Hi, all-
I'm newly registered here, though I have been lurking for a while, to pick up the flow, so to speak. What I wanted to discuss here is something I saw on e-Bay tonight, and it really bothered me. It was an e-Bay store that was offering wholesale prices on professional haircare products that are supposed to only be available for sale by licenced professional cosmetologists, and/or licensed cosmotologist wholesale houses. This store was not licensed in either way, though they were re-selling large quantities of pro prducts. This is called Diversion, and is illegal. I already turned them in, but I wanted to put out the word to you all, and to warn against doing this.
Diversion is a really big problem right now, because the people who are re-selling these products have absolutely no professional knowledge of the products they are putting out there. Most of these products are expired, and are stolen during shipment. It is doubly irresponsible of them to do this on-line, as there is no way even a pro could examine someone's hair and "diagnose" the proper product thru a computer screen.
For anybody out here who is thinking of re-selling professional beauty products, please don't. If you come accross someone who is advertising wholesale lots of pro products, go to the company and find out out if these products have been reported missing in transit, stolen, etc. All the professional companies keep detailed shipping and transaction records, and will want to know about a huge lot showing up on-line. Many even offer rewards for information leading to the capture of the individuals responsible.
This holds true for pro nail products as well. I have seen pro chemicals being offered to the public that were never intended for consumer use. Many of these nail products are extremely dangerous in the hands of the untrained consumer, yet I have seen them for sale.
Please help out here, all,and stop these products from going out to the public thru the wrong channels.
goWholesale Forums » Advertising » General Chat
Diversion in the Beauty Industry
25 posts
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Those in the professional beauty industry may think of it as diversion, but the rest of the world thinks of it as free trade.
There is nothing illegal about the practice. Show me one law that states that certain beauty products are only to be sold to licensed beauticians.
This is one of the last areas where the manufacturers and distributors are promoting a myth in order to keep a captive market and keep prices inflated.
Years ago plumbing distributors sold only to licensed plumbers. And electrical distributors sold only to licensed electricians, and so on. Now, in order to compete with Home Depot, Lowes, etc., they will also sell to anyone.
Their previous reasons for limiting sales to the trade was to protect their customers. Want a new distribution panel in your home? We won't sell it to you, not because it's against the law, but we want to protect our customers. (And maintain our margin of profit.)
Auto parts store used to just sell to garages. Now, they can only sell Freon to people with a card stating that they have been trained in the proper handling, but other than that, anything goes.
So, while you may not like it, there is no LAW regulating the sale of beauty supply items, just collusion on the part of those with something to protect. -
Hate to break it to you, but there are in fact laws against diversion of beauty products. You might want to call and see if you are living in one of the 10 States that have enacted these laws so far, and also see if you are in one of the states that is planning to enact them within the next couple of years.
As for it being"free enterprise", yes, it would be if anybody was able to go to the manufacturer and order products without a license. There are reasons for this- Public Safety being the top priority, as well as the understanding that many of these products simply don't work at all after a certain amount of time, or they can get stronger, or unstable.
Bear in mind, I'm not just talking shampoo here. I have seen hair color, perms, nail acrylic kits, straighteners, gels, resins, fillers, genuine full strength chemical products that only professionals are taught how to handle, apply, and counteract, available to the public at wholesale prices!
There's a reason that cosmotologists have to get licensed, and it's not just for the states to make money. This is a regulated profession, mostly by the Health Department, but all cosmetologists have OSHA guidelines to follow. In fact, every single product manufactured by the Beauty Industry has an MSDS Sheet, and all retailers are reqired to have these on hand for every product they sell, including shampoo.
We're not talking about hammers and nails, or even carburators and air filters here. We're talking about acids and bleaches, phosphorus and triclosan, that are applied directly to human beings, and can cause all kinds of health issues when used inappropriately.
Another thing to consider are the liability issues. Legitimate retailers of these prducts know that they are legally liable if someone gets hurt from the use of these products. They have accepted the responsibility of public safety by standing before the Board to test for a license.
We are not dealing with sales issues only here. These are public safety issues. Just because you can make a buck doesn't mean you should. It could cost you millions in the long run. -
Actually, you're talking more about distributors violating their agreements with the manufacturers. When they sign up to distribute specific products they sign a non-diversion agreement (contract), which may or may not be enforceable.
