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Carnival Has Ended: Time to Accelerate in Brazilian Direct Selling IT Strategy

Now that we have gone through the world famous carnival holiday in Brazil, the local market can finally “accelerate the engines” and mobilize its planned efforts aiming to grow the channel and effect more consistent results in sales. Brazil is in 6th position in global Direct Selling ranking. And definitely, technology is a focus of companies in 2020, in order not just to provide best service to the end customers, but mainly to introduce up-to-date tools to the circa 4 million independent resellers which make of this activity more than a mere part-time complementary income option.

Besides the proper dedicated DS management platform implementation which manages critical processes as model configuration, resellers and leaders registration and allocation rules and KPI setup, nowadays technology strategy planning for local DS business encompasses the “last mile” tools, the empowerment resources that the company will provide straight to the independent resellers. This is in order to confirm their relevance as the channel that best reach the customer in its person-to-person attendance needs. This task demands attention to some peculiarities in our market which leads to different scenarios for channel and sales force engagement. Investments in technology, whether to empower the channel or streamline service or to improve the experience of the end consumer in omnichannel operations, must be in accordance with the Brazilian reality and aligned to priorities of the main direct selling models practiced locally.

Any decision in this field must be based on two relevant pillars:

DS Models:

The representativeness of Multilevel Marketing (or Network Marketing) model at the global level is notorious. But it is important to mention that in Brazil, foreign companies and newcomers must deal with the negative reputation legacy of malicious companies that existed here in the past who left their undesirable marks.

The Brazilian Association of Direct Selling Companies (ABEVD) has been doing continued efforts to clarify and advise entrepreneurs in order to mitigate this distrust and automatic relationship that is still made here between Multilevel Companies and pyramid (or “Ponzi”) schemes – a ghost that came back to haunt the local market last year, backed by cryptocurrency-based empty promises.

That’s why MLM model is majority in number of companies in our local market – and keep on increasing. But more than half of the national direct sales market’s revenue are still concentrated on “single” or “mono” level model operations (or its “bi-level” variation, as it is usually called in Brazil the commercial structures of direct sales in which independent resellers evolve to conquer a leadership role, receiving commissions by the results of their teams). This is a classic model practiced here by large omnichannel companies such as Natura, Jequiti, Boticário and Avon.

Local Technology Adherence:

That said, we have the scenario that highlights the different focuses of technology adoption in the country. For MLM operations, tools based on the RWS concept are fundamental. They reflect the classic dynamics of purchasing activation kits by leaders preferred customers who mobilize this clientele through links to their “virtual stores”. These stores replicate the corporate website and whose logistics are fulfilled by the company – or, in a growing local business model trend, can be attended by a Distribution Center Franchise.

For models in which companies mirror their strong option for prioritizing the direct sales channel, without adopting e-commerce for end customers, the IT strategy must consider the growing use of solutions that accelerate the sales process and empower the channel in direct action with consumers, inside social media and messaging apps running in smartphones. In such operations, local applications that engage online sales and virtual catalogues and facilitate real time commissioning of the channel using messaging app APIs such as WhatsApp and FB Messenger have grown significantly. This is the reflection of a reality different from the Latin America average trends in smartphone usage and mobile access. For example, WhatsApp is massively used in 55% of the 215 million active Brazilian mobile lines – in a country with 209 million inhabitants. The last report from GSMA records a rate of 81% in smartphone adoption, against a 67% average rate in Latin America.

Precisely because of the differences in access, per capita income, culture and logistical challenges brought by its dimensions, enormous and promising opportunities lie here. This is the keystone for IT strategies that aims channel empowerment in the present time, and yet committed to keep and evolve the people-based network relationship-related nature of Direct Selling since its inception, meeting the convenience and personal consultancy needs demanded by the new customers generation, and still leading to increased profits for the channel in such a challenging new era for Direct Selling.

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Guest Post by Fabio Piastrelli
The Future of Direct Selling Is Still Promising in Brazil

In recent months, I have noticed an uncertainty in the air in the market about the future of direct selling in Brazil. Even though there is the traditional speech that this sector stands out in times of crisis, such as the one we are living right now, we come across news that create negative expectations for the sector and the first question that comes up is: Does this business model have future in the 5th largest direct selling market in the world? I do believe so.

I do believe so, because this sector, which raised more than R$ 41.3 billion in 2015 (Brazilian Direct Selling Association – ABEVD), is not limited to a few companies. It consists of nearly 200 companies between micro, medium, giant and new entrants. They are responsible for bringing not only cosmetics, but also clothes, shoes, education and even health to places in Brazil that are lesser-known and where technology is at an early stage of development or hasn’t arrived yet. According to the study “State of Connectivity 2015” by Facebook, the country has around 58% of the population online, and 86 million people still lack access to the Internet. Thus, it appears that when we question the impact of technology in the direct selling market, we limit our vision to emerging regions and we end up forgetting that Brazil is huge and many regions are short of technological development, which makes the work of more than 4.6 million resellers still important for Brazil’s economy.

I do believe so, because even with the technology advances, the reseller has a competitive advantage when compared to e-commerce or even the physical store: Proactivity. In a store, whether real or virtual, the selling process is reactive, and begins by consumer initiative. In direct selling, the sale is proactive, as the reseller is free to show the product and keep a closer relationship to awaken the desire to purchase in its customers. And the brand gains competitive advantage by being able to intensify this attitude using incentive campaigns, promotions, career plans, among other actions. Some of these promotions are lost among other channels that we are daily exposed, either through emails, websites or by traditional media. Even with all these channels available, the reseller has a key role to guide the customer, offering only what really has value to the customer. Thus, the reseller acts as a distribution channel that has the ability to go to the customer, customize the offer, overcome objections and seize the opportunities.

The last point that enhances the continuity and growth of this market is that we are experiencing a retail business movement in the adoption of direct selling as another strategic channel for the companies, mainly to expand its operations to places where it is too expensive to open a store. Today, at least 13% of companies that operates in direct selling come from traditional retail, according to a survey by Gera, and we foresee that this number should increase in the coming years.

For all these reasons, I believe that direct selling will continue to exist, but will undergo a major revolution and the questions that are being made today will lead it to a new phase, where it will be integrated with other channels and will be part of the multi-channel strategy of any company.

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