By this point, it’s hard to believe someone isn’t familiar with what Avon MLM is and how It works, but if it is your case, let’s keep it simple. Avon is an international beauty company that allows you to make money by selling products and recruiting others.
This principle is evident in the multilevel marketing model adopted. Although it tends to be infamous for not paying members or not allowing them to make the actual money people expect, Avon has proven to be, somehow, different.
The company is well-known for its long history in the business as it has lasted for over 100 years.
If we have to mention how Avon has become so popular, we must first focus on an actual fact: it is the original source of direct sales companies and why the MLM system has grown over decades.
There are few people who don’t know about the company’s products. They may not be aware of the business opportunity or if it is feasible to make money.
David McConnell, the founder of Avon, decided to start the company while keeping women in mind for a very good reason: he knew there were products they needed and used; he just had to start the market.
Back in the day, most of the beauty items were hard to access and even afford, and David approached the idea to make it possible.
Today, the idea became a multi-millionaire business and depended on independent distributors. The question is: can you make as much as the business with their MLM system?
Avon is legit; that’s something we can set in stone. But there are some things you need to keep in mind.
First, you need to make more money from recruits than sales of products. Then, there is the fact that you will need to pay fees or commissions during the process.
In the end, it will be a process of determining whether your efforts, sales, and commissions are worth it or not. For it, let’s go over the company from the very beginning.
Founding a Beauty Company: Avon’s Inception
As we earlier mentioned, Avon started with founder David H. McConnell. He was born in New York on July 18, 1858, and died there on January 20, 1937.
Although he spent most of his years as a businessman, it wasn’t until founding Avon Products that he would make a name for himself in the industry and business world.
But before getting there, he also had a hard road to deal with.
In New York, he sold books door to door. After seeing how women loved perfumes, he decided to sell them instead of books in September 1886 as his experience, more like contact with individuals, was growing with his businesses.
Before this event, McConnell’s childhood was not well-known, and there wasn’t much to notice before he made this jump from selling books to going to perfumes.
But focusing on it, McConnell’s business associate suggested that the company should be renamed “California Perfume Company” when they decided to change their products and go for a new market.
The reason for the name feels more unique as it was a natural choice because of California’s abundant flowers.
Following this, McConnell and Henderson were listed as company officials. On January 28, 1916, the California Perfume Company became a corporation in New York.
The USPTO received its first trademark request on June 3, 1932, from California Perfume Company, Inc., New York. The goods and services described included lipsticks, powder, rouge compacts, toilet water, and powder.
This was to request the application of “Avon” and the change in the company.
September 1, 1929, was the first commercial use of Avon. The registration of the name was completed by August 30, 1932. This was the moment that the company became what it is today.
The company has made great strides in the development of perfumes and other products for women since then and focused on this niche as women-only grew more interested in acquiring the products.
Of course, this is a bit vague considering all the history the company should have, but Avon in the past century was a bit more reserved on how it moved until it started to expand globally.
What We Care About Is the Last Decade: Avon’s Growth
Avon has products sold in more than 100 countries today, and among them, Brazil is its largest market since 2010, and it doesn’t seem like it will change anytime soon, even when other countries are getting close to it.
But how did it get to this point?
Avon was first introduced to China’s market in 1990, which allowed it to expand exponentially as it is one of the main countries for sales and distribution of products in the beauty industry.
However, China banned direct selling associations in 1998. Due to this, Avon was required to sell via Beauty Boutiques rather than physical stores.
Fortunately, the ban was lifted in 2001, and Avon was granted a license to sell in 2006 directly.
Moving from there, we have to go to 2016, when Cerberus Capital Management paid $435 Million in cash for preferred stock in Avon Products. This was the closing of a December 2015 deal where Avon sold 80.1% of its North American Business to Cerberus for $170 million.
The total deal was worth $605 million. Cerberus was able to acquire almost 17% of Avon Products as a result of the investment.
Reports indicate that Avon makes most of its profits from overseas markets. The USA market is not as profitable since individuals prefer to purchase products from specific stores or retail ones themselves.
It is estimated that 81% of the company’s international sales revenue represents more than $17 billion.
Avon’s worldwide sales dropped for five consecutive years in 2014, and its North American revenues fell 18%; despite this, the company remained strong in the upcoming year.
The company has now separated its Puerto Rico and the United States businesses, forming New Avon LLC. This business trades under “Avon.” Global Avon Products moved its headquarters to London, United Kingdom, as part of a three-year plan.
New Avon LLC, an American privately-held company, signed a definitive agreement in August 2019. The agreement was made with South Korean consumer goods giant LG Household & Health Care, Ltd. to buy the direct-selling cosmetics sector for $125 million in cash.
Jan Zijderveld was appointed the company’s CEO in February 2018. Sherilyn McCoy was the former CEO and remained on board as an advisor to Zijderveld through March 31, 2018.
Avon’s owner has changed in recent years. Natura &Co, a Brazilian cosmetics company, offered to buy Avon Products in a share swap for more than $2B. It would be the fourth-largest beauty company in the world.
