Beauty and the business plan

By Leila M. Barry

The model of beauty: Oriflame’s success is based on its successful business model.

Among many other things, Sweden is known for its functional, affordable and high quality products – IKEA for instance; it is also famous for cutting-edge technology that is environmentally responsible. Sweden’s natural beauty is legendary and so are its naturally beautiful women: Ingrid Bergman, Greta Garbo and Bond Girl Britt Ekland to name a few (according to Travelers Digest, a US magazine, Sweden is supposed to have the most beautiful women in the world). A combination of high-quality, affordability, innovation and of course Swedish beauty is Oriflame Cosmetics, a direct sales beauty products company from Sweden.

Oriflame Cosmetics was founded in 1967 by two brothers, Jonas and Robert af Jochnick and their friend, Bengt Hellsten. These three young entrepreneurs had an idea to manufacture and sell good quality skincare products that were inspired by the natural and wholesome beauty that is associated with Sweden. Not wanting to invest in shops and staff, they decided to market their skincare from the homes of ‘sales consultants’ – directly.

In the last 40 years or so Oriflame’s product portfolio has expanded to include almost 1,000 products in the skincare, colour cosmetics, fragrances and personal and hair care categories. Oriflame is dedicated to research and development and today it is ranked third amongst the global direct sales beauty businesses. With a presence in 62 countries and more than 3.5 million sales consultants worldwide, this Swedish company is one of the fastest growing direct sales beauty companies in the world. 

The company sells much more than a range of high quality beauty products. Oriflame offers people the opportunity to join its team of sales consultants and representatives, to build upon a successful direct sales business plan and in the process make a decent amount of money.

In Pakistan since 2009, Oriflame is one of a handful of foreign cosmetics’ companies and the only direct sales beauty company operating here. As in other markets, here too the strategy is two-pronged and the company pushes its business model as much it does the actual beauty products, as the sales of one depends on the growth of the other.

According to Amna Niazi, Marketing Manager, Oriflame Pakistan, with a population of 170 million, Pakistan is the ideal market not only for Oriflame’s affordable beauty products and cosmetics but also for its simple and effective business model.

“We try to have a presence in markets with large populations; Pakistan is ideal because the population is both large and young, and the market is rapidly progressing toward a cultural change and more westernised lifestyles. The population size also suits our networking sales model.”

The success of Oriflame’s beauty products (in any market) is intertwined with the acceptance and success of its business model and the sales consultants who go out there and talk about the products. There are two ways to earn money through Oriflame direct sales: one is to join a sales consultant’s network, recommend products from the catalogue by word-of-mouth to family and friends and earn a 20% commission.

The other method is to become a sales consultant. This position requires some serious training in the business plan and an in-depth understanding of the product range. Sales consultants have the added responsibility of developing a down line network of representatives; the wider the network and the more they sell, the larger their profit, commissions and cash rewards.

“Growing your network is like growing a tree, and getting more people involved is where the real money lies,” Niazi says.

Pakistan – where geographical and cultural limitations often make access to proper markets and shops difficult – is ideal for direct sales. Niazi is pleased with the response Oriflame’s products and business plan have received thus far.

“We are very big in smaller cities. As far as the product portfolio is concerned, urban centres are important; but business model wise the smaller cities are doing well despite the fact that the products sold in these markets are different. In a town like Vehari, affordable soaps and shampoos sell, while in Karachi it is the Rs 4,000 anti-aging cream.”

Despite the encouraging response, Niazi feels that direct sales have a long way to go and plenty of market to capture. The challenge she says is to change the mindset of the market in terms of acceptance of buying directly from a salesperson rather than at a retail outlet, and one cannot blame consumers for being wary, given that the sum total of their direct sales experience has been confined to a handful of random, unauthenticated direct sales companies selling herbal waters and diet supplements of a dubious provenance.

Oriflame, a multinational company with annual sales of 1.5 billion Euros and five production units in Sweden, China, India, Poland and Russia is a member of the World Direct Sales Association and is working to change this perception in Pakistan.

Most of Oriflame’s advertising and communication follows the same formula as its sales – direct and on a personal level. The communication is dual-purpose. To advertise, and to educate and inform the consumer about the ease and authenticity of the direct sales system whether it is the products or the business plan.

“We make marketing investments that will help our consultants bring more people on-board. So we have to find platforms where they are able to talk to more people and explain to them how the process works,” says Niazi.

The advertising media of choice has been on-ground activities such as exhibitions where consultants can interact with and explain to consumers how to buy Oriflame’s products and share their success stories as sales consultants. Print advertising also serves to educate consumers about how to buy and become a part of Oriflame. However, Niazi adds that their print ads take a “two-pronged stance; we want visibility in good magazines to build reputation and we want to be in relevant media (mass appeal publications).”

Niazi admits that convincing Pakistani consumers about buying and selling through direct sales has been a challenge but is nevertheless confident that the market will accept this mode of business when they see the rewards they are able achieve. She is confident that with time the market will evolve and no doubt the first mover advantage will all be Oriflame’s.

First published in the May-June 2011 issue of Aurora.