The recent bankruptcy declarations by Tupperware and Avon Products (API) demonstrate the weakness of a direct-seller model. Tupperware, the plastic containers maker, filed for bankruptcy in September. That came just one month after API, the US-based nonoperational holding company of Avon beauty brands, filed to restructure its debt due to previous and ongoing litigation regarding talc contamination in its products. Avon’s operations outside of the US remain unaffected.
Each iconic brand was seen as a disruptive innovator in its time. Since its founding in 1886, beauty specialist Avon has relied on its “ladies” to sell to their families, friends and neighbors.
The success of the resealable containers invented by Earl Tupper in the mid-1940s relies on the same sales strategy. A single mother, Brownie Wise, in charge of marketing, had the idea to organize Tupperware parties with friends. Once again, many women embraced the direct-selling model.
Nevertheless, the magic eventually stopped working. “Consumers now buy three-fourths of their homewares in shops and 20% online,” said Brian Fox, Tupperware’s chief restructuring officer, in the bankruptcy filing.
Tupperware “was late to the party when it came to modern consumers,” he added. First, the company’s patents expired in the 1980s, letting rival products from Ziploc, Rubbermaid, and Pyrex enter the market. Then came the e-commerce revolution. Women no longer have to attend a party to discover new products; they just need a computer. Avon Products, which became a subsidiary of the Brazilian brand Natura, faces the same dilemma after a series of sales and reorganizations. Walmart, Target and Amazon offer convenience and a wider selection of beauty products. Younger consumers, meanwhile, are flocking to Instagram-friendly brands. Influencers have replaced the “ladies,” and the old disruptors are paying the price. In its bankruptcy filing, API declared more than $1 billion in debt; Tupperware $1.2 billion. No more ding, dong—now it’s click, click.
