Country Focus
March 2011
Bulgaria Works Hard to Catch Up with the Rest of Europe
FACT FILEPopulation: 7.5 million |
Recession is showing Bulgarians that direct selling can be a safe way to earn money and build a business without too much risk, as successful companies set standards and improve the industry’s image. Judith Wojtowicz finds a country that is fast catching up with its neighbours.
Bulgaria is working hard to catch up with other markets in eastern and central Europe, where the direct selling opportunity was embraced more quickly at the end of the communist era.
Having gone through a very difficult transition, the move towards a political democracy and free market economy was slow, although successive governments have shown real commitment to reform, supporting the development of all economic sectors.
While there is no formal legislation covering direct selling – leading in some cases to a ‘grey’ area when it comes to taxes and earnings – there are moves to align Bulgaria with EU regulations. Consumer protection laws exist in basic form and large multinationals such as Avon, Oriflame and Zepter are playing their part in raising awareness and maintaining standards.
Absence of legislation means there are no standardised regulations, with options ranging from a distributor registering their own company and issuing invoices for payment or taking out a ‘civil contract’ with less onerous obligations.
Against this confusing background, some industry executives estimate up to 35 direct selling organisations are operating here. The absence of serious statistics makes it difficult to measure or track their activities to ensure they are operating in an ethical manner.
Established companies speak of enormous potential, thanks to low corporate tax levels, a stable banking system and low inflation, while admitting that the people have been slow to recognise the opportunity. Direct selling and multi-level marketing in particular are still little known and under-appreciated, partly due to financial concerns and also psychological factors. The nature of the population is generally viewed as being more conservative and slow to accept new ideas, although some companies report an increase in inquiries from younger people attracted by the sense of personal freedom and reward and the sociable, fun element that the industry represents.
Ongoing difficult economic conditions provide an ideal platform for companies to demonstrate an alternative self-employment opportunity with minimal initial investment, flexible working hours and a direct link between personal effort and the end result. One challenge for management is to train distributors to value their own efforts and not offer products for sale at too low a price, which dilutes their earnings. While they welcome the independence offered by direct selling, their natural instinct is to favour friends and customers by offering attractive prices. Greater understanding is needed of how this may impact their profit and, from the company’s perspective, create a barrier to rapid growth.
Another challenge is that Bulgaria has one of the lowest average incomes in Europe, which can make product prices appear expensive. The decision to buy or to become a distributor is, therefore, often slower and sometimes more complicated.
Dr Tatiana Nikolova, Brand Partner with Vemma, is one of a growing number of entrepreneurs happy to be seen as ambassadors for the industry. She told Direct Selling News Europe: “Companies with a modern vision are helping change the way the whole industry is perceived. The reputation of the industry is slowly changing in a positive direction and this tendency will continue as the levels of competence and professional skills keep growing. Part of my personal mission, mine and my team, is to help improve the popularity and reputation of this great business opportunity.”
