Avon: How a Company Ready for E-Commerce 20 Years Early Lost Three-Quarters of Its Revenue

In this episode of Rozmowy Logistyków, Piotr Skobało and Adam Sobolewski analyze the history of Avon — a company that at its peak generated 11 billion dollars in global revenue. They discuss what led to the fall of a direct-selling giant, despite having factories and distribution centers around the world.

A DIRECT-SELLING MODEL THAT DROVE GLOBAL GROWTH FOR DECADES

Avon, an American company, built its business over more than 125 years on direct sales through a network of consultants (women and men — historically, some of the top sellers were men too) working from a product catalog. In the early 2000s, the company reached nearly 12 billion dollars in global revenue, entering successive markets in Central and Eastern Europe and Asia — from its Warsaw HQ, it served 22 markets at its peak, from Poland and Russia to Kazakhstan and Uzbekistan, generating almost 1.5 billion dollars in revenue combined.

WORLD-CLASS LOGISTICS — BEFORE E-COMMERCE EXISTED

The distribution network included several large factories globally (Mexico, Garwolin, plus smaller plants in Western Europe and Asia) and a dozen-plus distribution centers — Europe alone had seven or eight, with Russia served by four transshipment hubs fed by FTL transport from the Garwolin center. As far back as roughly 20 years ago, Avon already had fully automated pick-to-light processes and sorters on its outbound line — infrastructure that no modern logistics company today would be embarrassed by. Its order profile (350,000-370,000 orders per campaign in Poland alone, each averaging 5 SKUs, worth around 160-200 PLN) was structurally identical to what large e-commerce platforms handle today — Avon had infrastructure ready to support online retail two decades before that model became dominant.

A COSTLY LESSON: A SAP ROLLOUT THAT COST 125 MILLION DOLLARS

A pilot of a new SAP system in Canada (started in 2011) turned into a serious failure — the interface turned out to be a poor fit for how consultants selling directly actually worked, leading to mass attrition and losses estimated at 125 million dollars from the pilot alone. This shows that fitting technology to end users' real way of working can matter just as much as the system's functionality itself.

ORGANIZATIONAL RESISTANCE TO E-COMMERCE AS THE REAL CAUSE OF THE DECLINE

Avon's biggest business tragedy — despite having operationally ready infrastructure — was years of internal resistance to launching online sales. With a sales force numbering in the millions of consultants worldwide (some working this way for decades, sometimes across three generations of one family), shifting the model to digital sales meant a fundamental identity change for a huge number of people. The result: revenue fell from 11 billion dollars at the turn of the century to 2.7 billion in 2023 (a fourfold drop), of which all of Europe (East and West combined) recorded just 300 million dollars, against 1.4 billion in Central Europe alone in 2008-2009 — a drop of more than fourfold in that one market. The COVID pandemic, when door-to-door direct selling became physically impossible, accelerated the decline to 60-70% year over year, at a time when Amazon was growing 40% a year.

A SHRINKING NETWORK: FROM SEVERAL GLOBAL FACTORIES TO THREE HUBS

In response to falling sales, Avon gradually wound down distribution centers and consolidated manufacturing into three main hubs, including Garwolin, which went from being Avon's second-largest factory (after Mexico) to its largest plant in the world. The consolidation cost the closure of the Neuenhagen factory in Germany after 70 years of operation — a decision with serious consequences for the local community. In 2016, the company sold its US, Canada, and Puerto Rico operations to Cerberus Capital for 175 million dollars and moved its headquarters to London — formally leaving the United States after more than 120 years, a country where one small town had renamed itself Avon City in the company's honor.

THE TURNAROUND PLAN: CUTTING THE ASSORTMENT AND WORKING ON WORKING CAPITAL

One of the rescue initiatives was a planned 25% cut to SKU count (from around 7,000), to simplify the supply chain and reduce the working capital tied up in it — the company had spent years operating in an "always too much inventory" mode, first as a natural effect of continuous growth requiring production ahead of demand, later as a mismatch with shrinking demand. Only in 2022 did Avon decide to move onto external sales platforms — in Poland it appeared on Allegro and Empik.com in 2023, and in October 2024 entered 500 Rossmann stores. The takeaway: no amount of logistics optimization, however advanced, can make up for a sales strategy that hasn't kept pace with a changing market.