STOP DIVERSION: From The Top
Executives from the leading manufacturers talk about their companies’ commitment to fighting diversion on all fronts.
Mike Kennedy, Vice President of Global Trademark Protection and Diversion Control
Aveda’s zero-tolerance diversion policy has resulted in the dramatic reduction of unauthorized resale of Aveda products within recent years. Diversion requires Aveda’s daily attention, as well as diligent and sustained preventative measures. In addition to more than doubling the audit process of our network and the investigation of recovered gray market product, Aveda constantly implements the newest product-coding technologies, intensifying the tracking and recovery of diverted product. According to the latest Beauty Industry Fund (BIF) diversion survey conducted by Nielsen in the U.S. for the full year of 2012, sales of diverted Aveda products at unauthorized resellers have decreased by 24 percent compared with the prior year and now represent less than 0.12 percent (about one-tenth of 1 percent) of the diverted haircare products sold in the U.S. Products sold through gray market channels may be overaged, adulterated or even counterfeit. Outside of Aveda salon/spa partner locations, Institutes and Aveda Experience Centers, retail guests are not guaranteed safe, suitable product recommendations, nor do they benefit from the value-added Aveda Experience, thus damaging brand equity.
Though Aveda products are in short supply on the shelves of unauthorized retailers, Aveda will continue to enforce a zero-tolerance policy until diversion is completely stamped out. If you have any information regarding a source of Aveda diversion, please contact the Aveda Diversion Hotline at 1-877-972-8332 or firstname.lastname@example.org. Aveda will reward $500 cash to anyone who supplies the company with verifiable information that leads us directly to a salon or store diverting Aveda products away from authorized online or retail locations.
John Amico Jr., President
In 1962, the John Amico brand name was founded on a mission to enrich the lives of beauty industry professionals across the country. Built on the principles of protecting and supporting the business growth of salon owners and stylists, John Amico remains dedicated to the beauty industry by offering professional, non-diverted products, marketing plans, management tools, education and motivation to help professionals succeed as individuals and as business owners. More than 50 years later, the company is still family-owned and operated. More importantly, it remains completely committed to selling only to its ever-growing network of member stylists and salon owners.
In 2013, John Amico introduced its Success Systems Program. This targeted offering makes introducing and understanding John Amico retail and service products easier than ever. In addition to accepting inbound member orders, our home office educational coordinators also proactively reach out to members in our database with “bite-sized” information on new retail categories and other service opportunities. Because our products are not sold in big-box retailers, supply houses or drugstores, each product or category that members add is guaranteed to be exclusive to them. Customers who purchase John Amico products can only find them at member salons. We believe that “knowledge is power” and informed members are best equipped to triumph in the fight against diversion.
John Amico members have distinct benefits. They enjoy Flex Profit Pricing, buying wholesale and setting retail with unlimited wholesale buying privileges; represent award-winning products; attend free education classes, available with training for every level; connect with their very own home office coordinator, where members are treated like family; can earn a free seven-day Caribbean cruise when retail and service product purchase goals are met; and receive ongoing support with monthly newsletters, contests and more.
L’ORÉAL PROFESSIONAL PRODUCTS DIVISION
Pat Parenty, President
At L’Oréal Professional Products Division, we’re committed to preventing and eliminating diversion to enable our salon partners to operate their businesses confidently and profitably. So we’re pleased to report continued progress in many of our key initiatives. One of the most notable factors is that the unit volume of diverted products has decreased by 36 percent over the last four years* to the lowest point since 2004. By partnering with federal and international law enforcement authorities, we’ve been able to identify and remove more than 77,000 counterfeit units from unauthorized wholesalers and retailers. Our state-of-the-art quality assurance and product-coding system reached a six-year high in identifying the source of diverted units purchased in the market. Thanks to these systems and tactics, and the focus and energy of each and every one of our brands, L’Oréal Professional Products Division continues to make progress in fighting diversion to keep professional products where they belong—in the hands of licensed professionals within authorized professional salon outlets. *According to IRI, an independent global provider of consumer and shopper market data
MACADAMIA NATURAL OIL
John Fasan, CEO
As a professional product manufacturer, Macadamia Natural Oil is focused on quality, innovation and supporting the needs of the professional salon community. We’re dedicated to providing quality brands and services to our salons and stylists worldwide. In order to ensure our products are used and sold in professional-only environments, we launched an extensive anti-diversion campaign in early 2013.
To help combat diversion, Macadamia Natural Oil has been enacting, and will continue to enact, procedures such as identification-number tracking systems on all products to directly target sources participating in this issue. In addition, Macadamia Natural Oil will continue to closely monitor all distribution networks and empower team members to help prevent any and all diversion. We will also continue to voice our stance against diversion throughout the industry through various communication channels and to our distributor and salon partners.
Our company success is owed to dedicated salons and stylists who support our brands. We’re committed to showing our support to them by fighting against diversion and partnering to help them grow and flourish.
Gerardo Ludert, COO
Moroccanoil, the brand that launched the most effective and comprehensive anti-diversion and tracking program in the history of the industry, continues to pioneer new ground. The newest innovation, another first, introduces a sophisticated strategy that expands the fight against diversion to the Web.
