Avon overcomes logistic node and resumes route of expansion

Almost two years ago, when the Colombian David Legher took over the Avon Brazil, the subsidiary faced serious problems of logistics, lack of products and delays in delivery caused by the exchange of the information system of the company. Sales fell in this which is the largest market of the American giant, pulling the overall score down. Last year, Avon's sales grew back and, now, 98% of orders are delivered on time to their 1.5 million dealerships in the country.
In addition to the improvements in the operation, Avon put on the market a series of products developed for the taste of Brazil last year, which helped resume the upward trajectory. In the third quarter of 2013, according to the last published balance sheet, the Brazilian operation grew 13% (in constant dollar) compared with the same period the previous year.
"The competition is strong. [But] I like the competition that we have today, "says the President of Avon. For him, the Brazilian market goes through major movements. The industry moves to a multi-channel model. O Boticário, traditionally a franchise network grows through the direct sale and Natura, leader in door to door model, invest in a project of online sales, including direct delivery to the consumer, and the opening of shops-concept. "There is the impact of the moment, but we have to understand and take advantage of this transformation," says Legher. The level of competition also helped Avon global to recognize the need to invest in local portfolio.
"After difficult years, 2013 was very good for us," says Legher. According to the Executive, the subsidiary had two of the best releases in the history of Avon in their respective categories: Avon Makeup line, recast last year with a focus on Brazilian women, and the new line of body moisturizing Charm, made for the local market.
Sales successes cited by Legher are examples of product lines which, according to the company, gained more technology, and were more expensive. "Avon is a brand that democratizes the beauty, but we also want to participate in a portfolio that exists today on the market, which is of a higher price level." The idea is not to have accessible products. "There is a thought that there are some companies more high class or low class. This is a myth. If you want to be big you have to have access to the mass, "he says.
In 2014, Legher says that Avon will also have important releases in its main market segments: makeup, skin care and fragrances. For a year that economists are divided opinions about the impact of the World Cup in Brazil, the Executive says the company has taken a positive attitude towards the event. "We know it's going to be a year of very distracting, and we have to be part of the distraction". Were created about 30 tournament related products, Nail Polish and makeup with the colors of the Brazilian flag to a male fragrance called home run.
Despite the successful initiatives, cosmetics company still grows beneath the market, advancing two digits. Analysts await proof that the Avon, which also sells articles of fashion and decoration, will sustain their recovery in its main segment, whose sales in value grew by 6% in the third quarter, but still declined in volume.
Until 2010, the Avon was the third largest beauty products company and personal hygiene in Brazil, behind Brazilian Natura and anglo-Dutch Unilever's (owner of brands such as Dove and silk). Since 2011, however, the Avon fell to fifth position in the market, to be exceeded by American Procter Gamble & (Pantene and Gillette) and by the Brazilian Group Apothecary.
In makeup, the flagship company, Avon also lost market in recent years. The company continues to lead with off the category, but its share fell from 33% to 28% between 2008 and 2012. In the same period, the Group Apothecary practically doubled its presence in the segment, to 12 percent, approaching the runner-up Natura, according to Euromonitor consulting.
More than 95% of the portfolio of Avon is produced locally in the company's factory in São Paulo and by third party companies. There's a big Distribution Center opened in 2010 in Cabreúva (SP), which consumed investments of US $ 150 million, and two minors in Bahia and Ceará. For now, Legher prefers to invest in new technologies for the drive to open new centres. Ever the competitor Natura bet on an extensive logistics mesh, with the goal of delivering 90% of applications in two days. "Possibly we will have other distribution centers, but it's not something I'm obsessed in making," says the President of Avon.
About the logistics problems that compromised the company of 2010 to 2012, he claims that are already things of the past, but wants to evolve even more. "We have countries with a spectacular service level, such as Colombia. Our goal is not to just get back to the level that we had here in Brazil before, and Yes get the best in the world ".
The company also seeks to modernize its business model, there are 127 years is sustained by the relationship between people, with the launch of two digital tools this month. The first is an application where consumers can choose products and send your shopping list to a dealership for the smartphone. Legher expects a quarter of resellers joining in the application. "We think it will be a very powerful sales tool". The second, to be launched at the end of this month, allows each consultant create an integrated page to Facebook with your "showcase" products. The Natura competitor already has a similar service, launched two years ago.
According to Legher, 95% of resellers Avon make their requests via the internet. Three years ago, this index was 30%. In absolute terms, the number of people who adopt the Middle went from about 300 thousand to 1.4 million consultants. But sales closed by the consumer in the virtual environment still revolve around 5% of the total.
With global revenue of $ 10.7 billion in 2012, Avon invoice $ 5 billion in Latin America and, according to market estimates, more than half of sales in the region are obtained in Brazil, where the company has 7 thousand employees. Natura had net revenue of 5.6 billion Reais in Brazil in 2012 and in the first nine months of last year, rose just 3%.