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COVID-19 impact: Amway aims to transit from hi-touch to hi-tech

India’s leading direct selling FMCG company is re-envisioning itself to ensure business normalcy.

May 20, 2020 / 02:06 PM IST

Amway, India’s leading direct selling FMCG company, is re-envisioning itself in COVID times to mitigate the innumerable pandemic challenges to business continuity.

The four key pillars of a post-COVID life at Amway include enabling a paradigm shift from hi-touch to hi-tech, repurposing its physical stores under a heavily scaled down on-ground presence, a strategic shift towards building an independent last-mile delivery model under clearly structured multi-vendor national alliances and a mega push to immunity and nutrition product portfolio.

Drawing the broad tenets of the business continuity plan in times of COVID and beyond, Amway India Enterprises CEO Anshu Budhraja told Moneycontrol in an interview that “pre-COVID or right now, the first half of the year is a time of challenge but the second half of the year is a time of hope and time of rebuilding, reimagining the market place as consumers and all of us evolve to the new digital future.”

According to various industry estimates, the direct selling industry grew around 13 per cent from $1,633 million (Rs 11,670 crore) to $1,830 million (Rs 13,080 crore) in 2018. The Indian industry has grown at a CAGR of 10.7 percent from 2015-2018.

The direct selling industry has immense growth potential in India. As per FICCI-KPMG report on direct selling, the industry is estimated to grow to $ 9.1 billion (Rs 65,000 crore) by 2025 at a CAGR of around 24 percent for a period of 10 years.

But the pandemic has hit the business vertical hard due to disruption in manufacturing and closure of warehouses and stores. This has forced Amway to look for out-of-box solutions to ensure business normalcy.

Laying the digital road map, Amway India CEO said, “We are leveraging digital technology by conducting all the important meetings and training programmes with direct sellers online. There is an acceleration on the digital platform. It is educative to see how digital is offering connect with the world including consumers and channels for our business.”

Budhraja disclosed that Amway would invest heavily in the next six months to one year to enhance the capability and competency around the digital infrastructure. “Seventy percent of our business was conducted through our 140 stores and overnight 100 percent of it is happening online on the website. Maybe people will come back there but now they are feeling more productive and they are feeling more connected.”

Does this now mean curtains for the physical stores? The CEO admitted to a new life and identity for these stores as the company pushes for digital adaptation. “We need to repurpose our stores to deliver a new value proposition. We are having a closer look. We may have to re-size them. They have to stay relevant. For demonstration there is a role but not for transaction.”

From a product portfolio perspective, Amway has witnessed a significant behavioral and attitudinal shift towards personal hygiene and immunity building products. There has been an increased focus on preventative care and holistic wellness. As a result, nutrition and personal hygiene portfolios are expected to become major business drivers. Budhraja estimated that the nutrition segment, which is about 55 cent now, would scale up to 65 to 70 percent of the total turnover of the expanded base.

In reply to a question on movement away from personalised touch to an organised delivery model, he said, “We are putting in energy there so that we are able to serve the entire footprint. Currently, we serve about 8,000 pin codes. We want to increase that and make a sharper service level for our customers. Obviously we will not do it ourselves. We will have four-five national partners and integrate technology at the back end to make sure customers get a great experience.”

Would that not run into regulatory bottleneck in view of the way the direct selling model was perceived? “There is a new regulation in place in 2016, which among others, lays maximum emphasis on bringing utmost value to customers.”

Budhraja quoted his company’s credentials as an Indian manufacturer and argued that traditional channels had been optimised. “The business has moved to disruptive models and we are also improvising our channels. We want to add more value to the consumer. There has to be a reference point online. Can our distributor be the reference point, and most importantly, provide that personal experience?”

Rakesh Khar
first published: May 20, 2020 02:06 pm