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E-commerce rocks direct-sales world

Tupperware puts its plastic products on the Web. Amway's getting ready to go online. Is the Net a natural for direct sales?

    Long before the Internet existed, consumer products marketers Tupperware, Amway and Avon were bypassing retail middlemen, but now they must rethink their direct-sales model to satisfy consumer demand for the convenience of shopping online.

    Yesterday, Tupperware, maker of the ubiquitous plastic food-storage containers, announced plans to begin selling its wares online by the end of the year. The new strategy, which led at least two investment bankers to upgrade Tupperware stock, is meant to complement the company's field sales force.

    Tupperware's sales force "is very much the core of the business and we are looking at ways to reach out to people, meet their needs and bring them into the system," said Lawrie Hall, director of external affairs at Tupperware

    In a prelude to Internet sales, Tupperware has experimented with retail kiosks in five malls in a program run by local sales forces, Hall added.

    Capitalizing on the growing e-commerce trend would help Tupperware, which generates about 85 percent of its sales outside the United States. The company has struggled to overcome the effects of the economic slowdown in Asia and Latin America during the past year, but things may be turning around.

    Avon, a $5 billion company with a presence in 131 countries, already markets its products online. That allows customers to bypass the key to Avon's past success: its 2.3 million representatives, most of whom work part-time selling the products in private homes. Visitors to the Web site can join Avon's "A-List," which provides almost everything the company's representatives do: a history of purchases, gift reminder service, and answers to e-mail questions.

    One of the most innovative approaches to e-commerce among the direct sellers may be that under development at closely held Amway, the giant marketer of household products. Sources say the $5.8 billion, private company may transfer its model, which encourages its independent distributors to sponsor other distributors in exchange for a percentage of their sales, onto the Internet.

    Under consideration is a plan to create an e-commerce site, to be launched September 1, with a dual purpose: sell to consumers at retail prices, and sell to Amway distributors--there are 2 million in the U.S. alone--at wholesale cost. Every distributor would be issued an identification code that tells the company whether that distributor is sponsored. It would also enable the company to keep track of each distributor's wholesale purchases, and track consumer purchases by Zip code, linking them to the nearest distributor.

    To get its distributors to sign onto this e-commerce plan, Amway may create a new company that gives them partial ownership. "It will change our business completely," said a Maryland distributor.

    Amway declined to comment on its plans, except to say that it is exploring an e-commerce venture.