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STOP DIVERSION: End Run

Moroccanoil’s new e-commerce site turns the Internet—traditionally a diversion gray market—into a source of new clients and profits for salons.

The Internet has been a double-edged sword for salon marketing. On one hand, it’s an efficient platform for salons to promote their brands and a low-cost way of reaching customers with information or special offers. On the other hand, the Internet has hurt salons’ retail numbers because diverters use its power to sell directly to consumers, cutting the salon out of the loop.

One manufacturer has decided to use that power to its advantage. This February, Moroccanoil launched an e-commerce site that’s designed to attract sales away from unauthorized websites and generate profit for salons while driving clients to local salons for services. The site, moroccanoil .com, is built around a salon rewards platform that gives online customers the option to select from a list of participating salons that will benefit from the purchase via a unique profit-sharing system. If a client doesn’t select a salon during a purchase, the closest salon to their address is automatically credited. The customer is also sent a list of the five closest Moroccanoil salons along with their order. The system rewards all facets of the distribution channel—distributor, salon and distributor sales representative—and the company says there are now thousands of U.S. salons participating, despite some initial skepticism.

“We knew that our industry’s perception of the Internet was unfortunately not a very positive one, so we needed to create a completely new format that integrated all of our partners in the process in order to be successful,” says Gerardo Ludert, COO of Moroccanoil. “The fact that salons are reaping the benefits of online sales without investing a single dollar in the process is something they recognize as a positive reward.”

Moroccanoil is known for its strong anti-diversion stance. The company made news in 2010 when it spent millions developing a high-tech, tamper-proof encryption system for product tracking. Ludert says that system, with some refinements, is still in place. “Our tracking system continues to be the cornerstone of our efforts to combat diversion,” he says.

Ludert says that the company has already credited salons, distributor salon consultants and distributors for sales made through the website and that reactions have been positive. “Everyone is very excited about the potential of this new tool,” he says, adding, “Ultimately, our main focus continues to be to direct the consumers to Moroccanoil salons, where they can get the best experience possible with our products.”

photography: veer (salon employees)

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