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Multi-Level Marketing and the Beauty Industry - US - September 2019

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
Market overview
Top takeaways
Competition in the larger market poses a threat to direct sellers
Don’t forget about men
Product expansion and innovation are necessary to compete and stay relevant
The issues
Peer-to-peer selling presents trust and credibility challenges
Purchases in the general beauty market signal shoppers have unmet needs at direct sellers
The opportunities
Better informing and inclusive recruiting can serve more consumers, particularly men
Innovation in marketing and products can prevent leakage
What it means
THE MARKET – WHAT YOU NEED TO KNOW
A chance to drive growth among underserved consumers
Social media: a tool for communication and commerce
MARKET PERSPECTIVE
What is multi-level marketing within the beauty industry?
MARKET FACTORS 
Shared gender interest signals potential room for growth and a need for tailored targeting
DPI is favorable, but how consumers spend their money varies by gender and age
Figure 1: Splurges, by gender and age, August 2017
Social media engages more consumers, introduces new competitors
KEY PLAYERS – WHAT YOU NEED TO KNOW 
Emerging brands appeal to a younger, overlooked consumer
Despite partnerships and other evolution efforts, direct sellers face growth challenges
Digitally native brands make selling more direct with technology
WHAT’S WORKING
Avon’s efforts to evolve pay off with shoppers
Figure 2: Avon Insider Instagram post, June 2018
Emerging brands’ efforts to connect with young men are paying off
Figure 3: Arbonne Instagram post, May 2019
Figure 4: Beautycounter Instagram post, January 2019
WHAT’S STRUGGLING
Brands, new and old, face growth struggles in a crowded market
WHAT TO WATCH
Digitally native brands explore ways to use technology to sell even more directly
THE CONSUMER – WHAT YOU NEED TO KNOW 
Legacy brands are favorites, but younger brands resonate with young shoppers
Direct sellers face competition from mass merchandisers in stores, Amazon online
Fewer items purchased through direct sellers than elsewhere in the beauty market
Embracing the social nature of shopping and improving the experience will lead to repeat purchases
RETAILERS SHOPPED
Key takeaways/Analyst POV:
Legacy companies see highest share of shopping
Figure 5: MLM retailers shopped, July 2019
Emerging brands are winning with younger males
Figure 6: MLM retailers shopped, by gender and age, July 2019
Figure 7: Arbonne YouTube tutorial, April 2016
Where else are customers shopping in the beauty market?
General merchandise and specialty retailers are biggest in-store threats
Mass and Amazon are winning online trips
Figure 8: Retailers shopped (general), in-store versus online, July 2019
SHOPPING METHOD
Key takeaways/Analyst POV:
Online is the preferred method of purchasing
Figure 9: Shopping method – In-store and online – (NET), July 2019
Older women rank direct sales as number one
Figure 10: Shopping method – In-person and online, by gender and age, July 2019
Competitive leakage occurs among older women in-store at mass and younger men at Amazon
Figure 11: Shopping method – (NET any rank) – In-store and online, by gender and age, July 2019
Legacy brands see traffic through social media
Figure 12: Avon Instagram post, August 2019
Figure 13: Mary Kay Instagram post, June 2019
Figure 14: Mary Kay Instagram post, June 2019
ITEMS PURCHASED
Key takeaways/Analyst POV:
Skincare and cosmetics are top purchases through direct sales companies
Figure 15: MLM items purchased, July 2019
Older women represent an opportunity for basket building
Figure 16: MLM items purchased, by gender and age, July 2019
MLM purchases compared to general beauty purchases
Figure 17: Items purchased (general), July 2019
BRAND AWARENESS
Key takeaways/Analyst POV:
Awareness mirrors retailers shopped
Figure 18: Brand awareness, July 2019
Emerging brands have high awareness among young moms, but might be isolating older women
Figure 19: Brand awareness, by parental status by gender, July 2019
TYPES OF SHOPPERS
Key takeaways/Analyst POV:
Despite evolving beauty routines, most shoppers remain loyal to brands and products
Figure 20: Types of shoppers, July 2019
Younger shoppers swayed by expert or influencer recommendations
Figure 21: Sephora email campaign, February 2019
Figure 22: Types of shoppers, by age, July 2019
Young men enjoy their beauty routines
Figure 23: Types of shoppers, by gender and age, July 2019
SHOPPING EXPERIENCES
Key takeaways/Analyst POV:
Improving the experience will elicit repeat purchases
Figure 24: Shopping experiences, July 2019
The social nature of shopping direct sellers appeals to parents
Figure 25: Shopping experiences, by parental status, July 2019
Young men are more likely to primarily purchase through direct sellers
Figure 26: Shopping experiences, by gender and age, July 2019
ATTITUDES TOWARD MLM COMPANIES
Key takeaways/Analyst POV:
Shopper sentiments of direct sales brands are mostly positive
Figure 27: Attitudes toward MLMs, July 2019
Men appreciate socializing and women seek employment opportunities
Figure 28: Attitudes toward MLM companies, by gender, July 2019
Younger consumers more wary of direct sellers
Figure 29: Attitudes toward MLM companies, by age, July 2019
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations

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