Citing consumer safety is just another smoke screen. People can go anywhere and buy a car.
And they can also buy drain and septic tank cleaners that are every bit as damaging, if used wrong, as any beauty product.
It's amazing how adaptable the American public is when given the opportuity to use "professional only" products.
The fact of the matter is that anti-diversion is basically an industry preservation plot. -
jt34 wrote:Diversion is a really big problem right now, because the people who are re-selling these products have absolutely no professional knowledge of the products they are putting out there.
As is the case with most ebay seller, I find. Most are not into learnin business, just making a buck. they do not care about trade rules, they just want to make some extra beer money or get rich yesterday. -
It looks like one of the major salon chains in the country is also one of the largest "diverters".
Regis Salons also owns Trade Secrets, which is a salon in name only, just a couple of chairs in the back room to justify the "Professional Products", then 85 % of the "salon with the chairs hidden in the back" is devoted to "professional products" displayed on floor to ceiling store fixtures, all kinds of banners and posters, buy 1 get one free, etc.
Sometimes they have a Trade Secrets in the same mall as a Regis Salon.
I can guarantee you that the ladies who buy those "professional products" have no more training in their proper use than I do. And I am certainly not a hairdresser.
So, it's OK for Trade Secrets, or other "salons" to sell these products to anybody that walks in the door, but for someone to do it on ebay is against the law?
Again, it's simply a last ditch attempt to keep high profits in the supply line. -
Ok, Pete,
I am perfectly willing to go head to head with you on this one. So, point by point:
1. Regis and Trade Secrets, chain stores though they may be, are still "registered", if you will, as licensed Professional retail stores, and have the permission of the manufacturers to sell their pro products.
2. Not quite sure what you mean when you say that the ladies who buy these products have no more professional knowledge than yourself, when, if you were to question the management at Regis, you would find that management has had years of professional experience as a licensed cosmotologist, probably at Regis itself, to have even been promoted to management in the first place. Since only management places orders in chain salons, I can guarantee that any lady manager in that establishment would have professional knowledge far exceeding your own. Since Trade Secrets is owned by the same company as Regis, I would imagine that their promotional habits and licensing requirements are the same. As for there being only a few chairs in the back, that is no big deal, really, since that only proves that there are licensed cosmotologists on site to assist in the selection of the proper RETAIL item for the client. There are no chemical products offered to clients for "do it yourself" perms, colors, bleaches, or acrylic, gel or wrap services.
3. The "two-fers", posters, pre-packaged deals, etc. are provided by the manufacturer, and are puchased from the supply house as you see them in the retail area of the salon, in most cases. However, every business is perfectly able to sell any retail item they choose at any price they choose.It is easier for larger chain salons to sell the retail items cheaper than privately owned salons simply because they can order mass quantities, which are very carefully tracked by management so that there is a detailed record of inventory, cost control, sales, revenue, taxes, etc. And, as always, any salon is able to write off unsold product at the end of quarter or year, for tax purposes ( remember this point, it will come up next, when I give a definition of Diversion).
So now we come to the actual definition of Diversion- Moving professional products away from the licensed, authorised resale market, and offering them for re-sale without the knowledge of the manufacturer. This includes acquiring "lost, stolen, damaged, products, or products that have been illegally claimed for a tax loss. Diversion is not just selling products at a discount, or putting them on clearance sale. It also has to do with allowing people to get ahold of products that they shouldn't have at all.
The price is not the issue, Pete. My own salon frequently sells slower- moving products that need to leave at prices below cost just to get them out of the salon before they get old. No, the issue is the lack of any kind of professional supervision involved in the re-selling of these items. Granted, old shampoo is not so much of a big deal. Old perm solution, or any professional perm solution is. There is a big difference between chemicals used by professionals and the chemicals that anybody can get at Wal-mart. They are absolutely not the same, and the FDA is responsible for that. It's not hype layed on the public to get them into high-priced salons.
So, it's OK for Trade Secrets, or other "salons" to sell these products to anybody that walks in the door, but for someone to do it on ebay is against the law?
