Our mission at The Hair Society is to provide relevant tools for professional and commercial success that stands the test of time. An important aspect of that is to keep you up to date on breaking industry news so you can navigate through change successfully.
One of the key relationships in the hair replacement and restoration industry has been between the retail salons and the wholesaler suppliers. The trust established in this relationship is critical to the integrity of our industry.
As with any industry, change is inevitable. Some of the changes we see are helping to move the industry forward, and with others, the jury is still out. A recent change we have become aware of has to do with wholesalers selling directly to the consumer (D2C). This change opens up an important dialogue about our industry’s future and may even impact the business model for both wholesalers and retailers alike.
Why would a wholesaler want to sell directly to the consumer? What challenges might they face? The first and most obvious answer would be to cut out the middle man and sell their products for less money. Customers are always looking for ways to save money and buying direct provides the opportunity to shop around and get the best price.
Some wholesalers may view selling D2C as an opportunity to build a strong brand relationship with the consumer. Wholesalers will potentially have more control over the story they tell and the messages that are communicated directly to the consumer.
Another reason a manufacturer would sell directly to the consumer is to establish a relationship with the end-user. The manufacturer would have the ability to gather customer information and intelligence and use that data to provide exactly what the consumer wants and needs.
One of the challenges wholesalers will face by selling D2C, will be the need for a whole new business model. They will need to become specialists in marketing, selling, delivery, supply chain strategies, customer service, customer intelligence, data mining, etc.
Winning a sale from a consumer may seem like a benefit to the wholesaler but is it worth losing a critical relationship with the retailers as a result? This may prove to be the greatest challenge of all.
What are the benefits of consumers doing business with retail salons? Retail salons offer focused customer experience and service, target marketing to the consumer, promotions and annual contract services and can react to customer needs and feedback in a timely manner. The consumer and retailer build a relationship over time and trust is established, which turns into loyalty.
So, why would a consumer want to purchase directly from the manufacturer? With the internet at everyone’s fingertips, the consumer has the ability to shop around and search for the best value and price. Comparing prices between retailers and wholesalers empowers consumers to make the best decision for their situation and budget.
How would this potential change impact the manufacturer/retailer relationship? The wholesaler/retailer relationship is a partnership based on trust. Together, they can meet their goals by being in alignment. If wholesalers sell their products directly to the consumer, the integrity of their relationship with the retailer may be in jeopardy.
There are many things to consider if wholesalers start selling directly to consumers.
Some wholesalers offer assistance in the area of marketing and education but aren’t equipped to handle customer service with the consumer, and customer intelligence data and analysis. When a wholesaler sells to retailers, logistics, customer service, and marketing is primarily the responsibility of the retailer. If the retailers are taken out of the equation, who will support those critical components? Will customer service and experience fall to the wayside? How will returns be addressed?
Depending on who you ask, the D2C model for wholesalers is either considered a win-win for consumers or a nightmare! Retailers will have to service customers who have already purchased hair from the wholesaler. Consumers will be confused about being charged al a carte service fees by salons, instead of regular all-inclusive contract service fees. Retailers will require signed disclaimers concerning the hair because they can no longer guarantee the quality.
For years, retailers have been asked by wholesalers to turn away customers who bring in their own hair. If wholesalers sell D2C, it may appear as though they are contradicting their own advice to retailers. Again, trust in that relationship is critical, and this new business model puts that relationship on a tightrope.
It is still too soon to predict how this potential change will impact wholesalers, retailers, and consumers. One thing that is certain, change is inevitable. How all parties involved navigating through it will determine the future success or failure of their
business and/or experience. How will you adapt to the D2C model? Will you still purchase from the same wholesalers if this happens? How will you manage customer experience expectations in light of this potential change? These questions, and many others, will need to be answered as our industry continues to change and evolve. Are you ready?