V’s Barbershops Operates a Hybrid Distribution Model as They Grow
Over the past 20 years we’ve evolved a hybrid approach to distribution that suits us and our franchisees. We run as a lean corporate team on purpose; achieving growth by being cost-conscious and partnering with others to help us. Our approach is to let the experts do it.
Some franchise systems use a central distributor to keep the process simple for franchisees (one point to order from), which controls the entire distribution. Often there is a “mark up” on products, with the distributor collecting a profit on each item. We have stayed away from that, because it’s just not our model, but it suits many others. We focus our revenue on the back end (the royalty collected) of the sale. But also we wanted a system where our franchisees had a direct link to the product manufacturers. It was only when we created our own brand that we brought in third-party distributors for ease of distribution, costs and time.
So our product vendors, such as Reuzel, Suavecito, Layrite, Jack Black, American Crew and Uppercut, have a direct relationship with our franchisees. This gives vendors control over their products, ensuring less risk of diversion, and allows them to deal with each location individually so they can organize and deliver services and training as required. It also gives our franchisees a point of contact with the vendor and more control over orders and resources while allowing them to benefit from the preferred pricing and treatment that comes with being part of our larger franchise system.
But for our own product line (eight SKUs for V’s), plus all branded merchandise (which brings it to about 150 SKUs ) we work with a third-party distributor. This company supplies everything bearing a V’s logo, from printed goods to uniforms, hats and t-shirts, and distributes our V’s product line.
The partnership allows V’s to outsource tasks for which we are not prepared, and do not want to take on in-house. Brand management was a key motivator. We wanted to streamline the quality of our branded goods, and keep tight controls on inventories. We also wanted to be able to monitor whether or not products were being ordered, how often and in what quantities and insure the quality of these goods.
We pay a fee for distributorship on some items, while the distributing company, which is also a print and manufacturing house, can take small profits from some larger jobs. It not only distributes for us, but at times provides goods.
It’s a win-win, because we also run approximately eight to 10 campaigns a year. For instance, we do quarterly gifts to all of our staff nationwide in an effort to keep our barber talent and franchise system connected. Our distributor helps us source, manage, send, and track all that merchandise. Our annual marketing campaigns use creative materials, from posters to postcards and stickers, and our distributor manages all of that for us as well.
But our biggest challenge continues to be our size. Even though we feel like 40+ operating franchise locations is a large number, it really is not. So we struggle a bit with being “big enough”. Many items – products or branded items, even print – have to be purchased in large quantities to make them cost-effective. Although we are making strides in this, we are not quite a barbershop powerhouse when it comes to bulk purchasing power.
Technology helps, and we have an e-commerce platform in place for our franchisees. The next step is to expand that to allow the public to purchase some items. We are not there yet, but we are looking into it seriously.