Distribution of nail products - what's different?

[JuicyLucy]

Not sure if anyone will honestly answer this question.

What has happened in the industry recently? There appears to be lots of people selling CND, OPI, Harmony etc. legally where before it could only be sold by the Sole Distributors.

I'm not complaining, as end users the competition is healthy and I have never known Lena White to slash prices like they have recently, presumably to keep up with the competition.

Has the industry been deregulated or something? Is it something to do with the EU? Is the term "Sole Distributor" a thing of the past?

 

[hazeleyes]

I've noticed this.... It would seem so! Interested to hear others views?

 

[pure]

I know for CND that Sam aka The Geek aka Sam Sweet (S2) has explained on here a couple of times that no, these others are not the legal distributers of CND but they're importing directly from other suppliers in the states. Sweet Squared and their sub distributers remain the only UK company with sole distribution rights with CND and are therefore the only source where you can guarantee authenticity of the products. I think the process is called 'diversion' or something.

All I know is that I'm going to continue buying from S2 as I've never had a problem with them.

 

[JuicyLucy]

I understand the whole "diverting" issue, but all these new companies appear to be trading legally. A few months/years ago S2/Harmony/Lena White etc. would have shut these companies down. How come they are no longer able to and are just ignoring them?

 

[pure]

I'm honestly not sure to be honest but would imagine it's a legal mine field which crosses 2 continents meaning it probably takes months if not years to conclude.

 

[libbylou]

I think the big difference is , there is now big money involved. No one imagined these gel polishes would be so popular. They are for most pretty easy to apply, training is short, more often just a day. Before we had the likes of shellac etc, being a nail tech took real skill, dedication and time. ( do not take offence i am not slating any one.) So this as opened up a whole new market, look how many people offer gel polish now but not enhancements , most areas are over saturated with people fighting for clients. This created a huge demand for the product and everyone wont's a piece of the action. So with the likes of CND only supplying sweetsquared in the UK, companies are turning to parallel importing to get the products, and once they are in the country sweetsquared can do nothing to stop that company from selling them. It is unethical on CND part but not illegal. But it starts to bring competition into the industry lowering the prices for us, as certain companies no longer have the monopoly on these products. Sorry if i was long winded but that is how i see it. x

 

[hazeleyes]

Dennis Williams are one happily existing, trading and growing. Beverley beaute is another. It also happens on a smaller scale - My local supply store sell to many many supply stores in London and they have been in business in the same spot for over 18 years. They offer a postage service too. I had a conversation with the owner the other day. He said they just import it all from America. It's a family business so they must have American family who simply buy it there and send it across in large volumes.

No one has ever stopped them I wonder if they have ever tried- they make no secret of it and they are really well known.

 

[maddynails]

as someone said previously there is a rising demand for gel polish and therefore a demand for lower prices. if the big guns won´t lower the prices then its natural that other companies will see an opening and begin to do so. professional nail products are too expensive in this country. S2 are flogging a dead horse in trying to stop shellac imports. If CND really wanted to support S2 they would put a reference on each bottle that leaves the factory in the USA that way it could be traced back to a supplier who has exported it to the UK on the hush hush, then cut them off.

 

[BobSweden]

As I understand, it is illegal under European law to grant a contract to a distributor that is exclusive. That's because free trade within the EU states is a basic tenant of the EU concept, as is freedom of people to work and live in other EU countries (in some cases it is necessary to prove that you can financially support yourself beyond the first three months).

So, when distributors talk about exclusive contracts this tends to mean that only they are allowed to buy direct from the manufacturer, in their country. As far as I know there is no way to stop that distributor selling to other EU countries, or for other companies to source the products from somewhere else (so called grey-importing) and sell in your home country.

Now there is a view held by some people, that grey importers are parasites who feed off the reputation created by the master distributor. They didn't make the investment in marketing, advertising or education, and simply import and sell into a market that they did nothing to create.

For sure, if you want to buy products from a company that really knows their products well, can give support and advice, and has the backup from the manufacturer, then you buy from the master distributor. You may also do that if you care about the industry and believe that strong master distributors contribute to the nail industry as a whole.

On the other hand, you may not give a toss and just want to save a few bucks. That is who these grey importers appeal to.

However, before you buy from these grey importers, you might want to ask them if they have registered their company on the European Cosmetic Products Notification Portal. If so, they will be able to give you a CPNP organisation number for their company. All cosmetic manufacturers and distributors who sell cosmetic products must register by law or face financial penalty, or potentially imprisonment.

The CPNP is important because that is where the Doctors find information in the event of someone reporting ill heath due to product use - so it's in all of our interests to make sure that our suppliers are registered.

