IT the way forward for Amway to expand market reach

IT the way forward for Amway to expand market reach
By YEOW POOI LING

AMWAY Corp intends to grow its market share in all the 80 countries that it operates in, said Alticor Inc president Doug DeVos.

Alticor is the parent company of US-listed Amway.

“In some of the markets, we want to re-establish our market leadership. Our positioning, promotion and pricing would be areas to strategise in,” he said during his recent visit to Malaysia.

DeVos said markets like Vietnam, India, Russia and China had huge potential, given their large population, while Malaysia, Thailand and Taiwan would continue to see a growing business.


Low Han Kee (left) and Dough DeVos at the briefing

He said there was also “tremendous potential” in matured markets like the US, Europe, Japan and South Korea, which Amway plans to tap via product offerings.

DeVos said Amway would support its distributors through transparency and technology.

For example, product information is available on the company's website and transactions could be done through online payment facilities.

Amway distributors would be able service more customers as they do not need to meet customers face-to-face for presentation or product delivery. Communication technology has addressed that.

The direct sales group would be investing US$150mil to US$200mil over the next five years to upgrade and integrate its websites from the various markets it was present in, DeVos said.

Amway (M) Holdings Bhd managing director Low Han Kee noted that about 65% of sales for Amway Malaysia was transacted online.

The Malaysian business would be seeing wider physical presence with new stores planned for Kota Baru, Batu Pahat and Seremban in the next 12 months.

Amway Malaysia executive director Paul Yee said the company had spent about RM100mil to build a new corporate building, which would be ready next year.

“We have included a training centre at the new office, given that we hold about 400 trainings every year,” he said.

Distributors can also use technology like the PDA to test out cosmetic colours on customers instead of the conventional make-up session.

“The new outlets will allow customers to have a touch and feel of the products and gain better confidence of the brand,” Yee added.

Low said distributors' productivity was anticipated to increase by at least single-digit level this year.

He noted that the distributor force for Malaysia grew 2% to high single digit in the past five years. Last year, Amway has 188,000 distributors.

“Every year, about 500,000 Malaysians enter the job market. Hence, we do not expect saturation as 65% of new applicants are below 35 years old,” Low added.

On products, DeVos said the Nutrilite supplement range was its biggest contributor globally, contributing about 35% of revenue.

“We have our own research and development teams as well as our own organic farms for Nutrilite,” he said, adding that Amway had over 700 patents on Nutrilite products so far.

The product formulas have also been adjusted to meet the halal requirement.

On rising cost of raw materials, energy and fuel, DeVos said such economic condition was unlikely to impact the group significantly.

“There is always pressure on cost; whether it is materials, or pressure from the market place. We pay attention to cost structure all the time,” he said.

He expects distributors to travel less to meet customers and counterparts, and would depend on technology instead to communicate.

Low said transportation cost in Malaysia had surged 30% while the cost of cartons by 15%.

“However, we can't simply increase prices, as we have to balance that with demand. Also, we can't increase by the same quantum as how costs have increased,” he said.

Consumption might be affected but this would be mitigated by higher number of distributors, Low added.