Avon, Mary Kay boom amid recession

Avon, Mary Kay boom amid recession

Armies of new Avon ladies, Mary Kay reps and Tupperware sellers are advancing on living rooms across the country, their ranks full of professionals forced to take a second job amid the recession.

Becke Alexander, sales manager for New York-based Avon Products Inc., hears each week from laid-off bankers and stay-athome moms, but also gainfully employed people worried how long they’ll stay that way. All of them are willing to knock on doors, host parties or do whatever else it takes to peddle some makeup.

“‘I need money.’ That’s what I’ve been hearing since about November,” Alexander said. “There are no hobby seekers coming here. It’s people with a legitimate need.”

Job cuts, shrinking bonuses and scaledback hours have pushed more people than ever to become direct sales representatives, a phenomenon industry experts say they’ve seen before.

In the 1990-1991 recession, the number of direct sellers increased 8 percent to 5.1 million Americans. In the 2001 recession, the work force increased to 12.2 million.

And while 2008 figures are not yet available, in 2007 an estimated 15 million people nationwide were in direct sales. Some 58 percent became reps as a second job, according to the Direct Selling Association, a trade group that represents 200 U.S. companies.

Rhonda Shasteen, chief marketing director for Mary Kay, said the Addison, Texas
based company saw traffic on its Web site increase by 108 percent in March, when the company began airing television ads to attract new sales reps.

The sales force grew 22 percent from January to March compared with the same period last year. The privately owned company wouldn’t say whether its profit also increased during that period.

Tupperware Brands is making more money and has more people selling its products globally, said Nora Alonso, spokeswoman for the Orlando-based company.

Direct sales reps can earn commissions between 25 to 50 percent of retail sales, and some companies also will pay for recruiting a new sales person. Direct sellers also can earn rewards, too, including jewelry, handbags, furniture, appliances, cars and vacations.

There can be expenses. It costs about $10 to get the Avon starter kit of products and brochures, and some companies require the sales people to purchase products wholesale and then resell them. Mary Kay consultants purchase mascara for $7.50; the company recommends they sell it for twice that.

During stronger economies, people usually take on direct sales jobs so they can have money for leisure spending, said Larry Chonko, business ethics professor at the University of Texas at Arlington.

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-Associated Press