 "Amway reconnects with its community")
Driven by a rapidly changing retail landscape, continuing regulatory hurdles and an increasing threat from online marketplaces, US-based direct selling major Amway is building new pathways to the Indian customer. Apart from shoring up its direct seller network, it has set aside Rs 100 crore for setting up a dozen-odd "experience stores" across the country and is creating a new line of cookware, health, nutrition and skin care products. But at a time when e-commerce is redefining the customer experience and regulatory hurdles continue to plague the business, is Amway fighting a losing battle?
Many have also questioned Amway's new direction and some have even seen it as a dilution of its B2B focus. But the company strongly refutes the latter. The new experience stores, set up in partnership with Microsoft, are meant to support its business partners, it says. It has also signed Farhan Akhtar as the ambassador for its Nutrilite range of vitamins and dietary supplements. Is that another sign of its desire to connect directly with customers? Not really the company says, by creating a public profile for its brands, it is ultimately supporting its seller community it says.
Samir Behl, regional president (Europe, India and Africa), believes that the initiatives being undertaken will only expand the B2B base - its five-lakh-strong-family of Amway Business Owners (ABOs). The stores are meant to showcase Amway's range of products to distributors, business partners and customers and demonstrate the company's longstanding commitment to technology.
Even so, clearly Amway is steering its India strategy in a new direction, a country it says is key to its global plans. And it needs to do that, given the rapidly changing retail landscape in the country as well as the massive transformation in customer expectations. To that end, the company is launching new product lines that cater to the growing nutritional and health related consumption needs, using technology to get closer to its community of sellers and investing in a manufacturing facility in Tamil Nadu.
Creating new experiences
The first digitally-enabled experience centre was launched in Bengaluru in March 2016. The stores are being designed as tech havens; spread over 24,000 sq ft, a 75 inch LED screen makes up the façade of the building and a giant LED wall doubles up as a live product catalogue for Amway. There are wellness zones, beauty corners and virtual carts that use a mix of technological tools to provide customers an immersive experience. These stores also offer free fitness advice and exercise sessions. Sujoy Bose, vice president, south, Amway India says if 10-15 per cent of the people who joins these fitness programmes are converted as distributors or customers, it is a success.
Behl believes that the stores will help familiarise people with the brand. Says he: "In a diverse country like India, personalisation is important. The stores have been conceptualised with that in mind." Here buyers and sellers can experience the brands first hand and Amway business owners can set up customer meetings. The experience store leverages multiple new-age technologies to give an immersive experience to the user, the company said. Critics, however, would say that these experiences are easily provided by online sellers. But given the nature of the Indian customer and her desire for a personalised interaction, Amway hopes its business model still holds.
Loyal sellers make lifelong buyers
The direct selling industry in India has grown to Rs 7,500 crore from Rs 4,100 crore in the last five years, according to FICCI-KPMG's latest report. However, the report cautioned, the industry has slowed down over the past five years, mainly because of an ambiguous regulatory framework.
At Amway there is tacit acceptance of this fact. "Regulation is certainly a challenge, since no official guidelines or laws exist for the industry. In the absence of a law, chances for misinterpretation are high," says Behl. It is working with the Centre and state governments to draft a set of guidelines for the direct selling business. In the interim, however, it is trying to build closer connections with its seller community and the end customer.
Amway's buyers are also its sellers and the recent marketing initiatives are aimed largely at this community, the company said. In the past, the company has not spent much on marketing and branding, relying more on the community of sellers to spread the word about its products, but that is about to change as it brings in endorsers for its products and sets up tech-enabled stores across the country.
The company plans to triple its turnover over the next 10 years from around Rs 1,800 crore at present and for that it needs a committed community of sellers. Its branding initiatives are meant to keep its band of sellers motivated. It is also perhaps hoping to allay the fears that many of its sellers may have following the 2014 controversy over Amway India CEO William Scott Pinckney's arrest. He was jailed on the charge of cheating and other financial fraud.
Amway has recently added a new line of cookware, fitness equipment, and nutrition and skin care products. It plans to add 10 new products this year. It has set up a manufacturing facility; India is the fourth country globally where it has invested in a plant. An R&D lab is also being explored for the facility, furthering the site's importance to its global supply chain. Amway says it is bullish about India as a market, but the question really is whether it can withstand the growing pressure of e-commerce companies and online marketplaces.
