When Amazon was founded back in 1994, it sold books. From that moment the writing was on the wall for book stores. The online merchant then moved into electronics, hoovering up demand for the latest gadgets and household goods. Now, the giant marketplace accounts for 50 per cent of all online sales.
But it’s not Amazon’s voracious appetite and determination to offer every consumable under the sun that makes it such bad news for spas and salons; it’s the way it has pushed discounting as the primary driver of sales.
Late last year, ISBN vice-president Pat Neville, from Beauty First, hosted the Network’s Coping with Virtual Competition webinar, with speakers Peninsula Beauty COO Jerret Shaar, Salon Spa Ultimate president Sean Maney, and Amin Harari, senior brand liaison of Clean Boutique and Brand Forward. They quickly identified discounting as one of the biggest threats to the beauty industry.
Everything as a showroom
The problem of customers using the salon, spa or barbershop as a way to find out about products then going off and buying them cheaper elsewhere is a real problem. And not just because of loss of income. There is the additional risk of losing the trust of customers who pay $40 for a shampoo in salon and then find it for $20 online half-an-hour later while browsing over coffee.
The only way to fight back is to unite as an industry and try to stamp out discounting. It is possible. Amin referenced the nutraceuticals, which has seen a move by the big players combining brick and mortar outlets with online stores, without being dragged down the discounting route.
So what can ISBN members do to beat the online discounters?
- Unite as an industry – chains and large salons have real clout and they can drive a fatal wedge into the heart of discounting by choosing brands that will not discount online nor sell to retailers willing to discount just to get a sale.
- Work with manufacturers who recognize that retailing in a professional setting drives up the value brands.
- Look out for manufacturers that adhere to Minimum Advertised Pricing (MAP) policies. While there can be no compulsory pricing on goods, there is the option of a MAP, where resellers are not allowed to advertise a product below a certain level. It’s an effective way to thwart online discounting.
- Set up systems so that customers can easily replenish their favorite products between appointments. Some groups run memberships, in which their members receive their products at regular intervals by post or pick-up. Training the front of house team so they always offer the option of replenishment at checkout can help divert customers from checking online.
- Ensure every stylist, colorist and therapist is driving sales while the customer is undergoing the service. Few industries can boast such a captive audience, and the trust between the service provider and the recipient is powerful in the battle for the customer’s dollars.
- Set up online stores so customers can browse an extensive range of top-quality products carried by the salon or spa.
If you’d like to listen to the entire webinar go to https://salonspanetwork.org/coping-with-virtual-competition/