The Global Gateway

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E-commerce networks and Economic Globalization
Outsourcing
Presented by Tara Dennis Felicia Drew Chuck
Menchion Robert Sanders Shawn Williams
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General Overview

• Started out as the California Perfume Company
• Founder, Mr. David McConnell discovered that the
  rose oil perfumes he was giving away were the
  reason people were buying his books
• Named Avon in 1939 after the river that runs
  through Stratford-On-Avon in the English
  Midlands. The name is a tribute to McConnell's
  favorite playwright, William Shakespeare, who
  hailed from the town
• Women have been selling Avon since 1886
• Primary markets are cosmetics, fragrances,
  jewelry, accessories, wellness products, home
  decor items

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General Overview (contd)

• Sells in more than 100 countries worldwide.
• Primary distribution channel is direct sales
  through 4.9 million Independent Reps
• Worlds 1 direct sales beauty company
• Constantly developing new delivery\distribution
  channels such as kiosks, beauty centers, beauty
  boutiques, outlets and department stores
• Avon Salon Spa is lavishly appointed,
  encompassing 4 floors of New York's prestigious
  Trump Tower

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Analysis of Global CFT Industry

• Top 3 US facial skin care competitors increased
  advertising spend by 45 1st half of the year
• Highly fragmented distribution channels (shopping
  malls, drug stores, department stores)
• Segmented by consumer demographics and geography
  - country specific differences in consumer
  preferences
• 21st century growth fueled by product innovation
  focus on wellness and youthfulness (anti-aging
  less important to women of color due to increased
  melanin oil in skin naturally discourages
  wrinkles)
• Future rests on innovativeness of developing
  product that improves skin hydration,
  aromatherapy and herbal products

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Globalization/Outsourcing

• In 2000, Avon launched Avon.com establishing a
  local site in 44 countries.
• Strengths Its rapid deployment strategy enabled
  Avon to get foreign sites up and running in a
  matter of months to gain a quick online foothold
  in multiple markets
• Weaknesses Gave overseas representatives
  creative leeway but created inconsistent brand
  presentation and different levels of quality
  many markets treated the website like brochures
  rather than mediums to maximize Avons message
  with graphics and animation

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Direct Effects of Outsourcing

• Planned to layoff 600 of its customer service
  executives nationwide in the next two years and
  intends to outsource the work overseas.
• At Delaware where Avon has more than 500
  workforce plans to reduce the count by 50. An
  important component of the companys
  turnaround, first announced in November 2005,
  is cutting its cost structure by outsourcing its
  transactional and other services to low-cost
  countries.
• The company has also decided to reduce the
  headcount at Ohio but would keep about 300
  workers to serve career-oriented representatives
  who have more complex service needs due to the
  high volume of their businesses reports Sharon
  Samuel, spokeswoman for Avon
• Avon has made the decision to outsource its U.S.
  contact service operation as part of our
  four-part, multiyear turnaround plan.

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E-commerce benefits focus

• Avon realizes that there is a place for selling
  Fast Moving Consumer Goods (FMCG) online.
• E-commerce helps to build the brand
• 8.1 billion in sales in 2005 experienced
  growth is at 3.9
• Provide information that would be hard to
  communicate in-store or home.
• More functionality order tracking, find a
  representative, what's new, and promotions.
• Complementary product offerings allowing exposure
  to different segments.
• Develop a world-wide Intranet for information
  sharing and an extranet to tie suppliers, allow
  order entry quickly, and check product
  availability in real time and track order
  delivery.
• Solid channels in place (i.e. field reps,
  websites, mall kiosks, day spas, and new
  brick-and-mortar stores) improve
  behind-the-scenes function.
• Benefit in changing from a paper-based company to
  a web-based company.

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The Global Gateway

• You can't go far on the Internet today without
  running into a "global gateway." A global gateway
  is an all-encompassing term for the navigation
  system that directs users to their localized Web
  sites.
• Web designers and marketers often overlook the
  importance of the gateways to the success of
  their localized Web sites. After all, what's the
  use of localizing a Web site into French if
  French speakers cannot find it?
• Cosmetics companies are no strangers to
  globalization. It would take you only a few
  minutes to round up a half dozen Web sites that
  rely on some form of global gateway. Even if you
  have no interest in this industry, it's useful to
  study how companies address the universal problem
  of global navigation.

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The Case of the Hidden Gateway

• Home page real estate is precious. Often, the
  gateway to the localized sites is not given the
  prominence it requires, as shown here with Avon.
  See if you can find it.
• The gateway is located on the lower right-hand
  corner in the "Inside Avon" section. The location
  and the text itself does not make it clear that
  this link will take users to localized Web sites.
  The text could just as easily lead to a global
  press release section. Instead, a phrase such as
  "Select your country" would have been more
  useful, since it's more in line with the majority
  of other gateways. Don't try to get too creative
  with your global gateway because your non-English
  speakers may not understand what you're saying.
• Once you click on the link, you will arrive at
  another, more detailed, gateway, shown below.

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• Now this gateway is useful, but it comes one
  click too late. In Avon's defense, the localized
  sites do have country-specific domain names, such
  as www.avon.com.au for Australia or www.avon.ru
  for Russia. It is likely that Web users in
  Australia or Russia will type in the a
  country-specific address and skip the gateway
  altogether. But, once again, that's a big
  assumption to make. Instead of defaulting to an
  English-language Web page, many companies now
  rely on a splash gateway.

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The Splash Gateway

• In order to get to the MAC web site, users will
  first encounter the splash gateway, shown below.
  Users have three choices USA, Canada, or Other.
  Granted, MAC could work on offering a few more
  localized sites, but it's a start. What makes a
  splash gateway so useful is that users know
  immediately what sites are available to them.

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The Visual Gateway

• The Nivea gateway requires no text at all.
  Although the "Select your country" button is in
  English, the map overcomes any language barriers.

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E-commerce networks/net-enhanced organization

• Five year projection
• Strengh Internet-based sales could easily reach
  25 to 30 of the total retail market over the
  next few decades
• Opportunities Web-based sales will continue to
  grow as a natural outreach for larger retailers
  leveraging off of their traditional showrooms.
• Threat Even traditional cosmetic retailers
  like MAC, Clinque Nordstroms, Macy's and others
  are now starting to take orders via the web. This
  creates increased competition.