Avon buys Silpada
Avon is the world’s largest direct seller of beauty products, and it has bought Silpada Designs, a direct seller of sterling silver jewelry, for $ 650 million, this is it’s largest buy since a least in the 90s to complement its existing businesses. This will provide more home business opportunities. This company is going to purchasea business that both expands margins for the company. Avon knows well, that Jewelry has long been a highly-favored line item. Both Avon and Silpada will benefit from joint sourcing and supply chain programs.
The purchase is Avon Chief Executive Andrea Jung’s third this year, following a long absence since the company’s last purchase in the 1990s. In March, Avon bought Liz Earle, primarily an online seller of natural skincare products followed with the April purchase of baby care brand Tiny Tillia.
Jewelry is part of Avon’s fashion business, which represents 17% of its total last year. In comparison, the company’s core beauty business generates more than 70% of its over $ 10 billion in sales. Avon has said it’s putting more emphasis on jewelry and has said it sees the possibility to make its own jewelry brand global. Silpada also has increased annual sales on average 27% since 2004, Vargas said.
Silpada’s representatives sell its merchandise through party-plan settings, this is different from Avon, whose preferred method of selling is face to face. Its jewelry line, with an average price above $ 25, that is more than the cost of Avon’s Jewelry. Avon said it plans to keep Silpada’s existing management team and run it as a standalone business with its existing 32,000 independent sales representatives. Avon has about 6.2 million representatives.
Avon has been around forever and there is no reason to think that it will not continue to be around. I’m sure that the management at Silpada will benefit from the experience and success of the Avon executives. Avon or Silpada could be the business for you. If so, we’d can show you how we have succeeded. We believe that both are great businesses.
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