Brazil | Natura

Robert Habib ’13 | Brazil

Continuing work on the beauty industry, we visited Natura, a phenomenal company outside São Paulo. Natura grew from one salesman to a multi billion dollar company, with over 20% market share in the world’s third largest beauty market. As their name suggests they have a relentless focus on natural ingredients and sustainability. Professor Martinez, who seems to know everything about every industry in every emerging market, suggest three legs to Natura’s magic. Below I relate these to some other business case studies, MBA style.

1) Trusted corporate identity
Seen it before: Google
A holistic ethos rooted in nature, well being and doing good is pervasive across every element of the company. The notion that their raw materials, formerly discarded, are now being cultivated by Amazonian communities, creating jobs and halting deforestation, is a great sales pitch. Google wouldn’t get away with its creepy tracking of our data without its ‘do no evil’ mantra. Natura’s identity allows it to expand willingness to pay of consumers – higher margins.

2) Investing in employees
Seen it before: Southwest Airlines
Natura’s campus is a cross between a botanical garden and an engineering faculty. Connected to the corporate identity they have exercise breaks every hour and a daycare centre looking after 200 infants (admission following 6 months maternity leave until enrolment in school). But maybe the most important employees are the 1.3m Brazilian direct sales reps (called consultants). A typical sales rep is a zealous customer looking for a secondary income. They have training at the campus and celebrations at anniversaries. Like Southwest Airlines, Natura benefits from a willing to supply lower costs from its employees – in this case lower turnover and reps going beyond the call of duty because frankly they love their product.

3) Supply chain / distribution
Seen it before: Benetton
Natura incentivises its reps by offering them discounts on stock that rotates every 21 days. Since the natural products are perishable, manufacturing has to be very flexible. Getting stock to reps in the deepest favelas requires creatives logistics in a country with woefully inadequate infrastructure. That’s all amazing. But what I love most is the distribution channel. In the 80s Benetton achieved a lower cost base than the Far East by channeling manufacturing through Italian mamma’s, knitting between dropping the bambini off at school and putting the pasta to boil. In the same way, Natura is leveraging the low cost and risk bearing housewives as a lethal sales channel.

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