Again, it's simply a last ditch attempt to keep high profits in the supply line.
And incidently, yes, it's ok for salons to sell these products because they are LICENSED. Incidently, if someone on-line, or even on e-bay , is a licensed, authorised rep of the manufacturer, it's ok for them to sell products at any price they want. And by the way, the profits are not as high as you seem to think. Most times, the retail price is only the doubled wholesale price, but sometimes it's not as much.
You really don't seem to have any idea of the amounts of continuing education and traing most cosmotologists have to go to every year. In the chain salons, the stylists are usually required as part of the job contract to attend CE several times a year. This includes training in the current styling products, as well as techniques. How much of this has Joe Blow on e-Bay the other night gone through? None. Could he tell you if it was ok to use the Nioxin he was selling on color-treated hair? No, he couldn't. Could he tell you what the burning, red rash around your cuticles was after you had been using the acrylic kit he was selling? No. What about the color to mix with So-Color 7N to make it come out a cool red, instead of green? No, he could not. How about telling you which shampoo was best to use on your freshly tinted hair to make the color stay longer, so that you didn't have to spend more money sooner on new color? Probably not. But I can guarantee you that every licensed cosmotologist behind the counter at Regis or Trade Secrets can answer any and all of these questions. -
So, it's OK for Trade Secrets, or other "salons" to sell these products to anybody that walks in the door, but for someone to do it on ebay is against the law?
I have to admit I do not understand you whole post, but as for the quoted sentence...
I don't believe the problem is that they are selling on ebay and selling to end users, the problem is that they are lowballing just to make a quick sale and in effect going against the maufacturers' rules as far as "diversion" goes.
However, if the companies that make these products care about their brand and value being wrecked on ebay, then they will soon stop ebay from letting sellers sell the stuff. -
jt34 wrote:The price is not the issue, Pete. My own salon frequently sells slower- moving products that need to leave at prices below cost just to get them out of the salon before they get old. No, the issue is the lack of any kind of professional supervision involved in the re-selling of these items. Granted, old shampoo is not so much of a big deal. Old perm solution, or any professional perm solution is. There is a big difference between chemicals used by professionals and the chemicals that anybody can get at Wal-mart. They are absolutely not the same, and the FDA is responsible for that. It's not hype layed on the public to get them into high-priced salons.
Oh, I see. It has nothing to do with price and value but rather what is sold to who.
So tell me, if I went to trade secrets and I said I need this, this, this this and this, would they first ask me questions as to what exactly I inteded on using these specific things for in order to make sure I knew how to use them properly? Or would they simply just make the sale to me no questions asked? -
jt34 wrote:And by the way, the profits are not as high as you seem to think. Most times, the retail price is only the doubled wholesale price, but sometimes it's not as much.
HOLY COW!!! You are talking about keystoning, 100% markup. Are you kidding? I have yet to find a name brand product that can be keystoned and be within a competitive retail price. But I suppose that is only possible because they control those products, otherwise, if WalMart could get their hands on them, you would not be afforded the luxury of a 100% markup. So do not complain about 100% markups. You are lucky to be able to do that even 50% of the time with name brand products. That is why I stick to imports. Keystoning is usually never a problem if you sell it at the right place. In fact, 300+% markups are quite common, depending on how close the the manufacturer you are. -
jt34, So glad you recognized I was egging you on.
One thing you misunderstood. I said ladies who buy the products with no training, you got talking about the ladies who sell the products. Big difference.
And, regardless of how you slice it, the whole Trade Secrets idea is simply a way to "mass merchandise" salon products. You cannot even see the chairs from the front of the store.
Finally, I think you'll find little sympathy here, as most on this board are for free enterprise and unrestricted availability of products.
However, it has been nice having this discussion. I hope your salon is a great success. -
Not a problem Guys-
I have no beef with unrestricted product availability myself- hey, by the way, I was wondering if you all could tell where I could pick up some wholesale Amoxicillin, some callipers and some Lidocaine? And maybe some of those little cotton thingies the dentist uses to stop the blood? See, I've got this tooth that needs to be pulled, and I'm pretty sure that I can get it out myself, but I need the stuff to do it with, see, and the dentist is so high priced............. -
Well now, I can help you there.
