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World’s Biggest Network Marketing Company (MLM) - AVON
How AVON started the Network Marketing (MLM) strategy
AVON is known to be the biggest direct selling company for many years. Before the network marketing (MLM) was introduced in AVON, sales representatives earned only from direct sales and direct referrals.
In 2005, AVON planned to focus in "recruiting” as part of their large restructuring program to increase sales and cut expenses. In the same year, AVON reported to the Securities and Exchange Commission and announced plans for expanding their Sales Leadership program and improving the attractiveness of their Representatives’ earnings opportunity. The Sales Leadership program was described as "multi-level compensation program”. This gave way to AVON Sales Representatives to earn more money from commissions earned by their recruits and from their own Avon products sales. This was how AVON started to focus in network marketing (MLM) strategy.
Growth of AVON as the Biggest Network Marketing (MLM) Company
In 2011, AVON generated US$ 11.30 billion gross revenue (almost 20% greater than Amway) and US$ 517.80 million profit. It ranked no. 1 in the list of world’s top network marketing companies with highest revenue/income. AVON’s competitor, Amway ranked the second. You can see below the gross sales revenue comparison table of the two companies in the last 5 years.
Data and figures in the table are collected from annual financial reports of AVON and AMWAY.
AVON as the World’s Biggest Network Marketing Company (MLM) Today
Andrea Jung is currently the Chief Executive Officer (CEO) of Avon. She’s known as the longest tenured female CEO among Fortune 500 companies. In December 2011, plans have been announced including the appointment of a new CEO.
At present, AVON supports 6.5 million active AVON independent sales representatives in over 140 countries. It’s the leading global beauty company.
AVON received numerous acknowledgements and awards such as:
The future of AVON in the network marketing (MLM) industry is a mixture of excitement and fear. In February 2011, it planned to restructure its global operations with the help of McKinsey & Co.. It planned to cut costs in Avon’s North American unit.
It also planned to conduct in-depth operational and financial review by looking closely at its market, management roles and capital allocation. There’s an excitement of getting to know the positive results of restructuring program.
On the other hand, there’s also fear of getting to know the declining profits of Avon. It is currently facing financial difficulties – around two years of declining profit.
Can Avon successfully turn around the declining profits? Can its current restructuring program bring it to a new beginning of a brighter and more profitable network marketing leader?
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