July 2008

A New Business Direction?

By Jenny Hogan

Is bypassing distributors and buying directly from the manufacturer the choice for you?

Today, there are many advantages to going direct. Bypassing distributors and purchasing products directly from the manufacturer has some definite benefits. Direct contact with your product source is one, without the red tape of going through the middleman to communicate your needs, sort out problems or exchange ideas. Affordable prices are another: buying direct eliminates the markups distributors attach to your inventory.

Yet a direct relationship with the right manufacturer could bring much more than this, including exclusivity with no chance of diversion, advanced business education, profit sharing, retirement planning or a mentoring relationship for independent salons and spas.

Even though you may have a terrific relationship with your current distributor, it is always good to look for fresh new alternatives. Here are a few thoughts to consider when deciding whether going straight to the manufacturer would be a good business choice for the future growth and profitability of your business.

How can you decide whether you should buy direct versus purchasing through distributors? Traditionally, professional beauty supply distributors have been known as industry middlemen. They serve the role of support between the large manufacturer and you, the small entrepreneurial businessperson.

Advantages of buying professional salon and spa products from a distributor include having a wide variety of inventory on hand in several locations, technical product training and assistance and serving as liaison if product problems arise. A good distributor also serves as your salon business partner, helping with planning and ensuring the success of your operations.

So why bypass distributors to buy direct? The biggest advantage has traditionally been price, while education and marketing support are also important. Distributors generally mark up their products 80 to 100 percent. If they aren’t giving you those extra value-added services, this is a hefty cost for a small salon businessperson to pay. Look carefully at the markup your distributors are making and what extra benefits they offer and compare those with buying direct.

While researching potential lines, think of details such as whether they offer a wide range of products for many conditions. In hair care, instead of just the basics, does the line address scalp conditions, thinning hair or damaged hair? In skincare, are conditions addressed such as acne, acne rosacea, aging skin and sensitive skin?

There are other important considerations. Are samples and trial sizes available? Are brochures and point-of-purchase materials provided? These are good ways to introduce new products and educate clients on new technologies. Does the company gain mention in magazines and is there product recognition that clients can connect with?

Then there is the matter of the details of product ordering and logistics. Do they provide their products in a timely manner? What is their return policy? Is the company personable and friendly when you order? Do they help troubleshoot when problems arise?

There is also the matter of compatibility. Does the company share your business philosophy? Do you find their image a good fit with your own? Is your success their primary concern?

It is important to consider their diversion policy. Professional product diversion is a major challenge for the salon and spa industry. Salon and day spa owners are starting to take this subject very seriously. If you see professional products on the shelves of your local drugstore, you know someone’s diversion policy is inadequate.

Shop around for your professional products and weigh what is right for you. You have many great alternatives. You don’t want to, and can’t, compete with the retailers. They want a bigger piece of the professional product market and they are getting it. Your challenge is to find beautycare companies that are exclusive and represent ideals and benefits of what you want as a salon professional.

Find a manufacturer with a mission. Look at the record of accomplishment and background of your manufacturer. Ask whether their business policy and mission match your own.

Look for a professional manufacturer who keeps growing, changing and offering new benefits. A diverse product line with lots of variety and retail potential is important, along with both technical and business classes to ensure success. Research whether the company keeps on the cutting edge of technology and trends.

When it comes to trends, consider a few specifics. A good men’s line in both hair care and skincare is essential in today’s market. Organic products continue to grow in popularity. Environmentally friendly products are now in demand. The latest high tech innovations in equipment are always appealing to consumers and good manufacturers will continue to keep on the edge of new technologies.

In addition to products, find a manufacturer who keeps evolving in the benefits they offer your business in terms of education, business support, customer support and more.

Jenny Hogan is the media director for Marketing Solutions, Inc., a full-service marketing, advertising and PR agency specializing in the professional beauty business. For more information, call 703-359-6000, visit www.MktgSols.com or e-mail mktgsols@mktgsols.com.