Diversion and phantom salons

[The Geek]

Diversion is the 'art' of redistributing supposedly 'professional only' products to the consumer. Essentially bypassing the professional in the process.

In the US, it seems that diversion is a hot button topic with large stores like Wallmart and Target managing to get a hold of pallets of product to sale to the consumer.

Why?

Because the consumer WANTS professional products. Where these stores get their products is almost anyones guess - but you do have to wonder as these guys are getting it by the bucket load.

Another type of diversion is the ever growing number of beauty supply stores. In the US, everywhere you turn, 'Beauty supply' shops are almost as common as hair salons and 7-11's. These shops are also referred to as phantom salons as they usually have a large area dedicated to retailing professional products with a small chair in the back of the store (so they qualify as a 'salon' in order to purchase professional products).

It doesn't take a genius for a sales rep to see that:

• Little to no hair is done in this place
• Its really a front end to sell at a lower price to consumers, thus screwing the professional out of any resale ability.
• Its an easy way to boost your figures and hit your target

My question is:

• Does it matter? Does anyone really give a hoot?
• Is this a problem being seen in the UK yet? I don't really see very much diversion and phantom shops, however they are starting to appear
• Do you think that companies are REALLY that bothered about it? After all, they are ultimately selling the products. Getting a product into a Wallmart = MASS visibility for the brand. Considering that between L'oreal and Wella (and a couple others), these guys own of the professional and consumer brands. Are they really that bothered about who is selling it as long as someone is buying it?

 

[JDs]

Oh what a soapbox you have opened Sam.

Diversion here is just what you described. Wal-mart, Payless, Fred meyers etc. They all carry selected brands of Professionally designed hair products and now I am seeing nail products also, like OPI polishes.

I had a chat with a sales rep yesterday about diversion. His take on it was that if you see a mass amount of the same product on the store shelves, then it would have to be a huge salon or the actual manufacturer doing it. If you see only a few bottles of each and not the complete line, it is smaller salons getting rid of it.

When it first started, we would see the "old packaging" on the store shelves. Which made sense. Now we see the New packaging right away on the shelves.

My take on it is that it is the manufacturers benefiting from both sides of the fence. Even though you won't find any manufacturer admitting to this.

I mean really now, Look at Sally's..they sell bleach, perms, colors..but they say they don't sell these to the general public..so why is it when I am in there getting nail files and hair rinses that there is usually a person in there scratching their head while looking at the color lines, and here is the Sally's employee helping them pick a color out. Why do these companies have to be so dishonest with us ? Okay, that is a whole nother story....back to the diversion topic..

But what about the label " Guaranteed only if sold in a professional salon" ??

One Day, i went into my local Fred Meyer store and took a bottle up to the customer service desk. I asked them if they knew that the company they worked for sold diverted hair products? This manager said no, I then pointed out on the back of the bottle the salon guarantee logo. I asked her if she knew what happened to the product if I bought some and then returned it because my head broke out with a irritation? She said she didn't know. She then turned to another manager and that person said that they just threw it away because they could not return it to the manufacturer.:| I asked if they just put it on a discounted sale table. She said No.

When all this started to happen and the professional stylists started to scream and yell, a few manufacturers started putting encoded labels on their products to trace where they were coming from. Did it help? yes and No. I am seeing even more of it now with certain lines. But some of them have diminished.
When I carry a hair product line and see it start to appear as a OTC product, I will start with the companies and email them asking if they are aware of the diversions. If it doesn't start to diminish I then put everything from that line on discount sale and get rid of it. I refuse to give my money to a company or manufacturer that is dishonest.
On the upside of it all though is that the OTC prices are usually higher priced than what I sell it for. Greedy buggers that they are.
But then again, the public will pay the price sometimes just for the convienance of it being there.
Stepping down from my soapbox.

 

[becca boo]

boy are you right its everywhere here.. and yes for a professional its hard what i have been told is usally if its sold outside of a salon its probally bootlegged or a bad batch that has found its way to the shelves but its not always cheaper and not guarenteed out side of being sold in a salon

 

[The Geek]

Hey Becca,

I too would get the 'it must be a bad batch' or 'some salon must have had a closing down sale' from manufacturers.

I am sure there are times where this is correct - however if you were to take all the 'pro poos' from the supermarkets and add them up... you would begin to wonder who the hell keeps making the screwed up shampoos (and why he seems to be in charge of making so many other brands) and then you have to wonder where all these salons are that are going out of business

 

[JDs]

I did hear that why some of the companies were encoding the bottles to track who was buying large amounts and if they were found on the store shelves, was because someone was taking them out of the USA, acid dipping the codes off the bottles and sending them back into the country. I forget why they had to take them out of country but there was a reason for it.
The problem with this was that by acid dipping the bottles, it weakend the bottle material and allowed bacterias and such in the product thus contaminating it. Now that is scarey.

 

[mminks]

it's a shame how far some will go to make a buck dishonestly whereas if they put that much effort into legit business practices they could accomplish something great.....

 

[Cathie!]

The only diversion tactics I have experienced in the UK is people buying professional retail (consumer) products from Ebay (hair and nails), although Sally's wholesalers do allow members of the public to buy professional brands of shampoo and conditioner and styling products....not sure if they operate dual pricing depending on whether you have a professional card or not.