There are a couple of methods. First is called the Vise-Grip method. Simply get a pair of the large Vise-Grips and clamp down on the tooth. Wiggle it around a bit, while pulling straight up. Once you have a bit of wiggle room just pull like hell. Best to have a few cotton balls to jam down in the hole to slow bleeding.
And there is the door-knob technique. You need some sturdy string, or if you can fit it in, twine. Wrap the string or twine around the tooth and take about 10 feet of it and attach to a door knob. Have a seat in a chair about 9 feet from the opened door. Get a firm grip on the chair seat and then have someone slam the door shut. This should pull out the tooth. Again, a few cotton balls should be handy.
Washing your hands first is suggested, but not absolutely mandatory. -
You need to wear headphones with some loud music so you don't hear the removal noise.
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I asked...
So tell me, if I went to trade secrets and I said I need this, this, this this and this, would they first ask me questions as to what exactly I inteded on using these specific things for in order to make sure I knew how to use them properly? Or would they simply just make the sale to me no questions asked?
Anyone have the answer? -
It's a chain of stores in malls. About the only thing they'll ask you is "Cash or charge?"
Maybe "paper or plastic?" -
Yes, I have the answer-
Depending on what you were asking for,like shampoos, conditioners, basic stuff, they would probably just sell it you. However, if you were asking for Nioxin (or any other hair re-growth product), they would need to have a consultation with you to make sure you understood how to use it, what to realistically expect, and so on. Same goes for certain deep conditioning products, and a few other hard-core products for specific problems that are out on the market.
If you were asking for professional use only products, like perms, bleaches, colors, nail chemicals, stuff like that, they would either want to see your professional license, or they wouldn't let you have it.
Another however here, if the salesperson noticed that what you were asking for was obviously not a product that would be compatible for your hair, like if you had colored or tinted hair, and were asking for a product that wasn't designed to help the color stay longer, they might suggest that you get a styling product for color treated hair. Same goes for extremely curly, fuzzy, permed, excessively dry, excessively oily, or other special needs hair. They would also be there to answer questions for you about any concerns you had about your current styling products, and if there was anything better, or different available.
Consultation is an important part of the retail beauty industry. Using products that are recommended by your stylist or barber is always a good idea, as is staying away from products they don't recommend. This is part of what you are paying for when you get these products through a licensed, authorised retailer. -
What you say is true when dealing with a salon.
The entire point I'm trying to make here is that these "stores with a chair in the back room" have teeny-boppers, minimum wage clerks ringing your choice, just like at the C-store.
While there is usually a beautician in residence in the back room, which is truly less than 20% of the entire shop, the other 80% is floor to ceiling displays of "salon only" products being sold? by kids. Some may be in beautician school, but many are not. -
pete wrote:It's a chain of stores in malls. About the only thing they'll ask you is "Cash or charge?"
Maybe "paper or plastic?"
Thanks. That is all I wanted to know. I know what Trade Secret is. I also actually knew the answer to that question. I was just asking the question as I knew the answer would make a point. I think the point is made.
If it were actually on a "for sales to the trade" store, they woul dnot be in a mall. Likewise, if that actually cared who bought their products, they would not be selling in a mall. they would be a "wholesale only" store. We have a few where I am. You can only enter with a resale license.
Trade Secret is for the most part just a gimmick. -
Ok,
I'm starting to think that you guys have been assuming that I don't think the general public should have access to shampoo, conditiononer and assorted other styling products. I also need to point out here that I personally don't know Pete, and am not familiar with his sense of humor. I also find it interesting that every time I make a valid point in my argument, he comes along right after and says that what I have said was what he was trying to get me to say. Whatever.
Yes, I want the general public to have access to the lovely retail products our industry has made for them, because these are excellent products, and by using them instead of cheap stuff at the dollar store, our jobs are made easier because their hair is in better condition. You all continually misunderstand my point, as well as skirt around it, and that is- The general public should not have access to chemical products used during services in the salon.
Let me ask you- Do you guys think that the bleaches, colors, perms, acrylics, gels, resins and other assorted chemicals that are packaged without instructions should be made available to the public without the knowledge or consent of the manufacturer? Because that is what is being diverted, mixed in with the shampoos and conditioners, and other styling products.