Many smaller distributors and jack the lad type of online shops, are not registered with CPNP and I will tell you why. To do this they also have to upload :
- a photograph of every product
- a photograph of every product label
- the Material Data Safety sheet

Many products imported from the USA have labels that do not meet the specifications required by EU cosmetic law because in the USA they require much less information on the labels. So to comply with EU law, the importer has to design and print a new label for every product - and that is expensive. Many don't want that expense and to avoid detection by the authorities, don't register with CPNP - if they even know about CPNP or the EU labelling law in the first place.

 

[pure]

Bob thank you for that! I had no idea there were so many regulations that our distributers have to follow in order to supply our products.

I for one will continue to support my chosen brands 'official' distributer

 

[JuicyLucy]

That's a brilliant post Bob, thank you very much.

I can see that loyality to the "Official Distributors" is important to some degree. However, some of the big "Official Distributors" have somewhat abused their market position over the years. One in particular has offered very poor customer service, high prices, an arrogance towards its trade customers and has competed with the trade with their own retail sales.

The fact that this particular "Official Distributor" has up to up their game in terms of price reductions to compete with the new boys is great. However, unless they can up their game on customer service they will be dead in the water.

Clearly, some distributors were making huge profits at our expense. I fully understand the personal and financial risks that lots of the distributors took in the beginning (certainly more than I would have been prepared to take). They can still survive just perhaps making a lower profit.

We all run businesses, we all want the best deal using the best products. If your loyalty to a distributor outstrips your desire to maximise profit, there is something wrong. The distributors themselves would switch their suppliers if the profit margins were better.

The old argument that the training provided by the large distributors would cease if we didn't support them, has never worked for me. The training is never free or cheap, it surely is self funding and independent of their product sales.

The marketing by the big distributors has also been somewhat overstated. Apart from one who regularly runs ads in the ordinary press, all the others only market to us - we then use their posters etc. to market to the public.

The world changes!

 

[Lynne Baker]

Clearly, some distributors were making huge profits at our expense.

With respect, how can anyone other than the directors and the HMRC know that?

They can still survive just perhaps making a lower profit.

Again, how can anyone other than the company directors know that?!
And how would you feel if your clients told you to cut your prices to "survive" rather than thrive?

If your loyalty to a distributor outstrips your desire to maximise profit, there is something wrong. The distributors themselves would switch their suppliers if the profit margins were better.

Au contraire. If everyone bought on price there would be no Waitrose/Harrods/Harvey Nics. Some people rate quality higher than price. From a personal point of view I use only a certain brand of cotton wool pads because the cheaper ones disintegrate when they're dampened and they leave fluff everywhere.
Customer service, reliability, familiarity; all these play a part in choosing a supplier.

The old argument that the training provided by the large distributors would cease if we didn't support them, has never worked for me. The training is never free or cheap, it surely is self funding and independent of their product sales.

Absolutely correct. I despair when I read how such and such provides "free" training. They do not. The customer is paying a premium on every single product they buy to fund the "free" training and the "free" shipping.

The marketing by the big distributors has also been somewhat overstated. Apart from one who regularly runs ads in the ordinary press, all the others only market to us - we then use their posters etc. to market to the public.

I wonder if you know how much it costs to place ads in trade mags. Or to run a stand at a trade show. You're talking around about 100K for a stand like Dermalogica/Caci/Nouveau...I know this because I've exhibited at 3 shows and I needed a lie down in a darkened room after I realised how much it had cost me.

 

[JuicyLucy]

Hi Lynne,

With respect, how can anyone other than the directors and the HMRC know that?

I think we all know Lynne of a particular couple who became millionaires within a few months of being the sole distributor of a particular product in the UK. Fair play to them, they took risks I would not have to get the contract.

Again, how can anyone other than the company directors know that?!
And how would you feel if your clients told you to cut your prices to "survive" rather than thrive?

I do not have a monopoly in my area based in part on scare mongering. If my clients suddenly realised that I was making a higher than reasonable profit, and someone offering the same product with the same service and quality at a cheaper price, I would expect them to look at the other company.

Au contraire. If everyone bought on price there would be no Waitrose/Harrods/Harvey Nics. Some people rate quality higher than price. From a personal point of view I use only a certain brand of cotton wool pads because the cheaper ones disintegrate when they're dampened and they leave fluff everywhere.
Customer service, reliability, familiarity; all these play a part in choosing a supplier.

But the point is, we are talking about the same quality products (in fact the exact same products) but at a lower price. If Waitrose stock Heinz Baked Beans they price match them with Tesco/Asda etc. If they have a product of a higher quality which the other shops do not stock, then they can choose the price to sell it at.

I wonder if you know how much it costs to place ads in trade mags. Or to run a stand at a trade show. You're talking around about 100K for a stand like Dermalogica/Caci/Nouveau...I know this because I've exhibited at 3 shows and I needed a lie down in a darkened room after I realised how much it had cost me.

Clearly I would have no idea, but this is all still marketing to us (the trade). I was talking about marketing to the general public to raise awareness. Only OPI do that.