Direct Selling in Beauty and Personal Care: The Needed Transformation to Thrive Post-Pandemic

January 2022

Though hit by COVID-19, direct selling stays sixth in beauty and personal care with 8% of value sales in 2020. Flat results in Latin America and good growth in North America balance double-digit decline in Asia Pacific and Australasia. The pandemic-boosted shift to digital will test direct sellers, the business model of human interaction and relationships inevitably turning virtual. Opportunities await those brands willing to reinvent themselves to remain competitive in a post-pandemic world.

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Key Findings

Direct selling remains the sixth largest channel in beauty and personal care

It is well known that direct selling performs well when the economy struggles as consumers shift to more affordable options due to budget constraints, and because it turns into an employment opportunity.

Colour cosmetics and fragrances, key categories for direct sellers, were hit hard by the pandemic, but despite this the channel accounted for 8% of beauty and personal care sales and remained positioned as the sixth largest channel globally.

Direct sellers had to adapt their way of doing business and take the leap to digital in record time. From using social media to promote and sell their products, to opening their online selling platforms, to livestreaming their conventions, brands across the globe responded to the challenges brought by the pandemic.

Strategies and performance differ significantly across regions

In Asia Pacific, direct sellers lose ground to e-commerce pushing them to invest heavily in their digital strategies. Mobile apps and digital tools for consultants were critical to compete with e-commerce. The region was also the first to test livestream events.

The Americas has the largest direct selling penetration, ranging from 4% in Paraguay to 34% in Bolivia. The relational model works well in the Latin American culture, explaining the success of regional brands like Natura, Yanbal, or Belcorp’s Esika, L’Bel and Cyzone.

Western Europe continues to be the most challenging region for direct sellers. However, the success of newer companies like Farmasi in Turkey suggests that the model still has room to grow.

Digital transformation is inevitable and brings challenges and opportunities alike

In a digital world, direct sellers face two challenges: to attract customers – especially among younger cohorts – and shape their shopping experience around their own convenience which nowadays means online, while ensuring consultants retain the key role they play, but in a virtual world.

The model appeals to the human need to connect and relate; the task is then to turn these connections virtual.

Direct sellers have traditionally been highly adept at understanding and adapting to cross-cultural norms which can be an advantage in this new environment.

In less developed countries, and in second- and third-tier cities in developed ones, the shift to digital will take longer and direct selling will remain a fundamental selling structure.

 

Scope of the Report

Scope

A Snapshot of Direct Selling in Beauty

Direct selling is the sixth largest channel in beauty and personal care
Beauty and personal care takes a third of direct sellers’ portfolio globally
Natura&Co becomes largest beauty and personal care direct seller globally
COVID-19 puts pressure on direct sellers across the globe…
…but opportunities lie ahead in a post-pandemic world

Asia Pacific ahead on The Digital Move

A downward trend for direct sellers in Asia Pacific
China’s unique direct selling structure drags the region down, but…
…opportunities exist beyond the largest but restrictive Chinese market
Digitalisation is the path to growth in Asia Pacific…
… but direct sellers can profit in other areas
Case Study: Nu Skin turns digital to keep close to consumers/consultants
Case Study: Diversification helps Atomy to post growth amidst COVID-19
Case Study: Diversification helps Atomy to post growth amidst COVID-19

Consultants, Key Pillar in The Americas

Direct selling remains relevant in the Americas
Direct sellers face challenges diversifying product portfolio
Knowing the local consumer drives Latin American brands’ success
Premium or mass? Direct selling positioning differs across the region
COVID-19 pushes direct sellers to reinforce digital strategies
Digital will not replace consultants, but support their businesses instead
Digitally-native and D2C indie brands become close competitors
Case Study: Belcorp’s Mi Tienda Online expands across Latin America
Case Study: Hinode’s University reaches a larger consultant base
Case Study: Mary Kay turns showrooms virtual with Suite 13

Europeans Remain Elusive to The Model

Direct selling loses strength in Europe, but there are two sides of the coin
Direct selling’s relevance differs in Western and Eastern Europe
Forced initially by the pandemic, party plans continue to move to digital
Shopping experience remains vital for consumers in Europe
Despite the decline trend for direct selling, some companies see growth
Traditional brands challenged by incumbents in Europe
Case Study: Amway increases its reach by helping consumers during COVID-19
Case Study: Avon experiments with boutiques and reps-led stores in Turkey
Case Study: Farmasi’s beauty influencer – a renewed role for consultants

Direct Selling in a Digital World

Direct selling in a post-pandemic world: Reimagine, reinvent, redefine
Conquering younger consumers requires a new approach
For e-commerce it is a matter of how, not if or when
Direct sellers should also respond to industry key themes
The digital consultant, more of an influencer than a sales representative
Key takeaways
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