Incedently, there is a mall where I live, and we have Regis and Trade Secrets. They don't bother me a bit, because Regis is such a huge corporation that they actually have their oswn brands of things packaged for them, as well as carrying the usual brands of product. Trade Secrets doesn't have anything on the rest of the salons in my town because they sell the same things we do at about the same prices. No big deal. And frankly, anybody who doesn't know how to rinse, lather and repeat probably can't reach the counter from their stroller anyway.
The problem with diversion is that the manufacturer gets screwed out their cut, so they raise the prices for the rest of us to make up for it. They also raise their prices to make up for the lawsuits brought on by people getting ahold of the chemical products through the grey market and then hurt themselves, or screw up their hair or nails. -
Although I am not as experienced as some on this board, what I think the auther is saying, I cannot purchase the stock of a salon going out of business and resell the items. I am not sure that is how it works. Unless there is a law, like Pete said about Freon, I thought it was fair game.
CXM mentioned a person buying this and this and this and the salon would have to ask them how they intended to use it to be within the "guidelines" of some law. From experience, I have gone for my wife and bought those items, it is all Greek to me, yet they sold it to me. Were they breaking the law?
As for the expired items, there are still some of us who would not sell them as it is, in my opinion, unethical. We are here to earn a living, not burn someones head due to an expiration date and a quick profit.
Just my thoughts. -
I cannot purchase the stock of a salon going out of business and resell the items.
Yes, that is correct. Unless you are another salon, have a license, or are an authorised beauty wholesale house.
CXM mentioned a person buying this and this and this and the salon would have to ask them how they intended to use it to be within the "guidelines" of some law. From experience, I have gone for my wife and bought those items, it is all Greek to me, yet they sold it to me. Were they breaking the law?
No. The only way they would have been breaking the law is if your wife sent you into a beauty supply store for professionals, and neither your wife nor yourself was a licensed cosmetologist, and the people at the counter didn't ask to see your license and went ahead and sold you the stuff at wholesale.
I think maybe folks here aren't understanding the difference between items that are intended for public use, called "retail products" and are styling products like hair gels, waxes, hairspray, shampoo, conditioner, things for daily grooming, as opposed to things that consist of more permanent changes to the hair itself, or the surface of the nail, like bleaches, perms, colors, acrylic, etc. These are items that professionals use to make longer term changes to the structure of the hair or nail, and require an education to apply properly. Incidently, while trial and error is an education of sorts, there really are specific techniques that are tught to learn the right way the first time.As for the expired items, there are still some of us who would not sell them as it is, in my opinion, unethical. We are here to earn a living, not burn someones head due to an expiration date and a quick profit
Thank you! About time somebody got it!
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JT - I now understand what you are saying. However, it is fairly easy to gain access to these products in the "closeout market". Are we to screen all of our potential customers to ensure they have the proper certs. in order to use or sell these products? allthough the market may be better suited for professionals, there are many who may have the knowledge, even if it was gained through trial and error. Like stated in previous posts, supply houses are opening up to the general public as a means to survive. How many products are sold clearly stating for "professional use" or "quailified individuals only". Nowadays it seems to be the norm if you have used a product or know someone who has you will be ok. Isn't that why everything you buy has a disclaimer on it? At some point the end user or customer has to assume some reaponsibility for their purchase. I would not buy the said products because I am likely to go blind. However, someone with experience, allthough limited, might not feel the same. I am not saying to prey on the uninformed, and I truly believe if you did that is a criminal act, I simply feel if I have the opportunity to make a purchase and resell that item it is within my right following the guidelines I have previously stated. Honestly, if I came to you with an item at 50% of wholesale you would not be interested. Even though I am not a qualified distributor (of course meaning I got my products legit in a closeout fashion). Search the web, classifieds, etc, there are many people/companies selling items for air conditioners that 90% of the public have no right purchasing and installing themselves. However, if they purchase and have the proper people to help them with everything will be fine. We have to have a little confidence in the consumer.
