By Tom Steinert-Threlkeld  |  Posted 2001-10-29 Print this article Print

For 115 years, Avon Products has been employing personalization--in the form of its ubiquitous Avon ladies--to sell everything from cosmetics and fragrances to sundresses and bug repellent. Yet when the Web, with its ability to let companies interact one-

: Cut Through the Web Chaff">

Goal: Cut Through the Web Chaff

Starting this year, Avon is going to take another pass at tuning up its supply chain. Supply-chain renovation is one of the four main goals of Avon's Phase Two BPR initiatives, which the company outlined in May of this year. As part of Phase Two, Avon has committed to cutting eight to ten days a year from the total amount of inventory it keeps on hand. (In May, Avon said it had 119 days of inventory on hand; in September, that rose to 122.) In order to achieve these goals, Avon is retrofitting its demand-forecasting processes and systems, starting with a pilot "total demand visibility" system it is launching this fall in Mexico . Over the next three to five years, the company plans to roll out similar demand-forecasting systems in 10 markets, including the U.S.

The company recently created a dedicated demand-planning organization that will be completely separate from marketing. The organization's mission: Improve forecasting accuracy by 30%. At that point, Avon would be able to forecast sales to within 10 percent of what they would be.

Avon still is relying on Manugistics' Networks Demand system for general forecasting, but in January of 2001 added Churchill Software's Promotional Demand Forecasting package to the mix. A custom-developed marketing system feeds in data on known factors that cause sales to bump up or down, the effects of promotional campaigns, and other variables into Churchill's software.

The Internet also is big on Avon's agenda for the second phase of its business redesign. Avon is trying to make it easier for its reps to order online; find more incentives for Avon ladies to become e-reps; and, get more customers to buy online.

That Avon reps should be heading to the Web shouldn't be a new phenomenon. Avon.com actually has been in operation for six years.

Cybergrrl/Webgrrl founder Aliza Sherman built a small Web site in 1995 for Avon to enable the company to promote Avon's breast-cancer crusade work. In 1996, Avon hired On-Ramp, a consultancy that is now part of AnswerThink, to build and host a full-featured Avon.com site for the company. A revamped site, which was mainly an abridged, online version of Avon's paper catalog, went live in fall 1996.

Avon was not fully satisfied with On-Ramp's work, Edwards says. The company was not up to the task of hosting the site, he claims. But On-Ramp, according to one former AnswerThink consultant who requested anonymity, had warned Avon that it planned to exit the hosting business, since it was outside On-Ramp's core competency area. Their contention: Avon execs had failed to take heed.

In the end, Avon decided to take back control of the Avon.com site and to host the site itself. AnswerThink officials declined comment on the company's work with Avon.

AnswerThink isn't the only vendor that Avon ended up dumping. Avon hired FutureBrand HyperMedia, a Toronto-based branding and retail consultancy, to help move sales rep catalog copy onto the Web site. According to Edwards, FutureBrand was unable to deliver on this project, with the company claiming that the content in Avon's rep catalogs could not be captured and reconstituted easily on the Avon Web sites. Avon switched to P2i Group, a Bethlehem, Pa.-based company focused on converting print catalog and other content into Web content, to publish to the Avon.com Web site its many pages of catalog material. FutureBrand executives did not respond to several calls requesting comment as to why their contract with Avon ended.

There were other false starts for Avon on the Web side of the house. The company briefly established its Avon.com unit as a separate, standalone subsidiary. But Avon quickly saw the potential channel and management conflicts such an organization could spawn and rapidly reabsorbed the group

Avon's seemingly innocuous move to include the www.avon.com address on one of the spring 1999 catalogs in the hopes of driving more Web business was ill-received by the rep community. Some reps thought their in-person selling efforts were being used by the company to take away sales from their customers. After all, this was before the launch of YourAvon.com, where reps were able to set up their own Web selling sites. The company ran Avon.com.

"The decision to put the Avon.com URL on the catalog caused quite a firestorm," recalled one of Avon's integration partners, who spoke on the condition of anonymity. The reps thought "Avon was going around them and that caused some backlash."

To its credit, Avon did listen. Avon hasn't made any additional attempts to feature the Avon.com address on the catalogs, the prime selling tool of reps.

Not only did the company listen, it also learned. When it originally designed an automated order-entry system for e-reps, Avon discovered that the most streamlined user interface for rep ordering wasn't the most intuitive one for the e-reps. Avon had to backtrack and reintroduce a simpler method of ordering online that it first introduced in 1997 as AvonOrder.com. Now, Avon reps ordering products at YourAvon.com can enter all details of orders they place by using the numeric keypad on their computers, much like using an adding machine or calculator. They don't have to use the alphabet. If they want, they can see the names of the products they've ordered—or just the stock-keeping numbers, if they are confident of what they're doing.

Avon's Web strategy has been a work in progress. So, too, has the infrastructure powering the Avon.com, MyAvon.com and YourAvon.com sites.

In order to drop AnswerThink as the primary developer and hoster of Avon.com, Avon needed to build a capability to host a transactional e-commerce site. Such a site would need to be integrated with Avon's existing order-management, product management and pricing systems.

To build such a system, the Avon CIO in 1999, Sateesh Lele, hired nearly a dozen consultants and software vendors. Lele, a highflier who had served as CIO for General Motors Europe, selected IBM Global Services as the lead integrator on Avon's Web sites. Other players Lele brought in included Modem Media, which did design and branding consulting; Verilytics (which acquired iBelong), which designed the MyAvon.com portal; and Kinzan, which developed the YourAvon.com B2B portal.

"Sateesh championed the whole idea of bringing in outside experts to get things done," recalled a former Avon IT executive, who requested anonymity.

But Lele lasted in the CIO job less than a year. Integrators who worked with the company said he never really had corporate support. One former Avon IT executive said Sele was "less fluid" than other Avon executives. Lele declined several requests for comment on his tenure as CIO.

Lele was out, but his legacy remained. Managing the consultants turned into a job of its own, and one that lead integrator IBM Global, in conjunction with Avon's own IT staff, was charged with accomplishing.

IBM Global suggested that Avon adopt IBM's WebSphere Net.Commerce middleware (now known as IBM WebSphere Commerce Suite) as the crux of its e-commerce system. At the heart of Websphere Commerce Suite is IBM's application server, which provides the business logic for a variety of e-commerce-related applications, ranging from Web presentation to transaction processing. The platform allows for the development, deployment and management of custom-developed and/or third-party-developed Web applications.

IBM Global executives said the company offered Avon other possible choices for its middleware platform, but declined to be specific, citing confidentiality restrictions.

In late 1999, when Avon was deciding on which commerce platform to build upon, there were only a handful of robust middleware options to provide glue between the company's databases and Web applications. Finding good middleware was especially key since Lele and his team had decided that they were going to rely on Sun Solaris servers to power Avon's Web sites.

Tom was editor-in-chief of Interactive Week, from 1995 to 2000, leading a team that created the Internet industry's first newspaper and won numerous awards for the publication. He also has been an award-winning technology journalist for the Dallas Morning News and Fort Worth Star-Telegram. He is a graduate of the Harvard Business School and the University of Missouri School of Journalism.

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