Avon purchases Silpada

Avon is the world's largest direct seller of beauty products, and it has bought Silpada Designs, a direct seller of sterling silver jewelry, for $650 million, in its biggest purchase since at least the 1990s to complement its existing businesses. Now, more home business opportunities will be available. This company is going to purchasea business that both expands margins for the company. Jewelry is a highly favored item and Avon is well aware of this fact. The benifit will be seen by both Avon and Silpada because of the joint sourcing and supply chain programs.

The purchase is Avon Chief Executive Andrea Jung's third this year, following a long absence since the company's last purchase in the 1990s. In March, Avon bought Liz Earle, primarily an online seller of natural skincare products followed with Tiny Tillia, the baby care brand being purchases in April.

Avon's fashion business includes Jewelry, which represents 17% of its total last year. In comparison, the company's core beauty business generates more than 70% of its over $10 billion in sales. Avon has said it's putting more emphasis on jewelry and has said it sees the possibility to make its own jewelry brand global. Silpada also has increased annual sales on average 27% since 2004, Vargas said.

Silpada's representatives sell its merchandise through party-plan settings, different from Avon's person-to-person relationship-based model. Its jewelry line, with an average price above $25, also costs more than at Avon's. Avon said it plans to keep Silpada's existing management team and run it as a standalone business with its existing 32,000 independent sales representatives. Avon has about 6.2 million representatives.

Avon has been around forever and there is no reason to think that it will not continue to be around. I'm sure that the management at Silpada will benefit from the experience and success of the Avon executives. Avon or Silpada could be the business for you. If so, we'd can show you how we have succeeded. We believe that both are great businesses.

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