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And I understand what you are saying, too. However, the point is this- it should not be fairly easy to get ahold of these products in any market but the professional one, the only market that is authorised to carry Matrix, Redkin, OPI, NSI, FPO, Creative, Biolage, Nexxus, American Crew, Spiker, Goldwell, SoColor, Frommage, BioSilk, Faruok, to name just a few.
I can guarantee that if you come accross any of these products in a wholesale fashion and you don't have a license, and nobody asks for one, you are being offered grey market products. Period.
It should never even be an issue for you to have to worry about asking people for their license numbers because unless you enter the beauty industry from the front door, you, as an unlicensed , unauthorised individual wholesaler should never even be able to purchase it anywhere.
Like stated in previous posts, supply houses are opening up to the general public as a means to survive. How many products are sold clearly stating for "professional use" or "quailified individuals only". Nowadays it seems to be the norm if you have used a product or know someone who has you will be ok. Isn't that why everything you buy has a disclaimer on it? At some point the end user or customer has to assume some reaponsibility for their purchase. I would not buy the said products because I am likely to go blind. However, someone with experience, allthough limited, might not feel the same.
Even supply houses that are open(ing) to the public are not dumb enough to sell actual chemical products to the public, because they, the supply house, know that if they do, the manufacturer will pull the authorization to carry that product, and will most likely alert the other manufacturers what is happening in that supply house, and it can cause a dominoe effect, so that the supply house will have been slitting its own throat in the long run.
Even Sally Beauty Supply has had to crack down on this. Employees will get fired for not checking licensure on purchases containing prof. chemicals. And btw, Sally's only carries one mainstream professional brand, and only their lotions, which are retailed to the public at a higher price than any salon in town! All the rest of their so-called professional brands are nearly generic, and no professional I know (and I know around a 150 or so hair dressers and nail techs and estheticians around the country personally) would use these products.I simply feel if I have the opportunity to make a purchase and resell that item it is within my right following the guidelines I have previously stated.
But this is not an issue of "rights", it is an issue of laws and rules. If you follow the rules, and ask permission from the manufacturers, after having first gained licensure (State Law), then by all means, buy and sell away.
I too believe in Caviat Emptor, but the FDA does not. They don't want the public to have access to perm solution with over a specified percent of ammonia( I know this exists, but I can't remember the exact percentage off the top of my head), so that Sally, and any other public beauty supply can't even have it in the store, on the off chance somebody should screw up and sell it to just anybody. So now we come to wholesalers who have no licensing or authorization, and they get ahold of this pro perm solution with way over the amount of ammonia that the FDA says is ok, and Mr. Wholesaler sells it to the public over the internet, or at a flea market, or wherever. Well, guess who's liable in a criminal court of law when the people who bought it hurt themselves? How sympathetic do you think the judge is going to be when he asks just how you came accross this perm solution without licensing or authorization, and what made you think you ought to re-sell it? I can also guarantee that ignorance of the law is never a valid defense in court!
In my original post for this thread, I asked everybody at this forum for assistance with this problem, never dreaming that they might be the very ones perpetuating the problem. There's a world of opportunity available in this industry, if you are willing to to walk through the front doors. For those who are scurrying around the back doors, just know that you are screwing things up for everybody, and it will eventually kick you in the butt.
I am now finished defending the laws and rules. I think I have explained this thoroughly enough that even my 6 year old could understand what diversion is. Anybody out there who does not, at this point, is either actively engaged in it and has a guilty conscience, or has enough ethics that they can't concieve of breaking the law just to make a buck. -
You finally got what I've been alluding to the whole time.
This is the wrong place for you to come looking for help.
Read some of the other posts. This is the Wild West of the Internet. A bunch of cowboys doing whatever it takes to make a buck. Every other post is about fake goods and you think they're worried about diversion in the beauty industry. Not if there's a buck in it!
Feel lucky there's not some Chinese guy posting here about having containers full of "genuine" Redkin or Nexxus products. Stock overruns, etc. At least what's floating around in the grey market is legit.
And it's up to the manufacturers and the FDA to police this, not us. Why should we "help with diversion in the beauty industry"? What has the beauty industry done for us?
And I'm not jerking your chain on this post. I do wish you well in your business. Seriously! But, you can't help me with shoplifters and I can't do much about diversion.
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