Avon announced on February 15, 2018, its decision to cease all operations in Australia and New Zealand by the end of the year. The move impacts an estimated 21,400 Australian sales representatives and an unspecified number of New Zealand affiliates, many of whom reported being caught off guard by the abrupt closure.
The company's communication about the shutdown arrived first via email to affiliates, followed hours later by a public post on the official AvonAUSNZ Facebook page. This sudden revelation sparked widespread anger among representatives. Within days, the Facebook announcement accumulated over 10,000 comments, with many expressing deep disappointment and frustration over the lack of prior notice.
Avon's official statement, quoted by Australian media, cited a strategic pivot towards "long-term sustainable profitable growth." The company indicated it would concentrate on "markets with the greatest potential for future growth" to support its ambition of becoming the world's leading social beauty company. "After a thorough deliberation on our performance, the direct selling conditions in the market, and potential for growth, we have considered all options for the business and it is with much sadness that we are announcing our decision to exit the Australia and New Zealand markets," the statement read.
This explanation left many observers questioning how a business with tens of thousands of active representatives could struggle with profitability in developed markets like Australia and New Zealand. The implication is often a business model where individual representative earnings are low, product sales to outside customers are insufficient, or the focus shifts too heavily from product movement to participant recruitment. Such conditions can strain the sustainability of direct selling operations, especially in regions with robust consumer protection laws.
Avon has been steadily repositioning its global footprint for several years. In late 2015, the company sold 80% of its struggling US business operations. This followed a 2013 report showing that 88% of Avon's $10 billion revenue originated from overseas markets, indicating a long-term decline in its domestic performance.
By early 2016, Latin America accounted for roughly half of Avon's total revenue. Web traffic data to Avon's main site at the time of the announcement showed Brazil as the dominant source, contributing 44% of visitors. Mexico followed as the second largest market at 9.1%. This geographic concentration suggests a heavy reliance on a few key regions for its global sales and recruitment efforts.
The company's challenges extend beyond mature Western markets. China, once a significant revenue generator, saw its sales revenue plummet by 41% after a major bribery scandal. In 2014, Avon paid $135 million to settle US charges related to improper payments to Chinese officials for business licenses and other favors. Following the settlement, Chinese authorities mandated that Avon sell its products through traditional retail outlets rather than its direct selling model, severely impacting its market approach and profitability there.
Critics suggest that Avon's strategy increasingly favors markets where a recruitment-focused model might face less regulatory scrutiny, rather than adapting its direct sales approach to improve genuine retail sales to customers outside the network. If a company with over 21,000 affiliates cannot operate profitably, fundamental issues exist within its business structure. The abrupt abandonment of these markets, rather than a stated effort to reform the model, supports this view.
The heavy reliance on markets like Brazil, which currently accounts for 44% of Avon's website traffic, leaves the company vulnerable if authorities in those regions were to investigate its direct selling practices for pyramid scheme characteristics.