The transaction was a success, and Avon’s new logo was launched in June 2020. In September 2020, Avon launched a new marketing campaign called “Watch Me Now.” The campaign featured new visuals, including a revamped logo.
Natura &Co’s final acquisition is significant and has already changed people’s perceptions of the company.
Multilevel Marketing at Its Best
To understand how Avon works and how it turned out to be one of the most profitable MLM and beauty companies in the world, we need to understand the model they use to operate.
As we mentioned earlier, MLM is a business model that focuses on recruiting people and selling products. Still, the whole process of how it works involves more than this simple definition.
MLM companies may also be known as network marketing companies, and something we must highlight is: that none of them pay a salary.
Instead, you can make money selling products and recruiting people to your business as you will be the one representing the company. You can make commissions if you recruit someone new and begin earning money.
The idea of making money with it is that you need to climb levels based on sales and recruitments.
Although you can make money selling products offered by MLM companies (in Avon’s case, beauty products), many MLM employees prefer to work with others to earn passive income.
Avon’s final goal is to recruit as many people as possible and to allow them to earn large amounts of passive income.
The problem around this business and all companies following the same system are that they are usually compared with illegal pyramid schemes.
What is a scheme, and how does it compare to companies like the one that we are reviewing?
In their structure, pyramid schemes are very similar to MLMs. The main difference between them is the fact that MLMs also sell real products and pay members to recruit others. In other words, the deal is real.
Avon and other multilevel marketing companies require you to pay a fee to join. Still, you will get all the expected benefits back to a total or certain extension based on the conditions you agreed to.
Meanwhile, pyramid schemes don’t sell real products, and people are just trying to get you into paying a membership, investing, and losing money if you don’t recruit hundreds as well.
Pyramid schemes are illegal as it is hard for most people to make money and only 5% or less of them get the profits from the whole structure.
MLM companies like Avon don’t make you rich, but they meet promises in terms of being legit and paying for your efforts.
Getting Started with Avon Products
MLM companies usually include membership and a starter kit, as mentioned earlier. The latter is often quite costly.
Avon, however, changed its approach and now allows you to join for a very small fee.
The Starter Kit 2022 is valued at $135, and you also need to pay a membership set at $30. You will receive some brochures from Avon, but the majority of the company’s most popular products will be included in the kit.
You can choose from 3 options, and the membership remains fixed:
- The Color Bundle, which includes sugar plum, eyeliners, and seven other products, was first mentioned.
- This kit is the second most popular. It includes a ‘belif’ travel kit that focuses on skincare products and shampoo. This kit is worth up to $121.
- The belif, which is your truth bundled, is the most affordable in value at up to $112 and contains all lines of belif, including an aqua bomb, moisturizing and other elements.
The concept behind the company is that Avon representatives and distributors can save money while still receiving the products to sell.
Prices can vary depending upon where you live. We are only considering US audiences in this instance.
Avon Products: What Can You Sell?
We can go back a little and see that Avon began with perfumes for women and additional products for the same demographic. You will find lipsticks, creams, and some skincare articles here.
The company’s offerings in natural, skincare, and beauty products have expanded significantly. You will find a wider range of products than ever before.
Avon representatives can sell all products in the store, and most of the categories include:
- Skincare products: Day creams and eyelifts, night creams, and similar products typically cost between $40-$45.
- Makeup: Lipsticks, eyeliners, foundation, cushion, multi-performance makeup, and many more are available starting at $9 to $29.
- Perfumes: These can be purchased for $16-$30
- Body products: Deodorants, lotions, and travel sizes starting at $8, going up to $12.
- Clothes: For as low as $22.50, you can get pajamas and blouses, plus special collections.
- Jewelry: Prices start at $10 but can go up to $100+.
As an Avon distributor or rep, you receive a 25% discount on the products you purchase and can sell them at retail prices.
However, consider that in the information, we only used averages. Some products may be more or less expensive, depending on how you check them.
How Do You Actually Make Money (& How Much)?
MLM companies all have a compensation plan based on the two options we have discussed so far. You can also set ranking levels or single levels where you will earn more benefits.
Now, you know the essentials about selling products and recruiting members. But how much do you earn for this process?
The 25% profit on products is due to the discounts you receive as a distributor, which means this is already the margin of profit you have to keep in mind when it comes to product sales. However, there is an option for recruiting a downline.
This means that you can recruit people and make money if they sell products as well or, even better, if they also recruit new members.
However, it can be hard to determine how much you’re able to earn when working all-in with this second option. This is because Avon does not disclose any information about its plan, and the rankings used to calculate percentages are not publicly available.
Although graphics are available, they aren’t always up-to-date, and they’re very difficult to comprehend.
This is why we hope you bear with us when it comes to explaining this process and how much money you can make by coming up with an average.
Because Avon’s compensation program requires MOV at all levels, it is immediately noticeable. This is the ‘minimum order value’ component to any MLM’s compensation program for those who aren’t familiar.
