Avon calling

The Avon lady first started ringing doorbells in Japan some 40 years ago, and she is still going strong. Despite tough economic conditions, the company posted sales of 22.159 billion yen in Japan in 2008. Avon markets more than 1,000 cosmetics, as well as fashion jewelry, lingerie and supplements, through its sales reps nationwide.

Avon is also well known in Japan for its proactive breast awareness campaigns, such as Pink Ribbon and Walk for Breast Cancer, which have raised hundreds of millions of yen. Last year, Avon launched its women empowerment fund, with actress Reese Witherspoon as the spokesperson. The Women’s Empowerment Bracelet, which features a clasp in the shape of the infinity symbol to carry the message of the limitless possibilities for women, is sold by Avon in Japan and more than 100 countries globally in which Avon operates. Proceeds go to the Avon Empowerment Fund, which will contribute to the United Nations Development Fund for Women (UNIFEM)-managed U.N. Trust Fund to End Violence against Women.

In March, the Avon Foundation for Women announced new efforts to eradicate violence against women. This included a $1.5 million grant by the Avon Foundation for Women to launch the Avon Global Center for Women and Justice at Cornell Law School. This new center will focus on working with judges, legal professionals, governmental and non-governmental organizations to improve access to justice in an effort to eliminate violence against women and girls.

Heading up Avon’s operations in Japan is President and Representative Director Terrence Moorehead. Born in New York, he majored in marketing and economics from Boston College. After a stint in the pharmaceutical industry, doing sales and marketing, Moorehead joined Avon in 1991. He has worked for Avon in 17 countries and arrived in Japan to take up his current position in 2006.

Japan Today editor Chris Betros visits Moorehead at his office in Tokyo’s Hatsudai area to hear more about Avon’s operations in Japan.

What is Avon’s image in Japan after 40 years?

I think most people know the company name. If they don’t know us for our products, they know us for our breast cancer awareness initiatives, such as the pink ribbon campaign. Overall, our penetration rate is still relatively low in the marketplace.

How important is Japan in Avon’s global business?

Japan is an important market because it is a vital source of beauty technology and innovation. For that reason, we have an R&D group here and the products are manufactured in Japan, specifically for the Japanese market.

How are you coping with the recession?

It has hit us just like any other company. However, women are still buying skincare and make-up products, although their buying patterns are changing. Maybe, they go for the 2,000 yen lipstick instead of the 4,000 yen lipstick.

What is your business model? Does the Avon lady still come calling?

Yes, she does. Actually, we are in the middle of a multi-year restructuring program to reinforce our direct selling skills. That’s going to take time. Avon ladies sell at their workplace, to their family, neighbors and friends. Others go from door to door. If you are a sales rep, you do it at your convenience. What makes Avon work is we go where the women are.

How does one become a sales rep?

Various ways. A woman can apply online to become a rep, or she can call our toll-free number. We have district sales managers who go out and talk about Avon. Often our reps talk to other women about becoming reps.

Who is a typical Avon lady?

We’ve spent years trying to develop the ideal profile for an Avon lady and you know what? There isn’t one. But they are self-motivated. They see something in Avon that they like and find the drive within themselves to make it happen. We have reps in their 70s and others in their 20s.

How do they earn revenue?

There are a number of ways. They earn commission based on what they sell, ranging from 15-50%, plus additional bonuses on special campaigns. On a quarterly basis, if their sales are above a certain volume, they can earn a performance bonus. If they recruit and train other Avon ladies, then we’ll pay them a commission for that as well.

Can consumers order online?

Yes, we are getting more orders online. There is more we can do in terms of technology, for example, enabling consumers to place orders and shop via their cell phones.

How do you market the company?

Word of mouth is always an effective method. So is the Avon brochure that goes out every single campaign. We send out millions of brochures into the marketplace every two or three weeks. Our website is getting more hits, too.

How do you get feedback from customers?

We have quite a large call center and we get many emails. I should also point out that consumers can try a product and we have a 100% money back guarantee if they don’t like it. I’m happy to say that we have a very low rate of return.

What are some of your best-selling products in Japan?

We have some fantastic products in our product lineup. We span the entire spectrum in skin care as well as makeup. Our best sellers in Japan are the Mission lineup – Mission Y and Mission Eclat. Customers know it and love it. It is our cornerstone for innovation and always gets a tremendous response. Lower priced products, such as the Color Fiesta brand, do very well, too.

Does Avon do animal testing?

No, we haven’t done any animal testing since a long time ago and we enforce that policy with our suppliers, as well.

How often do you interact with your sellers?

Whenever I am traveling. I make a point to travel a couple of times each week. We have a good incentive program for our sellers. I just got back from Guam where we took our top performers and top leadership reps. Next year, there will be trips to Paris, Bali and Kyoto.

How are Avon’s charity activities doing in Japan?

The Pink Ribbon Campaign raises funds from the sale of special products such as lipsticks, pins and dolls and that money goes to local groups and individuals who are working to create greater breast cancer awareness as well as cancer care and research into cancer cures. We participate in and sponsor various events such as the Avon Walk for Breast Cancer. The Avon Awards to Women, established in 1979, recognize women who have made contributions to the betterment of women and society.

How about the Women Empowerment Fund?

This is a new initiative that was started last year to fight domestic violence. Avon partners with the UNIFEM-managed U.N. Trust Fund to End Violence against Women. The empowerment bracelet is new and really started taking off when we partnered with Reese Witherspoon. The bracelets cost 500 yen and all proceeds go to the cause.

What is a typical day for you?

I show up here between 7:30 and 8 a.m. and leave anywhere between 9 and 11 p.m. I rarely have time to see emails, unless it is on my Blackberry. I have a lot of meetings or I am out in the field.

How much autonomy do you get from head office?

We get a fair bit of autonomy as long as we pursue the global strategy and focus on our strengths. My responsibility is to make sure we have a clear strategy here that makes sense for Japan.

Does anything frustrate you about doing business in Japan?

The decision-making process is very different. There are four levels of yes: yes, I hear what you said; yes, I understand what you said; yes, I agree with what you said; and yes, I will actually do what you said. In many meetings, you will hear many yeses and have much agreement, but nothing will happen because you didn’t get the 4th yes.

How do you like to relax?

I have too many hobbies, but not enough time. I am an avid skier, but haven’t been able to ski for nearly three years. I love to go biking and spend time in the gym.

By the way, were there any Avon ladies in your family?

No, I didn’t have any relatives doing that, but I do recall that we always had Avon products in the house, though.

For more information on Avon in Japan, visit www.avon.co.jp

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