 

[CadenceAlex]

The only diversion tactics I have experienced in the UK is people buying professional retail (consumer) products from Ebay (hair and nails), although Sally's wholesalers do allow members of the public to buy professional brands of shampoo and conditioner and styling products....not sure if they operate dual pricing depending on whether you have a professional card or not.

Salonsdirect do this too - I can get my mitts on all sorts of Pro Hair products but don't... don't know what half of it is and would rather be guided by a Professional, in all honesty. I don't even buy Nail products anymore at the local wholesalers, find there is little help... particularly when I was new to nails.

In my opinion, it is wrong that I could also buy a Waxing pot and all the gear to go with them.. including professional bleaching... skin masks with chemicals in and all sorts... you should only be able to buy stuff if you have a Qualification to do so.

I have looked on Ebay and am surprised at how many Professional products are on there cheap... and SOMEONE must be buying them...

 

[beautynails]

This sort of thing was just on my mind. Today I was doing some shopping & went into price attack ( they sell professional brand retail haircare as well as other beauty stuff), and spotted a table full of a well known professional wax.

I was shocked. I have in the past used this brand, though I will never buy it again.:irked: Just realised I should have looked at how much they were selling it for.

 

[JDs]

I just got this email from Matrix


We launched a new state-of-the-art product coding system
that is 100% accurate in tracking products to diverters.
We partnered with new Distributors that have a successful track
record against diversion and refuse to allow it in their markets.
As a result, in the past 6 months, our Distributors have terminated or put
purchase limits on over 500 salons that have sold products to Diverters.

1. If you are approached by anyone wishing to purchase products from you
in bulk or even a small amount each week or each month at reduced prices,
BEWARE! Experience tells us these products will end up on retail and drug
store shelves.
2. If you are approached by a collector, get their name and telephone number
and contact us immediately at 800-503-3997 or [email protected].

Product quality is guaranteed ONLY when purchased in the salon.
Only you can recommend the right products for them
The average price for a bottle of Matrix shampoo or conditioner through an
unauthorized outlet is generally 10% higher than salon retail prices.

What about the Manufacturers and companies themselves? I emailed them and asked them if they were looking within their own company also. All the products out there cannot be just coming from single people.

 

[The Geek]

Just out of curiosity, why would matrix have an AOL account?

 

[JDs]

hmmm interesting observation Sam. I will let you know as soon as they answer my email if it is a real account.

 

[Sophiea]

Wow, interesting. I just emailed this message to the AOL address:

You Must Be Joking!

You talk like most of the diverted Matrix product is coming from "Collectors" approaching Salons. This is laughable...in fact it stinks of another sort of diversion. YOU the Manufacturer trying to divert our attention from what's really happening. Give Me a Break!!!
Most Sincerely, BA Parth
Salon Owner

PS: I find it interesting that your email address is an AOL account. What is that about????


Have you called the 800 number, JD?

I doubt we will get a reply. But what a load of Crapp with a capital C!:irked:
Soph

 

[The Geek]

remind me not to piss Sophie off

What about the 800 number? Surely that would be legit?

 

[JDs]

Hi Sophiea, No haven't called them. I am thinking of getting on the main Matrix site and post the letter there and see what they say. Now if I can remember my username and password.....
Nice and to the point letter Soph!
I am thinking that it is a bogus email box just to let us think they actually care what is happening to our professional products.

Yes Sam the 800 should be a legit number. Anyone want to call?
Hey Sam, with a USA 800 number, is it still long distance for you? curious minds want to know.

 

[The Geek]

Yea, you can still call an 800 number from international, but you get stuffed with international dialling rates

I did call though out of curiosity. Its an answering machine for 'the L'Oreal diversion hotline'. You leave your contact details, which product you saw and where and they look into it. I suppose it is legit... only thing that piques my curiosity was the AOL account. I mean, what if it's someone who diverts for a living just getting creative about drumming up new leads

I left a message reporting seeing 'nice and easy' all over that I demanded that they remove it right away 'Because I am worth it'. Hopefully they will get the joke and not wonder if L'oreal suddenly acquired Clairol

 

[Sophiea]

remind me not to piss Sophie off

What about the 800 number? Surely that would be legit?

LOL...Geek!

I've been pulling products from my shelves for years. And I remember 20 years ago when the Manufacturers actually cared about the individual salons that supported their products. And the Salons are the entity that built the professional products prestige factor in the first place. I don't like having to compete with the Mall Phantom salons and Walmart, so I don't anymore.:wink2:

It's a topic that can get my motor going.

 

[JDs]

I left a message reporting seeing 'nice and easy' all over that I demanded that they remove it right away 'Because I am worth it'. Hopefully they will get the joke and not wonder if L'oreal suddenly acquired Clairol

ROTFLMAO...thanks Sam, I needed that laugh.:lol:

Keep us updated if they call you back.

 

[JDs]

hey Sam , since you are highly involved with Creative..how does the company keep the products from getting diverted?

 

[JDs]

hmmm.. no answer from Sam..:idea: Hopefully that means that he is a very busy person and hasn't had much time to be online..

anyways: one week update : I haven't a whisper back from either the matrix site nor the aol email acct about my email.

How about you sophiea, have you heard anything back?