Avon’s announcement few weeks ago shook the global direct selling community deeply. But how could it not? The world’s second largest direct selling company said it would withdraw from the U.S. Direct Selling Association “based on the belief that in the U.S., the DSA was not advocating effectively for Avon and its representatives”.
I will leave this offically-stated reason aside for a while and first, focus on what this exit meant in general: The U.S. Direct Selling Association (DSA, in short) was formed in New York in 1910. In the beginning, it was called the “Agents Credit Association”. Among the 10 founding members of the association, was Avon (“California Perfume Company” as it was then, called). So, a “long-standing member” does not fully explain Avon’s relations with the U.S. DSA. We are in fact, talking about the withdrawal of a company that has been in the DSA from day one!
Along with this announcement, Avon also sent an open letter to other members
of the association, signed by Cheryl Heinonen, Senior VP, Corporate Relations. In that letter, Avon pointed out few issues. You will find these issues and my questions on them below:
• Avon said: The U.S. DSA’s agenda was overly-focused on the issues of a few brands rather than industry-wide challenges. There was also a need to enhance the DSA Code of Ethics. However, Avon did not believe the current U.S. DSA would address neither of these.
Question: The U.S. DSA, as stated on its web site, currently has 167 full
members. I was wondering if, being as a dissatisfied founding member, Avon lobbied all those others to overthrow the existing board through an extraordinary meeting, for instance. Or, can it be that the majority of the members do not share Avon’s concerns?
• Avon said: Avon’s model did not rely on sales of inventory, training or support materials between representatives. The core of its business model was based on representatives selling products to end-consumers.
Question: Is Avon saying those whose models relied on such activities have been accepted as DSA members? Did Avon raise its voice when such companies applied for memberships? If this issue has not been included in the Code of Ethics, then has Avon tried to convince other members to have it included in the Code, but has met with resistance?
• Avon said: Avon had reasonable return policies so representatives were not left holding excess inventory.
Question: Are there any U.S. DSA members that do not have clear return policies? If there are, has Avon applied for them to be expelled?
• Avon said: Avon limited representative earnings to three generations, with no promises of commissions infinite sales, incentivizing representatives based on their sales to customers.
Question: Does this have anything to do with the whole argument made by Avon? Avon might have chosen a compensation plan while some others might have picked different ones just as legitimately. Can this ever be a convincing point of concern that would lead to its leaving the DSA?
Avon announced it exited only the U.S. DSA and said it would stay at the World Federation of Direct Selling Associations (WFDSA) and at other country direct selling associations. This is another interesting point in Avon’s move. Should we now accept that WFDSA’s and other DSAs’ codes and practices are way different than those of U.S. DSA’s?
As you see, there are many questions that need to be answered. And I think Avon management owes these answers to the industry.
Coming back to the official reason behind Avon’s leaving mentioned in the first paragraph above, I would ask, “Is it one of any DSA’s duties to ‘advocate effectively’ Avon and its representatives, anyways?” On the other hand, I believe it is one of every DSA’s duties to advocate a member company if it is being severely and unfairly attacked from outside!
Avon is a big company with a strong reputation. It is the second largest direct seller in the world, and is more than twice as big as the third biggest. I wish it would stay within the industry’s trade organizations. Maybe Avon has plans to team up with Tupperware in the future. We don’t know that yet. To remind, Tupperware is no longer a member of DSAs in several countries including the U.S. And in Europe, it supports Direct Selling Europe, a separate organization.