Having been very popular for many years, direct sellers are now fighting to maintain their share of sales and further grow their businesses. Strong competition from online vendors and stores in shopping centres is affecting the channel’s growth potential.
Beauty and personal care products continued to account for the highest share of sales in direct selling in 2018 thanks to the strength of players such as Avon and Oriflame, which have been present in the channel for many years and are well-known to consumers, who also perceive their products as offering good quality. Indeed, many Romanians return to direct sellers for specific items, not being interested in other products.
As disposable incomes increase some consumers are abandoning the direct selling channel, particularly because it is a time-consuming retail format, instead preferring to shop in modern shopping centres or online. This trend is likely to continue or even accelerate over the forecast period.
International companies continued to control the channel in 2018, with local players holding very little sway. Firstly, entering this channel has always been a challenge for most local players due to the high cost of printing and sending out catalogues on the one hand and the need for trained sales consultants on the other.
Avon remained the clear leader in direct selling in 2018, followed by Oriflame some way behind. Avon is expected to maintain its strong leading position over the next few years.
The internet has changed the landscape for direct selling companies, forcing them to adapt their strategies and adopt an omni-channel approach so as to remain relevant in an environment where consumers appreciate the ability to make quick purchases. For now, both Avon and Oriflame have managed to combine their direct selling model with an online presence, but over the medium and long term this way of doing business will be difficult to maintain.
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This industry report originates from Passport, our Retailing market research database.