Sometimes it is called “personal volume” and sometimes “active requirement.”
No matter what the name is, the meaning is the same. It refers to the product that you have to sell or purchase in order for you to earn commissions and/or remain in business.
Avon’s MOV was built on PS90. If you reach this level, you will earn a 20% commission. Sales that are higher than PS170 earn a 25% commission.
Leaders who earn more than the PS250 can also be eligible for bonuses or coaching commissions.
Everything depends on your personal volume and the performance of your recruits.
What happens if you don’t achieve your goals?
The minimum order value is one of the most challenging aspects of MLMs. Avon will not pay you any commission if your minimum order value isn’t met every month.
Your sales would go sour. This also means that your products will be sold at full price, and you have to pay for them.
Representatives in MLMs will often purchase products to reach their minimum order value. This could lead to them purchasing unnecessary products and sometimes even debt.
They promise themselves that they’ll sell it later to make more money. Often, this does not happen. They just acquire more products and more loans, trapping them in the same vicious cycle.
This means that you must pay for the products that you have ordered or purchased if they aren’t sold within a set period.
What are the Pros & Cons of Selling Avon Products?
We are not here to give you advice on business or financial matters. These pros and cons will help you make an informed decision instead of pushing you into making one out of everything we’ve shared so far.
Before we get into the details, let’s clarify that Avon is not a pyramid scheme, and it is legal.
You must decide if the potential earnings you will make with the company are worth it. You can also ignore the cons and concentrate on the benefits, but we would recommend aiming for both and keeping them in mind before taking the ride or not:
The Good:
- You have the option to choose your work schedule.
- Avon products are reliable and have a great reputation.
- You can sell them because of their retail price.
- It’s not expensive to become a member.
- You don’t have to work under a boss but rather be your own one.
- All training, support, and an online store are completely free.
- Remote work.
The Bad:
- MLM is saturated. This includes Avon.
- Low compensation rates mean that you can’t make too much or get rich.
- Selling products and recruiting people is hard work the longer you stay in business.
- They have a great reputation, but the product’s popularity has been decreasing according to reviews.
- You can’t guarantee a steady income.
- To avoid losing money, you must find new customers and get money immediately, or else you won’t keep your PS, rank, and passive income.
- You will need to pay for products that you don’t sell within the timeframe or when the monthly goal is not met.
If you’re up to the challenge of recruiting downline members and selling products in order to make extra income each month, then you might consider taking a chance.
But if you want a more solid alternative, maybe a more traditional option will be better.
Why We Don’t Consider It the Best
Avon works for many people, but it isn’t a business model where we would put our money as nothing is safe or certain.
There’s only a 1% chance that you will make more than your regular income with this business and another 1% that you will get rich with it. Thus, you cannot rely on the idea unless you’re considering it as a passing-by solution.
If you need tangible reasons, we can give you a few why we wouldn’t invest in Avon in specific:
- Stocks are falling.
Avon shares declined 5.2% in the last four months compared to the 17.1% industry growth rate.
Since last year, the stock has not seen the light of day and, contrary to popular belief, is continuing to fall rapidly.
- Too many competitors.
When we said saturated, we meant it.
Today, many people are selling with the company. It is difficult to keep up your level and earn more commissions.
We prefer to jump into another business option that isn’t about to go under, no matter how big or small the company.
We also refer to the direct competitors of this company. MLM-based businesses are booming or thriving in new markets. You can’t sell alone in a competitive market.
- It is too laborious.
Selling, recruiting. Selling, recruiting. It’s a never-ending cycle.
This requires too much effort in selling products and finding new members to make the actual earnings.
We could also invest in other ventures during this time. For example, lead generation.
Our Best Shot at Making Money
We find multilevel marketing companies to be a problem. It is hard to believe that you will make any money with the reputation they have earned over the years. We are confident that you will not make it in 9 out of 10 times.
We understand that they can provide passive income and the opportunity to build a network, so people are willing to place bets.
However, they are too labor-intensive and can be pointless if you need to recruit new employees.
The main downline that you recruit is not enough. This is tedious, and you will eventually run out of people.
If passive income is what you are looking for, digital real estate is an excellent option. You don’t have to trick anyone, and you can build your foundation and fortune in a business that actually works.
This is not an easy option and requires hard work, but it will give you the freedom to make your own decisions and not depend on others.
When you settle and expand, you can earn over $5k per month as your minimum standard and climb from there onwards. You could even aim for six figures if your structure is complete.
What’s the point of it all? Why is it so appealing to us?
It is very similar to residential or commercial properties. This time, you will create websites for clients and ensure that they rank well on Google to generate leads.
These leads could become clients for companies you help and provide the websites. Each lead that you generate for a website will earn you a commission.
You can make as many websites as you like and let your clients use them. After you’ve set up your efforts, wait for leads to start coming in and then get paid. You don’t have to be part of any MLM or work with multilevel marketing plans.
Here’s Our #1 Recommended Online Business Model:
Interested in starting an online business to build passive income? Check out the local lead gen business model. Click here to learn more.
