Amway ready to adapt as consumers delay buying

Corporate July 29, 2013 00:00

By Bamrung Amnatcharoenrit
The N

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'Thais thinking more before purchases'



Amway (Thailand), the biggest direct-sales firm in the country, is more cautious with its business plans in the remaining quarters of this year after finding that consumers have started thinking considerably before making a decision on a purchase. 
In the regular climate, the company finds that when its products are launched and promotions are made, consumers spend without hesitation. But nowadays, people wait until the last day of a three-month promotional campaign before deciding to buy. 
However, Amway does not believe its sales volume will suffer. 
“Such a trend is sending a message to us. My question right now is whether delayed purchases are a real trend or just a psychological panic from being engulfed by negative news. But Amway can’t stand still with this situation,” managing director Kittawat Ritteerawee said.
He said business today was still plagued with barriers. Internationally, the Thai business community is challenged by economic crises in Europe and the United States and slower economic momentum in China. Domestically, it is faced with revised forecasts for economic growth, export contractions, and possible political risks in the future. 
Given the uncertain economic outlook, Kittawat acknowledged that Amway would face challenges in the remaining months of the year. To keep the operation dynamic, the company would have to work even harder. Still, he is confident it will achieve its sales projection of Bt18 billion, up from Bt17 billion last year.  
To do so, the company has prepared business plans to ensure it can handle unexpected situations. More incentives will also be given to sales representatives to strengthen its performance. 
Its strong business network of a million people will also be a key business driver by maintaining existing customers and getting new ones, along with creating relationships and loyalty of its customers to boost sales.
Even as the number of retail outlets rises, the direct-sales business is outgrowing them, Kittawat claimed. It is expected to increase by 7-10 per cent this year, against the retail industry’s overall growth of between 2 and 3 per cent. 
Currently, the direct-sales business is valued at Bt70 billion in total, or 2 per cent of the overall retail industry.
“Consumers [initially] decide to buy Amway products because of their quality and eventually become regular buyers.” By contrast, he said, shoppers at retail outlets move from brand to brand, becoming loyal to none of them. 
The direct-sales industry will still be a rising star over the next few years with double-digit growth, he believes, but this rate might see a slight drop in some years because it has posted annual growth in the past decade of between 7 and 10 per cent. During that period, it was not hurt by either political chaos or the flood crisis. 
Given the region’s population of 600 million, the opening of the Asean Economic Community in 2015 is also viewed as a business opportunity. Kittawat said it was likely to result in synergy among Amway operations in countries in the AEC. 
Salespeople will be allowed from country to country. However, it is too early to know the details of how this will work as some countries have no legislation to regulate the direct-sales market.  
He said the direct-sales industry had a long way to go in Thailand. The business has been established here for more than three decades. Compared with Japan, South Korea, Taiwan and Malaysia, the market in Thailand is considered to be still emerging. Thailand unit is one of the biggest markets by sales in Amway’s network. Worldwide, it ranks sixth, behind China, the Americas, Japan, South Korea and Russia. 
Two years ago, Amway’s parent company in the United States empowered its networks in four regions with more flexibility in doing business to cater to local culture and demand at a time of fast-changing lifestyles.