Industry News

La Vue: Perspectives on France
by Katherine B. Ponder

France is a small country with big purchasing power. While some products are relatively easy to sell through direct selling, others are as challenging as it gets. But presenting the opportunity and making sales in France is too good to pass up, as many direct sellers have found. France is also absolutely connected to the global market, with French companies extending their reach into the United States, and U.S. and other international companies targeting the French.

France has a population of 60 million, with a gross domestic product of $2.05 trillion. It makes for substantial economic might—all within an area smaller than Texas. The direct selling industry is doing quite well in the country, despite some heady competition. It reached $2.3 billion (€1.8 billion) in 2005, growing an average of 10 percent for the last two to three years. Approximately 170,000 people are registered salespeople with French DSA companies. The country’s cosmetic industry is exceedingly competitive, with high-end pioneers like Lancôme and L’Oréal working alongside direct selling veterans like Avon and others.

Each of the companies that spoke to Direct Selling News has a different perspective on the industry in France. These differences are the result of where each company started, and each is telling in its own way.

From the U.S., Looking In

ACN is an American-born company that sells telecommunications services. Its legions of representatives work in 19 countries, including France. ACN began business in March 2004 with fixed-line services and added wireless and Internet services over time. The French reception to this company has been nothing short of incredible. “France has quickly become the second most productive in all of Europe [for ACN] with the highest growth rate in all of ACN’s European countries,” says Allan van Buhler, Global Vice President of Marketing for ACN.

Part of this success is attributable to what van Buhler sees as the growing entrepreneurial mentality within the French collective mind-set. People seem to be looking for ways to supplement their full-time incomes with part-time opportunities. This is easier done in France, where the official workweek is 35 hours. ACN has an advantage, because it doesn’t require people to carry inventory and sells services that most consumers already use. People around the world find this an attractive business proposition. The French are no different. There is a difference, however, in the extent to which they’ll go to learn about their options.

“French people spare no effort in researching and collecting facts about different business opportunities available to them that would represent Plan B or a secondary income stream to complement whatever main occupation they practice,” van Buhler says. “The decision to join one or the other direct selling opportunity is generally made based on a thorough analysis and study of the company’s track record, compensation plan and mode of operation.” ACN passes this in-depth analysis with flying colors as it continues to grow in France.

Another factor in the success ACN has found in the country lies in the deregulation of the French telecommunications industry. As barriers fell, the company was ready to move. Watching such deregulation is always a part of ACN’s analysis of markets, and doors keep opening for the company as more aspects of the industry deregulate.

From a purely business standpoint, there are factors that ACN and all direct selling companies take into account when operating in France. First is the country’s membership in the European Union. This makes operations much easier across Europe, with more laws being standardized alongside the common currency. Second is the legal status of direct sellers in France. The French legislature created the Vendeur à Domicile Independent (VDI) status for all independent home sellers. It recognizes that the direct selling representative is self-employed but adds the compromise that the sponsoring company will contribute to the representatives’ social requirements. So, direct selling companies make social security contributions and quarterly filings with the French tax authorities for each representative. While this arrangement is not as free and clear as direct selling in the United States, it is quite an accession for France, because the rates that direct sales companies pay for each representative are much lower than for the typical employee.

The views of U.S.-based ACN reflect what many American companies have found in France. Van Buhler says, “ACN’s core products and business opportunity were extremely well received as the French interest in finding a proven entrepreneurial opportunity is common knowledge. The awareness of direct selling is growing at an explosive rate as it is a marketing concept taken very seriously within France’s borders.”

From France, Looking Out

Demarle at Home is actually at home in France. The company started there with cookware for professional chefs. These commercial products have been sold for 25 years in 90 countries. In 1994, Patrice Jacquelin, an enterprising gourmet, saw the potential to put Demarle products in the hands of home cooks. Jacquelin bought Demarle and launched a new concept: gourmet cooking at home. As the concept spread through France, Germany, Belgium and the United Kingdom, Demarle made slight adjustments in marketing, language and in addressing legal issues.

When Demarle came to the United States in January 2003, however, more than slight adjustments were around the corner. “Consumers in the United States are more casual about their cooking and home entertaining,” says Cindy Juncaj, President and CEO of Demarle at Home. “In France, it’s very gourmet and people are somewhat competitive about their cooking. As a French-based company, we needed to understand that what worked in France wouldn’t necessarily work in the United States.” The result is a more casual, yet still elegant, approach. Recipes are easier, the at-home parties are less formal, and the emphasis is on keeping everything simpler. This shift from a gourmet-only approach is slowly giving Demarle a new twist on its marketing everywhere.

