During the so-called “golden period” for direct selling in Croatia (around 2004), the element that made the fast development possible was also the element that carried the eventual seeds of failure: multilevel marketing. Croatians are less prepared to work hard and persistently for years when they get promised fast success based merely on their position in the network.
With the market looking relatively unattractive for direct selling representatives, technology could come to its aid as it offers the possibility of using the online component. Companies have accepted the weakness of the representative-selling-to-end-user concept and are increasingly switching to creating representatives among end-users, which means that they prevalently buy for themselves, plus buying some additional merchandise for friends and family.
Apart from being hostile to the MLM principle, Croatians like to “touch and see” the goods before buying. They do not trust buying something from a catalogue that they have not seen in person, and sales representatives cannot bring the entire product portfolio to a house-based presentation.
Avon Kozmetika is the traditional leader in direct selling, also being the most stable player in the channel as well. The company did not make the mistake of engaging in MLM but has always relied on the so-called “Avon Ladies”.
Herbalife, as the runner-up in direct selling, achieved this position only at the beginning of the review period. Prior to that, it not only had to fight against the competition that used the MLM approach, but also against some regulatory troubles its parent company got itself into concerning its business practices, for which it reached a large financial settlement in 2016.
Two globally renowned direct sellers have had to significantly reduce their physical presence in Croatia; Amway even closed its office in the country and is running its operations from one of the neighboring countries. It is interesting to see two direct selling players still keep their sale, though; Oriflame is slowly declining over the review period, while Amway even manages to recover from the lowest point in 2014.
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This industry report originates from Passport, our Retailing market research database.