Tupperware and Avon go bankrupt. In the nineties they invaded the Czech Republic, now their selling style is old school

The American phenomenon in the field of plastic tableware, Tupperware, announced bankruptcy this week. After almost eighty years of operation, the company can no longer stop reducing sales and attracting young customers. A month earlier, the cosmetic company Avon came with the same news. What do plastic boxes and mascaras have in common? Both companies use multi-level marketing (MLM), where salespeople offer products to their network of customers, often friends, who then qualify for commissions. Brands are also popular in the Czech Republic, especially among mothers on parental leave.

Both were once very successful, but in the last few years it has been in serious decline. Just Tupperware itself she fell over the last ten years in sales by half. Out of 2.6 billion US dollars (52 billion crowns), suddenly there was only 1.14 billion dollars (about 22 billion crowns). What could have caused it? “The downfall of companies like Tupperware and Avon’s financial troubles may be symbolic of a broader trend, but not necessarily the end of the multi-level marketing model as a whole,” thinks Jiří Hnilica, dean of the Faculty of Business Administration at the University of Economics in Prague.

According to him, it is imperative that MLM companies face more competition now than before and need to innovate. If they fail to face the competition, it can be fatal for them. The market is also changing, and the next generation no longer wants to shop at sales parties in living rooms. “Younger generations are more digitally oriented, have higher technology skills and are less willing to spend time on direct sales,” Hnilica calculates the possible reasons behind the financial problems of the named companies.

But it was once a hit in the Czech Republic. The products of the American company Tupperware arrived here in the early nineties along with new freedom. However, they were not sold in stores, but were sold by friends directly from the manufacturer. Most of them were mothers on maternity leave, which is also confirmed by Lenka Malinová, who still sells Tupperware products today.

“I got married in Prague in the 1990s, had children and started missing communication with people with whom we could have fun and about something other than diapers,” she says that the motivation for her, as well as most other women who jumped into selling Tupperware or even Avon, was an attempt to break out of social isolation.

So in 1997, a friend showed her a bowl for rising dough and other products, and Lenka Malinová was so interested in the products that she started buying them herself and eventually delivering them to her friends. “I liked their products then and I like them now. He never made a living, but I had no problem inviting the girls into the living room and throwing a party, I’m an organizational type.” he says.

He emphasizes that although it was plastic containers and boxes, often very expensive, the products were of good quality. “I still have a lot of the dishes from the nineties and they are still functional. My grown daughters are now using the lunch boxes for their own children.” she laughs and remembers that this “brigade” on the side also gave her job satisfaction. “I set a goal of what I wanted to sell, and when I did it, I felt good about myself.

However, it must also be said that the behavior of companies that used MLM was not always ethical and according to critics. it had characteristics of pyramid selling. In the past, for example, new interested parties had to pay an entry fee before they could sell their products at all.

In addition, the regular seller often did not receive a reasonable income at all and does not achieve it even today. The promised high share (for example 23 percent) of the price of the goods sold is only available on a certain conversion. “The girls do it more so they can buy the company’s products and have a reason to meet other people,” concludes Malinová.

The party they sell

But how did it come about? Back in the 1940s, plastic was not as popular as it is today. It was delicate and didn’t smell great. But Earl Tupper, an employee of the American chemical giant DuPont, managed to deal with it. From pieces of polyethylene slag, which is a waste product from the oil production process, he managed to make light and durable boxes, mugs, bowls and plates. Food stored in Tupperware boxes lasted much longer in the fridge, while retaining its taste and quality. Thus the business plan was born. There was only one flaw – the product did not sell.

Fortunately for Tupper, however, one mother, Brownie Wise, applied for a job in his company, realizing that tableware was a good product to sell at social gatherings. And so she forced Tupper to completely change the company’s strategy. So he withdrew the products from regular stores and started distributing them only through his own salesmen, ie mainly female salesmen, at so-called “Tupperparties” – neighborhood social gatherings where the goods were given to friends and acquaintances.

The strategy worked and the company started making money. In 1954, sales were already 25 million dollars. Wise became vice president of the company in the 1950s, which was very unusual for a woman in the US at the time. She gradually became a legend of personal sales and the face of the company in public, which Earl Tupper did not take well. In the late 1950s, he was forced to leave the company due to accusations that she was tarnishing its name, and the same year the company was sold to the Rexall drugstore chain for $16 million.

He later divorced and moved to Costa Rica. On the other hand, after leaving Tupperware, Wise tried her own business and was also active in real estate. But she didn’t repeat the success of her time at Tupperware.

Avon is here!

The American cosmetics company Avon also sells its products in the same way as Tupperware. And she found herself in similar problems this year. After 138 years of operation declare bankruptcy. At the same time, there are more similarities: she also invaded the waters of Czech industry in the nineties and focused on women in parenthood.

“At the beginning of the nineties, we moved from the east of Slovakia to a block of flats in Olomouc, I was on maternity leave and I needed to communicate with people,” Erika Vránová describes the moment she first met Avon. “I received a flyer where the manager from Avon offered to work with me for an entry fee of 250 crowns. On the leaflet was a picture of the model Pavlína Pořízková, who looked beautiful, and I was wearing second-hand clothes, I had no money for cosmetics and I wanted her badly.” he says.

Gradually she went around the house where she lived, offering makeup and mascara to friends and acquaintances. Her connections began to grow. “In a few years, I had more acquaintances in Olomouc than my mother-in-law, who has lived there all her life. Vránova laughs.

The company also organized business conferences for successful salespeople, where they could meet stars such as Karel Gott. According to Vránová, this was very motivating for all the women involved. As one of the few, Erika Vránová didn’t just stop at door-to-door sales. From being an Avon woman, as the company’s salespeople are called, she became a sales director and later got a job as a manager in another cosmetics company, where she still works today. . She remembers her time at Avon fondly. “I think I learned a lot there, for example how to drive a car. I also met a lot of people from all over the world. I fulfilled my dream there,” ending.

Avon itself tried to deal with the decline in the long term. Between 2011 and 2022 fell in revenue from nine billion dollars (about 180 billion kroner) to 2.7 billion dollars (54 billion kroner). However, no e-shops or e-shops have been launched opening brick and mortar stores.