Manufacturers of professional hair care products are not restricted to a single channel of distribution. Historically, brands have established their reputations and built their images through the salon distribution channel. Today the salon distribution channel moves an ever-smaller portion of a brand’s total volume. Other channels such as big box retail, drug stores, specialty retail, and the Internet make up the bulk of all sales volume and growth. You might consider this diversion but it certainly isn’t the grey market. Most manufacturers are well established in several legitimate distribution channels. You are not alone if you feel they unfairly exploit the salon channel and leverage their own success at the salon owners’ expense.
When I think of diversion I think, in particular, of the unscrupulous brand who has pressured a salon to take on too much inventory—more than they can possibly sell. Or, on the other hand, an unscrupulous salon owner who intentionally buys too much knowing she will offload some of that product in the grey market.
One of the biggest grey markets of professional hair care products operates completely in the open. Amazon.com. Don’t get me wrong, I don’t think Amazon is a bad company at all. And, frankly, they are at least three degrees of separation away from the real problem, that is, too much inventory getting stuffed into channels beyond their normal business capacity.
If you haven’t already done it, then look for yourself. There are many examples of hair care brands who purposely do not distribute their products through Amazon.com—and yet there they are. Why? Because some salon owner, or middleman, has the ambition to buy up excess inventory and resell it below “retail” (and “at or above” in some cases) directly to consumers. This, of course, offends the brands themselves, but more to the point, injures salon owners who play by the rules. They are the ones who build the customer relationships, diagnose individual needs, recommend effective products—while their customers often buy hair care products on line, or from other channels, to save money.