How the Salon Industry is Using Technology to
Balance Professional Integrity with E-Commerce
Salons in the United States have been losing sales of professional hair products to a rapidly growing number of online retailers. Between product diversion and restrictions for online purchases, many salons have stepped away from the very products that they’ve helped develop and have supported for years resulting in a lost profit center for their businesses. Now, current technology works to balance the integrity of professional hair care products with a salon-focused e-commerce platform where the entire supply chain benefits.
The Professional Industry (in a nutshell)
The professional hair care industry was born in the salon. That’s where hair experts worked with chemists to come up with the best possible hair products formulated for professional use. For decades, these products were available through professional distribution channels and were exclusively sold in salons as prescribed to clients by their hairdressers.
After time, professional products found their way into mainstream stores and eventually online. This happened through a practice known as diversion, which is where any member of the supply chain steps outside of their contract with the product manufacturer to sell to an unauthorized retailer. Today, diversion has almost completely cut out the salon both from the sale and the opportunity to prescribe the right products for their clients. Instead, both whoever sold the product as wholesale, and the unauthorized retailer have lined their pockets. Both are guilty of removing the salon professional from the transaction and ultimately undermining the integrity of professional products altogether.
The early days of diversion have morphed into another animal blowing up on the internet with online retailers taking over a large share of the sales for professional hair care. To the dismay of the salon industry but done out of necessity to survive, many professional hair care brands have chosen to wholesale to mainstream retailers. In some cases, manufacturers even sell directly through their own websites, which can be a sore spot for salons.
Why is this an issue?
Salons were instrumental in establishing the market for professional products and they have stood behind the labels as they gained both credibility and traction. Cutting the salons out of the deal is perceived as undermining the very foundation for which the brands were built. After all, what’s a professional hair care brand without the professional?
The Beauty Industry Fund (BIF), a professional association of salon owners, distributors, and manufacturers that support the beauty industry by working to eliminate product diversion conducted a series of studies. In an article about diversion through the Professional Beauty Association (PBA), BIF co-founder Rick Kornbluth was quoted saying, “The increasing number of websites, not to mention the ease at which one can sell products on eBay or Amazon, is making the hill in front of us even higher. Turning a blind eye, giving in, and letting our products go means we will likely lose retail in our salons, which accounts for the majority of a salon’s profits. We all need to take ownership of this fight as I believe we literally are fighting for our livelihood.”
The Consumer Side
On the other side of the salon retail concern is the consumer who shops online utterly unaware of any issues. They seek deals for professional products online and go for overnight deliveries to their doorstep. Why not? It’s fast and convenient and is the new norm for shopping.
Truth in Numbers
Consumers are shopping online and their numbers are growing every year - that’s a fact. According to the Huffington Post, retail e-commerce transaction volume is estimated to reach $2.4 trillion for 2019 or about 33 percent of the overall retail commerce. Looking forward online retail revenues are projected to grow to $4.88 trillion in 2021 (source: Statista) and $5.8 trillion by 2022 (source: Forbes).
Retail e-commerce sales worldwide from 2014 to 2021
Convenience Over Credibility?
Consumers tend to shop when and where it’s most convenient for them; however, they also demand assurances that what they are purchasing is both authentic and is sold at the best possible price. Should salons provide an outlet for e-commerce, shoppers would have the option to make their purchases with their own trusted local source.
The problem is that salons are not allowed to sell professional hair brands online, as one of the stipulations both they and local distributors ultimately have to abide by is the manufacturer's limitation on distribution area. Permitting online sales may violate contractual agreements because anyone from anywhere could purchase through the salon’s online store. Other distributors and possibly other salons may find such sales an infringement on their territory. This no e-commerce clause is problematic for salons, as their clients want the convenience of shopping online.
An App for That?
To meet the demand for online sales while maintaining the integrity and contractual obligations of professional products, one relatively new company is touting a viable solution. SalonInteractive is a Chicago-based e-commerce platform created by Jim Bower, who is a former salon owner turned founder of a software company that specializes in the professional beauty industry. Bower’s software application helps salons and their local distributors compete with online retailers. SalonInteractive works as a standalone application or can be integrated into salon scheduling and management software as middleware.
“The salon client is currently buying online; in fact, they demand the convenience,” mentioned Bower in a recent interview. “That’s why we set up a closed system where salons can open an online store and sell a variety of beauty products to their clients within specific distribution borders. With everybody involved making their cut, the products are shipped directly to the client from the salon’s local distributor. It’s not only a convenience for the salon and their clients, but it comes with the customized product recommendations by the hairdresser and provides a trusted source for those purchases. It’s our solution to keep professional hair care products truly professional.”
The reference Bower makes to “trusted source” for online sales points out a legitimate issue for consumers. There are several retail platforms where nearly anyone can set up a store and sell whatever they’d like. Although people can find genuine product on many outlets, the sale comes without the advice of the salon professional or the backing of their salon.
For consumers looking for professional hair care products, online purchases can also involve other risks such as old, expired, counterfeit, even partially used products flooding the market. This deceiving business practice has caused many consumers to question the value of professional products at all instead of understanding that it’s an issue with the seller not with the legitimacy of the brands.
According to Bower, there are other issues salons should consider. “Some retail giants provide a program where beauty pros can sell products through a link on the salon’s website. That’s all good for the first sale, but should the client side-step the salon website and go directly to the retailer, the next and likely future sales are all lost to the salon. If anyone thinks these retailers are going to worry about the salon and their commissions when the retailer can market to the salon’s client directly, think again,” Bower exclaimed. “In such a case, salons are essentially handing over their clients without realizing it – as a former salon owner, I find that unacceptable.”
For solo artists or salons without space to stock products, a platform like SalonInteractive can mean the difference between offering retail to clients or not. For those businesses already inventorying beauty products, having an online store can add to their clients’ shopping experience. Salons can offer more brands than carried in-house by working with multiple distributors to broaden the potential for sales.
“Like it or not, online shopping is the direction things are going, as it’s what consumers want,” said Bower. “To survive, the professional beauty industry needs to adapt, which is hard to do while keeping the integrity of the professional products intact. What we hope to achieve is to provide an e-commerce solution where everybody makes their fair share of the sale while shoppers are confident that the products they're purchasing are genuine, right for them, and backed by the salon. You know, the professionals who started this whole thing, to begin with!"
This article comes on the heels of Amazon's professional online beauty supply announcement. Although Bower does not mention the retail giant by name, he does allude to issues with online retail platforms like it.