Relative low penetration presents huge growth opportunities for prospective micro entrepreneurs in direct selling industry in SA
Leading direct selling beauty and personal care products company, Avon Justine, says the relatively low penetration of direct sales micro entrepreneurs presents the company with an opportunity to more than double its sales workforce and provide thousands of women with an earning opportunity to alleviate spiralling unemployment and depleting disposable incomes.
The direct selling industry continues to buck the trend of the economic slowdown, with the personal care and beauty sector accounting for over 46%, or almost R6 billion, of the total direct sales in 2016, according to figures released by the Direct Selling Association of South Africa (DSASA).
Avon Justine has the biggest market share in the direct selling industry in South Africa, with over 20% market share.
“There is still ample opportunity to increase the number of Sales Representatives we have in South Africa without negatively impacting on the sales potential of existing beauty entrepreneurs,” explains Mafahle Mareletse, General Manager for Avon Justine SA.
“Only 18% of South Africans are employed in the formal sector compared to an average of 61% at comparable countries. This means that the bulk of the working population is employed in the informal sector. This represents millions of people with an opportunity to exploit the opportunities that the informal economy, including the direct selling industry, provides,” says Mareletse.
His sentiments follow an announcement that Avon Justine made recently that it will be embarking on a major recruitment drive to enlist new Sales Representatives.
Mareletse explains that based on a formula of 1 Representatives per 10 000 people, the market in South Africa is far from saturated compared to other markets in Europe and parts of the developed world. He says this relatively low penetration of the direct sales industry in South Africa still represents companies such as Avon Justine with a huge growth opportunity.
He concedes that the sluggish economic growth has depressed sales volumes, which have slowed down from double digit to single figures over the past five years. Premium products have been hardest hit, but essential day-to-day personal care products continued to show strong growth. However, he points out that consumers still regard personal care products as a top priority in their list of consumables.
“One of the innate needs of human beings is to look and feel good about themselves. We are a company that empowers women, not only from an earnings point of view, but by also providing women with high quality and affordable beauty products that enable them to don themselves and look beautiful. The first step to empower someone is to make them feel confident. It is on the back of this that we will continue to post steady growth, and aspiring micro entrepreneurs can reap the benefits of the growth of this sector,” says Mareletse.
Observers have cited the uptake of e-commerce as one of the biggest threats to the direct selling industry. Avon Justine has introduced Avon ON app and My Avon Store, an online e-commerce platform, as part of its digital transformation and in a bid to empower its beauty entrepreneurs to stay ahead of the curve.
“A lot of communication and social interaction is now happening in the online space. By introducing these digital platforms, we are riding the digital wave and empowering our micro entrepreneurs to harness the power of connectivity by equipping them with the tools to market their businesses, interact and transact with their customers online without incurring the prohibitive set up costs of an e-commerce portal.
In the past a Sales Representative will have to buy a hard copy brochure and share it with a potential customer. With digitization, our beauty entrepreneurs can simple share a digital brochure with their customers and transact with them online. In the long term, there is less brochures to be printed, which is positive for the environment and for operational costs,” says Mareletse.
He adds that though the traditional method of selling will still become an option for techno-phobe Representatives, the digital option is gaining traction particularly among millennials, with 33% of all direct selling personnel under the age of 35.
Avon Justine micro-entrepreneurs earn income either from the top up they add from discounted stock, or from the commission they generate which could be as high as 30%. Sales Leaders earn revenue from the commission generated by their teams.
To offset the challenge of lack of access to capital, Mareletse says Avon Justine offers credit to qualifying prospective entrepreneurs to purchase stock, which is payable without interest.
“The South African economy is yet to fully unlock the latent potential of the direct selling industry. We believe that the increasing adoption of smartphones and social media will mark a new growth chapter for the direct selling industry, and will help to improve the industry’s employer value proposition,” Mareletse concludes.