Mary Kay

KEL034

ANNE COUGHLAN

Mary Kay Inc.:

Direct Selling and the Challenge of Online Channels

It was a beautiful day in Dallas in 1999, but Bill Brown didn’t notice the weather outside. As he sat in his office preparing notes for his upcoming meeting with the executive management team at Mary Kay Inc., he was focused on the significant challenges the organization was facing. For 36 years, Mary Kay had relied on its direct selling model—using its independent sales force of over 407,000—to sell its full line of private label beauty products. After years of record growth, sales had started to level off in 1994. The lifestyle and buying habits of the company’s consumers had been steadily changing, and internal systems and processes were becoming outdated. Many industry analysts were predicting the demise of the direct selling model, and some of Mary Kay’s competitors were exploring alternative models. In addition, the Internet was fast becoming a prominent sales channel that could not be ignored. As vice president of ebusiness and technology engineering at Mary Kay, Brown believed that creative applications of emerging technologies could address these challenges. There were several possible avenues for action, including further developing technologies and processes for online communication with Mary Kay’s Beauty Consultants; facilitating online communication, ordering, and payment between Independent Beauty Consultants and end consumers; or initiating online sales from Mary Kay directly to consumers. Further, any online activity downstream needed to take into account the need for integration of the “back end” of the business, where Mary Kay manufactured product to send out to Independent Beauty Consultants. Finally, there was still significant interest in a primary focus on new product development, rather than Internet innovation, and the case had to be made for investment in online technologies. The question was: which subset of all these activities should the...