Although companies that distribute their products through the “door-to-door” network seldom resort to advertising, the system is highly publicised.
There is a positive publicity, as some people highly praise this kind of trade, claiming that anyone can get rich, and a negative publicity, coming from those who mistake it for the pyramidal games. However, 30 million people throughout the world are working in this industry, whose global value amounts to more than 80 billion dollars.
The system expanded to Romania after 1990, when Zepter entered the market. Then Oriflame, Amway and Avon came to Romania. Beside them, US companies Herbalife, California Fitness and Forever Living, which distribute nutritional and naturist products, also operate the direct sale system on the Romanian market.
Simona Goncea, Amway country manager for Romania, the largest direct sales company, thinks that this system is “quite new and unknown in Romania,” although modern consumers are familiar with this concept, as they are willing to save the shopping time. “I would like the find a full pantry when I come home. I need a direct distributor and there are a lot of people like me,” says Goncea.
Amway corporation uses the Multilevel Marketing (MLM) direct sale system, also known as Network Marketing. According to the definition of FEDSA (Federation of European Direct Selling Associations), direct selling is “the marketing of consumer goods and services directly to consumers on a person-to-person basis, generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations.”
Amway Romania was officially launched on November 10, 1997, and is one of the 53 Amway subsidiaries located throughout the world. The company also operates in Hungary, since 1991, in Poland, since 1992, in the Czech Republic and Slovenia, since 1995.
The Romanian subsidiary has 60 employees and the sale network included 40,000 “business partners,” both distributors and final consumers, in August 1999.
In Romania, Amway distributes housekeeping products, personal hygiene products, cosmetics (Artistry), perfumes, detergents, personal magnets (Magna Bloc) and nutritional aids (Nutrilite vitamins). A share of 90% of these products is manufactured in the company’s Michigan-based departments.
Amway portfolio included 200 products in 2000, against only 11 products in 1997. The Romanian subsidiary has three product selection points, based in Bucharest, Timisoara and Cluj.
Simona Goncea was appointed Amway Country Manager for Romania in 1996, when the company had not officially entered the Romanian market yet. According to her, her mission as a foreign investor is “difficult and long termed.”
“The main concerns of Amway Romania are a proper legislative framework, compliant with the EU standards and acknowledgement of the direct sale industry at the European and international levels,” Goncea said. She emphasised that Romania should exploit the benefits of the direct sale system.
“First of all, these products are not available in retail stores. Private entrepreneurs directly offer them to the consumer. They do not simply sell the products from door-to-door. The distributor visits the clients under a previous agreement, and proves the product’s benefits.”
She says that consumer impact is smaller in stores, where people usually watch a product for less than a few minutes, but a 20-minute demonstration performed by a distributor may persuade a consumer to buy that particular product.