Juncaj sees the biggest differences between French direct selling and U.S. direct selling in terms of acceptance. “The American culture is much more accepting of direct selling,” she says. “The French are just now beginning to accept this concept. While they will share the products with friends and sell to them, they aren’t as quick to tell people about how they can make money in the company.” That said, most of Demarle’s French sales representatives work their businesses as their sole source of income—be it as a career or as an alternative to single- or retirement-income living. They don’t come into the business to make money, though. They come because they love the product and invariably end up earning income. In fact, the number of Demarle sales reps in France is fairly low, about 4,700, but each one is very productive. They have high average sales per person and tend to have lower recruiting figures than their U.S. counterparts—all of which reflects the cultural hesitancy to share the opportunity.

Demarle is similar to ACN in its inventory-free approach. The company does not want sales representatives to have inventory other than products for their personal use. Demarle also doesn’t want reps to lose money by ordering and storing marketing materials. “We may be a slower-growing company because of that, but we have happier representatives who are staying in the company because they are going out and selling, so they make money,” Juncaj says. “They’re not feeling like they’re stuck with a lot of inventory. The same with the marketing materials—we believe that is a cost of doing business.”

Juncaj also believes that launching a direct selling business in France before coming to the United States is an advantage. “You don’t hear as much about smaller countries like France,” she says. “It’s not easy to build a direct sales business there. A company that is successful in Europe is much more likely to be successful in the United States. It’s harder [in Europe].”

From Brazil, Looking In

Natura is the Brazilian star of the cosmetics industry. It ties its natural products to maintaining biodiversity and ecological responsibility. As the No. 1 direct seller in Brazil, Natura has branched out successfully to several Latin American countries. In 2005, the company made its first move to establish a presence in France, and they took an unusual approach.

“We first wanted to establish brand value,” says Sarah Gautier, Commercial Director of Natura France. “So, we opened our boutique in April 2005 and then the Web site in January 2006. On Oct. 10, 2006, we began the direct sales model.” The direct sales model in France is relying upon Internet sales and special workshops set up by consultants. With each new addition, Natura contacted its customers to announce its upcoming steps. This combination of retail, Internet and personal selling has worked like a charm. There are 108 consultants working in France now, and the boutique has a very loyal following. In fact, many of the boutique and Internet customers were among the first to become consultants.

The company’s performance has been so good that BusinessWeek Online said, “Cosmetics maker Natura looks like a natural winner.” Natura’s track record and solid footing are the main reasons why it can go into a market as competitive as the French cosmetics industry.

“France is second only to Japan in terms of cosmetics,” Gautier says. “It is one of the most competitive markets in the world, and that is why it was chosen.” Again, the thought, “If they can make it there, they can make it anywhere” comes into play. And Natura is wisely taking advantage of the scientific advances that come from French cosmetic research. The company installed a Paris-based research lab, whose main focus is creating and maintaining close relationships with the scientists, universities and researchers who are developing new technologies in the cosmetics industry—where Europe has long been a leader. Today, Natura closely monitors studies being done on artificial skin, which helps immensely in cosmetics testing.

Cosmetics and France seem a natural fit, but how do they combine with direct selling? Sometimes awkwardly, according to Gautier. “The direct selling market has an old-fashioned image there,” she says. “We want to change that image by making Natura warm, convenient and friendly. It will probably take two to three years for people to really know about it.”

There are some very selective direct selling companies coming into the market that are giving the industry a boost. Gautier notes that these companies are mostly couture/clothing companies that have set up only in the very expensive, posh areas of Paris. “It is helping improve the image of direct selling for everyone,” she says.

As far as government and regulatory factors, Natura finds it easy to work in France. The VDI statute has improved the direct selling industry’s image and clarified what companies and independent sellers must do to comply with government social fees. Gautier credits the World Federation of Direct Selling Associations with being very active and having a positive impact on business in France and across the world. “France is Natura’s country to try and experiment with new things, like our workshops, the fact that we have three channels and the science lab,” Gautier says. “It will all help the company grow.”

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