Natura: Will AI Enable the Company to Go Global?
Natura, a multinational Brazilian company known by taking the lead in sustainability and innovation is using AI to expand its direct sales strategy globally.
A Brazilian Multinational known by sustainability and innovation
Founded in 1969, Natura is a Brazilian multinational company in the cosmetics and personal care segment, leader in direct sales. In early 2020, with the acquisition of Avon Products, and previous acquisition of the British Body Shop and the Australian Aesop, Natura & Co became the world’s fourth-largest pure-play beauty company just behind L’Oreal, Estee Lauder and Shiseido.
Natura has always characterized itself by high ethical and environmental standards (being one of the largest B-Corp certified in the world) and its innovation in products and technology.
Since 2018, the company partnered with IBM to deploy Artificial Intelligence (IBM Watson) in many aspects of the business, but the main focus has been on improving its relationship with the community of consultants and representatives that are in the heart of the direct sales model.
The digitalization of the direct sales model
The Direct sales is a distribution and marketing approach in which products and services are sold via a network of independent distributors or representatives. During its expansion in Latin America Natura developed also a multi-level direct sales model, encouraging salespeople to recruit and train new distributors. The model has clear advantages over the traditional retailer model of owning stores, as consultants are independent entrepreneurs, that own the inventory and manage the relationship with customers, providing a broad capillarity that physical stores cannot offer.
With customer increasingly using online channels, however, the very model of direct sales has been questioned in the past years, but Natura has been successful in leveraging the model to the digital space. After the acquisition of Avon in 2020, the company has more the 6 million consultants around the globe, reaching more than 100 million customers on a daily basis.
Roberto Marques the CEO of Natura & Co. is confident in a movement that he calls “The renaissance of direct sales”, where consultants and representatives move from a door-to-door relationship to an online presence, using different platforms to connect with customers as, in his own words, the company has “6.5 million influencers that are improving our brand every day”.
Technology has been key to enable Natura’s expansion through direct sales in the internet era, including the utilization of Artificial Intelligence. Will AI help the company to export the same model to other countries and cultures?
AI solution to improve relationships
Natura’s flagship AI component has a name, she is called Nat. The virtual assistant that was created in 2017 to answer customers questions about gifts, evolved to solve more sophisticated questions from consultants, negotiate debts and payments and, with a strong market campaign that humanized the assistant, she became the face of the company, Nat has a twitter account and is one the main character in the Brazilian AI scenario.
But the application of AI and analytics goes beyond customers and consultant relationship, the company is using machine learning to select the best areas to hire new consultants and to predict customer repurchase. The implementation of sophisticated algorithms is embedded in the online platform used by consultants daily. The transition to digital platform in Brazil and Latin America has been completed with more than 2 million consultants using the online ecosystem, increasing productivity of around 7% and increasing customer satisfaction.
Value creation and challenges
The company is currently finishing the merger with Avon and even though the recipe of direct sales worked for Brazil and for the expansion to Latin America, going global is a different challenge and technology can be a game changer, some value provide by technology employed by Natura include:
- The online platform can enable the company to strengthen the relationship with consultants in new markets (for example previous Avon consultants) in a more customized way.
- AI can help the company to learn faster how to adapt to these new markets both in terms of customer preferences and consultants relationship
But some of the challenges the implementation of the AI and analytics are also present:
- AI can create the perception of lack of humanization in the relationship with the company. Nat has been successful so far in Brazil. Will this work in other markets?
- The online platform can create the fear from consultants that the company is bypassing them or even that the AI can make the job of them irrelevant.
- Different markets have different level of adherence to technologies and the company will have to be sensible to that.
The path forward
As Natura expand its business globally, technology will be a key component of its strategy and can enable a smoother transition into new cultures and markets. The utilization of AI can reduce time to market and increase the relationship with customers and consultant. The future will tell if Natura will be able to leverage technology to enable the ‘”renaissance of direct sales” in a global scale.
Thanks for this interesting article Reinaldo! I wonder how Natura envisions using its massive consultant workforce while it simultaneously has Nat and will likely continue to adopt other AI technologies? As you mention as one of the key challenges, I would speculate that many of these consultants that Avon is currently carrying will be made redundant unless they are able to provide true value-added services. With an advanced AI program that allows them to identify customer preferences and provide customized recommendations, I would imagine that the in-person experience is probably most beneficial for customer acquisition at the beginning of the customer journey (especially since its skin-care, which means customers want to be able to try the products), but not so much afterwards.