to Brazil and the launch of The Beauty Box, has jeopardized the channel’s performance. “These players distribute their products through own stores; it’s a completely different strategy.

Even the eCommerce expansion, which many predicted would mark the end of the door-to-door trading model, has ended up complementing the work of the sales representatives, as many use the internet to multiply their network of relationships and increase clientele. “The internet and the social media channels have emerged as a powerful tool for sales reps to expand their opportunities. Although virtual, commerce continues to be carried out through the relationship between consultant and customer,” says Roberta.

An example of the synergy between online retail and direct sales is the Rede Natura (“Natura Network”), a pilot project created by Natura in the countryside of São Paulo. Through the website, customers select both the products and the consultant who can assist them in the purchase process. Besides its cosmetics portfolio, in May, Natura also began marketing fashion and home care items through the website. The company has an exclusive consignment agreement with 15 small and medium manufacturers. The criteria for the choice of partners includes originality, sustainability and ethics.

Fernanda Bonifacio

Portfolio

© 2014 - Brazil Beauty News - www.brazilbeautynews.com

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