The beauty of Natura's Avon acquisition: Appealing to Asia
The cosmetics market in Asia Pacific is expected to grow to US$126.8 billion by 2020. According to global market research firm, the region is the second largest market for cosmetics after Europe. It is no wonder that personal care cosmetics group Natura & Co decided to acquire Avon Products for US$2 billion recently, in a bid to better serve different consumer profiles and distribution channels, and expand into new geographies, such as Asia.
Avon currently has stores in Johor Bahru, Kuala Lumpur, Melaka, Kedah, Perak and Negeri Sembilan, among others cities in Malaysia. In 2018, the company had more than 200,000 sales representatives and 168 outlets in Malaysia. Last year, Avon appointed Bill Rahm as VP to oversee Asia Pacific in terms of both strategy and development. In his role, he oversees Malaysia, the Philippines, China, India and Taiwan.
This move will see Natura & Co enter a market that is currently saturated with cosmetic and beauty brands such as NARS, SK-II, Clinique, L'Oreal and Estee Lauder, as well as Asian beauty brands such as LANEIGE, Etude House, Innisfree and The Face Shop that have grown increasingly popular among consumers in this region.
In a statement to Marketing, Chanchul Sakhrani, founder of beauty-focused digital and tech agency Selicious, said rather than fill a void, Avon can value add to the Asian market with its wealth of knowledge gathered from over 133 years in the beauty industry.
By integrating the legacy business acumen with its strong scale of direct sellers Avon has garnered, as well as its technology capabilites that allow it to go from concept to consumer in 20 weeks, Sakhrani said that the industry will have "a force of nature" that promises to deliver new and innovative beauty products.
According to her, Avon made the right move by developing strong strategic partnerships in Asia with well-established local companies such as LG Household & Health Care, which is an "interesting way" for it to increase competitiveness in Asia. Additionally, its partnership with South Korean skincare manufacturer, Bonne, allows it to ride the wave of K-beauty trends in Asia, by developing products that suit the needs of Asian consumers.
"By cementing its Asian operations with a local structure, Avon is well positioned to capture the wide variety of beauty opportunities in China and the wider Asian market," she said.
Agreeing with Sakhrani is Warren Johnson, CEO and founder of W Communications who said that is a "big immediate market opportunity" for Avon in Asia, as the region is home to some of the largest direct selling markets in the world, with Malaysia, China, South Korea and Japan all topping the charts.
While Avon is a household name in the West and a pioneer of peer-to-peer selling in the analog era, Johnson said the brand lacks that same legacy in Asia, which could be "a hindrance but also a help". He said:
Here consumers live on social media, and Avon has an opportunity to reinvent itself for a digital Asia.
"Avon has the chance to combine traditional direct selling with the influence of social media to create a third way: Peer-to-Peer 3.0. A potent selling force of ‘Avon influencers’ taking the brand off Asia’s doorsteps and into its social media feeds," Johnson added.
Meanwhile, Wong Mei Wai, founder, CEO and chief change catalyst of APAC Global Advisory said that the sophisticated and well-travelled Asian consumer today is now continuously looking to the beauty industry for innovative solutions to meet her or his changing needs.
"A brand that can bring across access through digital and social networks that align to its social and environmental beliefs will score high on its radar, if the unique product propositions are made clear and delivered in an engaging, inspirational, innovative approach direct-to-consumer space through a multi-channel digital and social network," she said.
Nonetheless, the product quality and performance cannot be compromised and should still be brought to each consumer segment at the right price.
Cutting through the Asian beauty clutter
Selicious' Sakhrani said that cosmetics and beauty brands in Asia should ask and listen to what current and potential consumers are saying relative to their beauty products and services. That information can then be used to create relevant content, conversations, packaging, products and services that engage with consumers based on their feedback. She said:
Beauty brands have to meet their consumers where they are at and not the other way around.
Citing Millennial beauty brand, Glossier, Sakhrani said brands can take a page from its book and involve consumers in elements of product design, marketing communication, branding and social content marketing.
When consumers see that brands have listened and weaved in elements of their feedback, it makes consumers feel that the brand truly has their best interest at heart and is not just marketing yet another opportunistic beauty product or service," she said.
Sakhrani added that in any relationship, including a B2C one, both parties want to feel that their needs are being met and the only way to do that is to pay attention and then deliver what is most relevant for both the brand and its consumers.