September 01, 2010
Letter from John Fleming, September 2010
The big news within the industry over the past 30 days has been the Avon acquisition of Silpada! When we saw the first release come through we could only think: “WOW! What a story!” Having been around the direct selling industry for many years it was not difficult for me to remember the beginnings of Silpada, for it was only about 13 years ago that they started. If you don’t know the story, it is definitely worth a trip to their website to browse this company and review its beginnings and its mission. Talk about dreams coming true, this is quite a story, but there are many stories within this story.
First there are the co-founders, Bonnie Kelly and Teresa Walsh, who got to know each other as room moms at their kids’ school. They looked for ways to earn some extra money and each decided to pull $25.00 from a grocery fund to buy some sterling silver jewelry that they would sell via party plan. They had so much fun! After a few hundred parties, they decided to form Silpada Designs in 1997. As the saying goes, the rest is history! Today, that idea born of two $25.00 investments and lots of parties is the new darling of direct sales. Silpada Designs ranked No. 52 in the DSN Global 100 and boasts a per-party average of $950. Their story is also about company leadership and, of course, the many thousands of Silpada consultants who have built successful businesses and made some of their own dreams come true. Customers are obviously excited about this product line, and the Silpada consultants who share the products and opportunity are also having a lot of fun! Behind this operation is a CEO and co-founder who has led a steady charge to the top over the past 13 years. Enough cannot be said about the leadership of CEO Jerry Kelly.
Avon divulged the terms of the acquisition—$650,000,000! Yes, that’s right, six hundred and fifty million dollars! That is truly a big story! Here in Texas we call that a “barn burner,” and as some of us in the office said on the day the news broke, “The co-founders have to be doing a happy dance today!” But there is so much more to this story. Why would Avon acquire another direct selling company? What is really behind the acquisition price? This is the second acquisition for Avon in the last few months, but this one garnered attention from everyone who watches the direct selling industry. As I thought about the apparent shift in Avon’s acquisition strategy from what it was many years ago, I started to jot down a lot of questions that I thought our readers might appreciate. Of course, questions without answers do not mean much, so being an alumnus of Avon and still having quite a few friends there, I decided to ask the lady who would certainly have the answers.
In this issue, Direct Selling News brings to you an exclusive interview with Andrea Jung, Chairman and CEO of Avon Products Inc., and Jerry Kelly, CEO of Silpada Designs. We were able to capture a few minutes of their time at the recent Silpada Designs convention in Toronto, Canada. We know you will enjoy what we captured.
The other big story within the past 30 days was the release of the Direct Selling Association’s data regarding industry performance during 2009. For the fourth consecutive year, revenues were down, but interestingly, recruiting was up, creating many questions and much debate. If recruits were up, it appears that the business model is being perceived favorably; therefore, more people are choosing direct selling in recessionary times. This position has often been taken in previous recessions, but there may be other questions this time. If we can attract more than in any other year, what is missing in terms of how to keep productivity in line with past levels? This alone would have created an industry increase in revenue versus another decrease. Or, is the industry keeping pace with the manner in which technology is changing behaviors? Is the purpose of the personal relationship the same as it was five short years ago, considering that product information and demonstration can be done creatively and appealingly with new gadgets, such as computers, phones and iPads, which do everything except provide the relationships? These are all interesting questions, and over the next two months, Direct Selling News will present some of these to our academic friends and others for their points of view.
Before the end of the year, we will have further reflections on 2010. Based on second-quarter results, many companies are rebounding, and others are continuing to post strong growth. When we see companies such as Herbalife, Nu Skin, Tupperware Brands, Avon, USANA, Pre-Paid Legal Services, Immunotec, Primerica and others post strong gains, it is most encouraging to all.
This past June we announced a “first ever” listing…the DSN Global 100. On p. 12 you will see the details of how we will deliver another DSN first…100 who are making a difference in direct selling based on their work and contributions in 2010. You, our readers, will make the nominations!
Until next month… enjoy the issue!
Publisher and Editor in Chief