Over $1 billion in debt, cosmetics company Avon Products Inc. (API) has filed for bankruptcy. Hundreds of lawsuits alleging that talc in some of its products was contaminated with asbestos contributed to the famed company’s downfall. The company vehemently denies the allegations.
Bankruptcy process is to help keep the brand in the market. API is a daughter company of Natura&Co, which bought Avon’s non-US business four years ago. After the bankruptcy process is completed, Natura&Co plans to buy back Avon shares outside the United States for $125 million. This gives the Avon brand, along with its salespeople, consultants and customer network (including Polish ones) a chance to survive despite API’s bankruptcy.
Avon companies related to API – emphasized the British “Guardian” report on the subject – employ approximately 5,000 people directly. employees and millions of sales agents around the world.
American Forbes, commenting on the bankruptcy filing filed mid-month, noted that although legal problems are the direct cause of Avon’s collapse, the real reason is loss of company innovationwhich stood out as an innovator: from the last decades of the 19th century, Avon, instead of relying on traditional retail channels, sold its products through a network of independent representatives, thus creating a series of brand ambassadors deeply associated with the company. However, when technological possibilities began to allow convenient online sales, Avon was unable to leverage old values in new circumstances.
Avon’s downfall is a story of missed opportunities, strategic mistakes and a lack of evolution in the face of a rapidly changing market landscape. – said Forbes. According to the portal, the company had the potential to become a leader in trends that ended up destroying it.
Long before the advent of social media influencers and brands selling directly to consumers, Avon he had an extensive network of micro-influencers – his representatives – who had deep, personal relationships with customers. If Avon recognized the value of this network and leveraged it in the digital age, it could become a social selling powerhouse – rated by Forbes.
The famous company’s problems were also caused by hundreds of lawsuits alleging that talc contained in some of the company’s products was contaminated with carcinogenic asbestos.
Despite ongoing lawsuits, Avon emphasizes that it only uses… cosmetic talcum powderwhich underwent tests that proved the absence of contamination.
