Amid the uncertainties and challenges imposed by the pandemic on nations and businesses over the last two years, one thing has remained unchanged: our understanding that life is a complex chain of relationships—that nothing in the universe exists by itself and that everything is interdependent.
This premise, a fundamental element of Natura’s beliefs, guides the Natura &Co group’s direct selling model, which we call Relationship Selling. Having faced the threat of a global virus, there can be no doubt that everything, for better or for worse, is interrelated. And it is my conviction that it is up to businesses, especially the direct selling industry, benefiting from its proximity to the consumer, to leverage and shape relationships so that they generate a positive impact for people and for the planet.
I usually say that direct selling is the “original social network.” A look at the United States at the end of the nineteenth century shows how Avon pioneered not only the foundation of direct selling in cosmetics, but also women’s struggle for emancipation in a profoundly unequal society. At that time, the opportunity to do business by means of an accessible and flexible commercial model ensured autonomy and development for thousands of women whose basic civil rights, such as the vote, were still denied. Many decades later, in 1974, the Brazilian company Natura followed in Avon’s footsteps, exchanging retail for direct selling, where it found the recipe for success based on generating income for thousands of women.
Since that time, certain things have not changed. Direct selling continues to be an important tool for the financial empowerment and social inclusion of women worldwide, particularly in Latin America. Other things, however, have changed profoundly—and augur the future for this venerable industry. Based on an offline social network, we have established a network whose connections employ multiple platforms, directions, and occasions, supported by digital social networks and other technological tools. We call this social selling, and it has accelerated rapidly during the pandemic.
This model provides digital solutions that adapt to the most varied selling contexts and customer profiles and facilitates the execution of our consultants’ and resellers’ routine tasks, such as orders and payments. Among the new possibilities of creating links within the Natura network, training between consultants is one of the most promising. We have identified consultants with a high degree of influence in the digital media and invited them to train others in online engagement to drive sales, paying them for that: a win-win situation for the consultant, the network, the brand, and the consumer, brought closer to our products ever more effectively.
This direct selling digitalization process constitutes the basis of what we call a “platform ecosystem.” Natura consultants and Avon representatives start making connections that go beyond product sales. Based on new channels of interaction, they can commercialize other beauty, aesthetics, and well-being services, expanding their network and earning potential based on our cosmetics, but not restricted to them.
The platform ecosystem also enables us to optimize the financial transactions taking place in our network. In 2020, this was the reason we created &Co Pay, our own payment platform, which already numbers more than 350,000 digital accounts. This is not only a question of facilitating and streamlining the circulation of money, but also of promoting financial and social inclusion. Thousands of Natura consultants had access to a bank account for the first time ever. The brand’s raw material supplier cooperatives also benefited from access to it.
Technology can facilitate and leverage a series of processes and interactions in our industry. But we must not forget that prosperity and positive impact are generated by people. We adopted the Relationship Selling model because we believe in the power of the individual and relationships as drivers of beauty, pleasure, and sustainability.
Natura’s experience with its Crer Para Ver product line, launched in 1995, is a notable example of a shared common purpose within our network. This is a line of non-cosmetic products, the earnings from which are invested entirely in projects to support education and are overseen by the Instituto Natura, an arm of the company dedicated to this cause. In 2020, part of the amount raised by the line was used to provide credit for Brazilian consultants and relatives who wished to begin or conclude a course. We have also offered other free courses for the network, from digital education to financial literacy.
Originally, the Crer Para Ver funds were employed only in public education initiatives. The decision to also invest in the education of our consultants was taken based on data obtained via an innovative tool: the Consultant HDI. Inspired by the UN Human Development Index, since 2014 we have monitored the living conditions of our consultants in Latin America, encompassing factors such as health, knowledge, and work. Measuring our impact on people enables us to better understand where and how we can make a difference, based on the actual needs of the network.
This experience showed us that to address global challenges, such as social inequality and climate change, we need to establish new ways of accounting for our actions and impacts, beyond the financial performance of the businesses. In 2016, Natura started measuring its environmental impact by means of an EP&L (Environmental Profit and Loss) methodology. We were the first company in Latin America to account for its businesses’ impacts on the environment, expressing these in monetary terms. In 2018, we also started to measure the organization’s SP&L (Social Profit and Loss) to calculate our impacts on and contributions to the lives of consultants and supplier communities.
More recently, we launched our IP&L (Integrated Profit and Loss), which accounts for all of our impacts systemically in environmental, human, and social terms. The result of our first IP&L, for 2020, showed that we generated a positive impact of R$22 billion. This means that for every R$1 that Natura generates in revenue, R$2 in benefits are generated for society. In the Amazon region, where the majority of our over 7,000 raw material supplier families are located, this impact is even greater: on average, for every R$1 we invest, we generate some R$10 in social value.
The result of all this mathematics is twofold: on one hand, measuring these factors guides our decision making, enabling us to adjust our course and increase our positive impact over time. On the other, it substantiates the message our consultants convey when doing business. In addition to providing details about the quality and the proper use of our cosmetics, the consultants act as powerful messengers for sustainability, explaining the importance of using refills or encouraging consumers to sort packaging for recycling, for example. Based on the trust established between sellers and buyers, we multiply the notion of responsible consumption to thousands of people.
Today, as the Natura &Co group, our eight million consultants and representatives, together with 3,700 stores and franchises (in the retail trade, we operate through the Natura, The Body Shop, and Aesop brands), reach over 200 million consumers in more than 110 countries. This constitutes a direct relationship with the consumer unparalleled in the market. There can be no doubt that the future of the direct selling industry is multichannel, multiplatform, and digital—and that this future has already arrived. But we must not forget that, without pursuing sustainability and the generation of positive impact, our businesses will not be prepared to support humankind in the major challenges of our times that go beyond the pandemic: reducing social inequality and combating climate change.