The company has launched an official e-commerce site (moroccanoil.com) that reaffirms Moroccanoil’s commitment to the stylist/client relationship. It’s uniquely designed to attract sales away from unauthorized websites, accelerate salon profits and drive clients to local salons for services. In addition, Moroccanoil is also spending millions on legal action against unauthorized websites.
When a customer makes a purchase at moroccanoil.com, they can select a Moroccanoil salon that will receive a percentage of the sale. This unique profit-sharing system rewards all facets of the distribution channel (distributor, salons and distributor sales representative). If they opt not to select a salon, the closest one to the shopper’s address is credited. A list of five Moroccanoil salons closest to their location is also sent with purchase.
Moroccanoil highly values its relationship with salon partners, and is dedicated to supporting them in every way. We are providing customers with easy access to authentic Moroccanoil products in a trusted online environment, while sharing the profit with and making referrals to our trusted partners.
ORGANIC SALON SYSTEMS
Troy Raszka, Director of Marketing
Diversion is an important concern for the industry, especially for the salon owner and independent stylist. They rely on the exclusivity of products they carry to set their salon apart. Organic Salon Systems understands this, perhaps more than others, because we’re a direct-to-salon distributor of niche or boutique green and natural product lines. As such, we’re very protective of the brands that we provide to the industry. While we don’t see our products being diverted in great numbers, it does happen on occasion. Mostly, we see parts of our lines pop up online with websites that sell used, or “buy-back” products directly to the consumer at a substantially lower price than our salons. We realize that there’s little that can be done about this practice. Salons often can change retail lines, and end up directly liquidating their old stock online. Other times, the old stock is purchased (as credit) by another distributor or manufacturer and then resold. One way that we try to avoid this is by offering a 30-day money-back guarantee on some of the lines that we carry. That way, if a salon doesn’t like the product they can return it to us rather than resell and divert our products.
Cheryl Tarulli, Vice President
Here at Rejuvenol, we have definitely noticed the problem of diversion. We see it not just with our brand but all the brands who are also presenting a great product to the market. Rejuvenol creates very close relationships with our distributors; we keep the communication open with them and like to hear about what they’re doing and how we can help them. We’re working on an education program in-house, in our new state-of-the art presentation theater, to provide classes and presentations to salon professionals that will bridge the gap and build stronger relationships. In April, when we launched our new packaging, we were looking for ways to make it harder to reproduce and counterfeit our products. We developed our new bottle shape with our name molded into the bottom of the bottles. We produce unique bottles in our own facilities, the way we do every aspect of our production, which we feel helps keep the amount of outside influence to a minimum. All of these aspects of controlling our manufacturing and keeping it all in-house won’t stop people from diverting, but we feel it does help to minimize that kind of exposure.
WELLA, THE SALON PROFESSIONAL DIVISION OF P&G
Reuben Carranza, CEO Wella North America
Wella’s approach to combating diversion is proactive and targeted, employing high-tech monitoring and investigation to stop the practice before it even begins.
Wella’s team of asset protection professionals, drawn from experts inside parent company P&G as well as outside the business, pinpoints high-risk orders to halt diversion before it occurs. The team uses legal, regulatory and detection resources to stop diversion before it starts, with data and demand mapping, digital monitoring, tracking and enforcement. Their task: identify and monitor the source of unauthorized distribution to stop the flow of products, making it both difficult and expensive for diverters to deal in its Wella, Sebastian and Nioxin brands.
The fight is heated and ongoing, as new diverters from a multitude of platforms seek to cash in on the equity of professional brands. Nevertheless, Wella has been successful in curbing diversion, with the biggest Internet dealers de-listing its products completely and an additional 80 percent success rate in closing down diversion on other sites. The results speak for themselves, with Sebastian, once one of the most diverted brands in the industry, now showing the lowest diversion rate of any of the major salon brands. Wella will continue to apply pressure—at the shelf, on the street and on the Web—to protect the integrity of the professional channel.
More industry leaders weigh in online about their efforts to fight diversion at blog.americansalonmag.com.
Public Service Announcement
Macadamia Natural Oil’s anti-diversion campaign helps salon pros educate their clients.
It’s catchy and it’s sassy, but Macadamia Natural Oil’s new anti-diversion slogan is also dead serious. The company launched the campaign earlier this year with a logo bearing the catchphrase “Professional. Protected. Promise.” It appears on salon point-of-sale and trade-show materials, banners and printable anti-diversion statements, as well as online and in the company’s distributor newsletters.
The educational campaign is the public face of a comprehensive in-house anti-diversion program announced by the company earlier this year. The seven-point plan also includes implementation of a new MacID coding and tracking system; anti-diversion clauses in distributor contracts; termination of any salon or distributor proven to be diverting products; and legal action against unauthorized dealers.
“Diversion is harmful on so many levels,” says Macadamia Natural Oil CEO John Fasan. “Through our ‘Professional. Protected. Promise.’ campaign, we’re able to spotlight this concern as well as what we’re doing to eradicate it.” macadamiahair.com