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Direct Selling in Latin America

July 2019

This report analyses the performance of direct selling in Latin American markets, considering how the different product categories perform within this channel. It also explores the competitive landscape, addressing initiatives from players with both domestic and regional operations. Lastly, it features expectations for the 2018-2023 period, especially regarding beauty and personal care direct selling, which is the leading product category sold via this channel.

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Key Findings

Beauty and personal care sets the pace

Direct selling in Latin America is strongly impacted by the performances registered in Brazil, Mexico, Colombia and Argentina. Direct selling in these countries, in particular in Brazil, relies heavily on the performance of beauty and personal care products; therefore, any significant movements registered by this category, such as consumers migrating to drugstores, has a marked effect on total regional figures.

Trading down and channel migration impacts value sales

The economic slowdown in several countries in the region during the review period led to a deterioration in labour market conditions and affected consumer confidence, with a negative impact on expenditure. Consequently, large direct sellers saw a decrease in sales, owing to a drop in the number of orders, mostly resulting from consumers trading down and migrating to other channels.

Career opportunity

While direct selling is negatively impacted by lower consumer expenditure, it benefits to some extent from periods of economic turmoil, as it typically represents an alternative means of earning some income during times of financial constraint, and even a career opportunity.

Direct sellers going multichannel

Competition from other channels, such as internet retailing and drugstores, is a factor in Brazil, Uruguay, Mexico and Chile, in particular. Players are thus diversifying their channel coverage by going online and opening physical stores. Nevertheless, the role of the seller is still a central part of their businesses.

Brand loyalty for sellers too

Besides focusing on the customer’s perspective, companies are implementing online tools to provide training and support to sellers at a lower cost, as well as to engage them and cement their brand loyalty.

Introduction

Scope
Key findings

Regional Overview

Deterioration in market conditions enables number of sellers to grow
Brazil’s poor performance drags down direct selling in the region
Beauty and personal care leads in most markets
Other direct selling in Ecuador boosted by sales of domestic players
Growing relevance of categories other than beauty and personal care
Decline in BPC direct selling in Brazil drags down the whole region

Leading Companies and Brands

Increased segmentation favours small players in Brazil and Argentina
Be it fragmented or consolidated, the market is all about person-to-person
Decreasing number of orders impairs Avon’s performance in the region
Natura’s acquisition of Avon will expand its regional reach
Loyalty of sales representatives is key to the success of large players
Direct sellers rely on multichannel strategies to remain relevan

Forecast Projections

Weak growth for direct selling as consumer confidence slowly recovers
Direct selling growth driven by Brazil and M exico

Country Snapshots

Mexico: market context
Mexico: competitive landscape
Brazil: market context
Brazil: competitive landscape
Argentina: market context
Argentina: c ompetitive landscape
Colombia: mar ket context
Colombia: competitive landscape
Peru: market context
Peru: competitive landscape
Chile: m arket context
Chile: competitive landscape
Ecuador: market context
Ecuador: competitive landscape
Bolivia: m a rket context
Bolivia: competitive landscape
Guatemala : market context
Guatemala: competitive landscape
Dominican Republic : market context
Dominican Republic : competitive landscape
Costa Rica: market context
Costa Rica: competitive landscape
Uruguay: market context
Uruguay: competitive landscape
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