Jan Zijderveld is betting he can make Avon Products Inc. Amazon-proof.
Seven months into his new gig as chief executive officer, Zijderveld is spearheading Avon's first fast-beauty initiatives, both on the digital and product sides, and working to capture data in order to help the company's representatives improve their businesses. The model, with reps able to dole out beauty advice to their customers, is what gives Zijderveld the gall to assert that Avon's model could be Amazon-immune.
"You could argue we are Amazon-proof," Zijderveld told Wall Street analysts after the company's earnings call — where Avon unveiled narrowed losses of $37 million for its second quarter.
Later, on a call with WWD, Zijderveld elaborated. "We have six million representatives to create a high-touch, high-tech, high-impact experience. We have to be different than Amazon," Zijderveld said.
"We have all these beauty entrepreneurs that can give you advice, that can give you tips, that can give you virtual parties or real parties, and this combination of this direct connect via our sales representatives…to the final consumer, gives us a channel that not many other have," Zijderveld continued.
Connecting those dots is part of Zijderveld's plan to force Avon, which has struggled for years, into the modern era.
"We used to be, to be fair, quite slow," Zijderveld said. "But we're really speeding it up."
So far, he's launched a shoppable e-brochure that reps can messenger (via WhatsApp, for example) to their customers, who can create orders via their mobile phones. That project took three months, and is now available in 26 countries. He's also planning global product launches with millions of dollars in marketing support, and for the 132-year-old company to move faster, in part, by sourcing some product ideas and manufacturing from third-party partners.
"We have half the innovation cycles internally," Zijderveld said. "We can get innovations from our third parties and partners much faster if we can't do it internally, or if people outside have a good idea or a good product, we can do that faster." Other established beauty players are approaching fast beauty via third-party manufacturers.
Zijderveld is also working to digitally enable Avon, through initiatives like the e-brochure, which can be quickly updated as launches hit the market. "If you think about the end point, a digital social-selling beauty company — that's the destination," Zijderveld said.
He outlined three priorities for getting Avon to a digital, social-selling place: Giving representatives better tools to do their jobs, providing digital tools, and using its historical and new data to run analytics. "Data is the new oil, and we have plenty of oil," Zijderveld said.
Avon is working on establishing its e-commerce business, which is up and running in the U.K. and Argentina, he noted.
Zijderveld has also gone on a hiring spree, bringing the company's first chief digital officer on board, as well as several new regional general managers, including a soon-to-be-announced turnaround specialist for Brazil. Some of these new hires are focused on fast beauty.
"We know it is still just talk, but the several management hires in recent weeks (including a seasoned chief digital officer) and callouts in the press release around enhanced rep training, a big new product pipeline and increases in advertising slated for the second half are all suggestive of a far more proactive approach to turning around revenue trends than we've seen to date," wrote Barclays analyst Lauren Lieberman in a research note.
In its presentation to Wall Street, Avon highlighted some of the time-to-market of new products, including Mark 2-in-1 Lip Tattoo, which took 23 weeks to develop and launched in 20 countries, a K-beauty line that was developed in 22 weeks and Avon Anew Ultimate Gold Mask, which took 23 weeks. Those times are close to some traditionally fast beauty companies — E.l.f. Cosmetics, for example, had an average time-to-market of 22 weeks for 2017.
In the second half, Avon is launching 200 products, and the business is planning $30 million in advertising behind them. Launches include a Segno Fragrance for men; the Avon Life Colour fragrance, designed by Kenzo Takada; Avon Anew Platinum Instant Eye Smoother, and Mark Big & Extreme Mascara, which contains a proprietary stretch technology.
"It's a significant step up , a huge boost, which does a few things," Zijderveld said. "One, we capture new growth opportunities. Two, we teach the organization to become faster and more digitally oriented. And three, it gives huge confidence for our six million representatives that we're doing more, we are more active, we have more news, we have new products and the combination of all those things sends a strong signal that Avon is different, Avon is on the move, and we're building a new Avon — an Avon that is very, very different than in the past."
Avon's numbers for the second quarter remained negative, though losses were less than before.
The business posted a $37 million loss, with a 3 percent dip in sales to $1.4 billion. Avon's sales were hit by a 10-day truckers' strike in Brazil, its largest market. For the six months ended June 30, Avon posted a $58.1 million loss — less than the prior-year's $82.3 million loss — with a 3 percent sales dip, to $2.58 billion. Active reps were down 4 percent, due partially to the strike.
"The main issue is that active rep trends are still poor," wrote RBC analyst Nik Modi in a research note. "We commend the company for committing to higher spend in behind new products, but we think more spend is required to sustainably turn Avon around."
Avon's stock was up 3 percent Thursday in midday trading, to $1.68.
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