Editor’s note: This is part two of a three-part series on distribution. In “Getting the Goods” (part I, July 1995), nail technicians talked about what they look for in a distributor. In this part, manufacturers tell what they look for in a distributor and how they think nail product distribution needs to change to support the growing industry. Part 3 details distributors' own concerns.
Distribution of professional nail products has changed dramatically over the years, first ask Tony Cuccio, who got his start in the nail industry hawking nail polish and lipstick on Venice Beach. Or Tammy Taylor, who struggled to develop her own technique for doing nails, then turned it (and her line of products) into a multi-million dollar business.
Or ask George Schaeffer and Susan Weiss-Fischmann, who gave up then dental supply business in 1981 to supply the growing nail industry with OPI Products or Jack and Gary Sperling of Alpha 9 who went from distributing beauty supplies to manufacturing nail products. They and other manufacturers know well how distribution of nail products has changed because it wasn’t that long ago that they were knocking on salon’s doors themselves to sell then products.
Today few manufacturers depend on door-to-door sales to sell their products. The distribution network used by most large manufacturers is complex far-reaching and still changing. Even though the nail industry currently represents $5.2 billion in service sales building distribution networks hasn’t been easy for nail product manufacturers, and some are still struggling to get distribution in certain areas.
Most beauty distributors built distributor for OPI Products best their businesses by supplying hair products and only recently have realized the potential in nail care products, say many nail product manufacturers. The forward-looking distributors who recognized the potential of nail care and supplied nail product lines early have watched their nail product sales soar. Others, say manufacturers, remain stubbornly focused on the big hair product lines for which they have a steady customer base. Still, nail product manufacturers are pragmatic, saying there is nothing wrong with distribution that time won't fix. Distributors are businesspeople, they say, and will ultimately respond to nail technicians' demands for product, education, and merchandising support — or they will lose them as customers.
Nail product manufacturers, as you can guess, are lull of suggestions on how distributors can better respond to technicians' needs. The ideal solution, they say, is for distributors to create nails-only divisions.
Kim Hovie, director of sales and education for European Touch Co. (Butler, Wis.), sums up the feeling: "We are seeing more and more distributors hiring nail department managers. And our sales are increasing from those distributors." Still, says Hovie, the change needs to happen faster.
The manufacturers NAILS interviewed mentioned several other areas in which distributors could improve, including providing better retail merchandising support (which will have a positive effect on the distributors' sales, as well) and carrying fewer manufacturers' products. Instead of carrying a few products from 10 lines, for example, nail product manufacturers suggest distributors limit their selection to the full line of two or three manufacturers.
Finally, like nail technicians, nail product manufacturers want to be given their due. Says Susan Weiss-Fischmann, executive vice president or OPI Products (N. Hollywood, Calif.), "Distributors are under so much pressure to keep their hair lines that they ignore nails. They need to get all of their eggs out of one basket so that they are not as vulnerable. Nails are steady and growth-oriented, so it's definitely time to take us seriously."
What Makes a Good Distributor?
There are many distributors who do great business with nails. "Some are so wonderful," says Michael Bannett, president of Cosmic (Sunrise, Fla.) "They would do anything to promote, market, and educate."
What qualities define a good distributor? First, manufacturers look for distributors who "service" instead of "sell." "If you think about it, we provide the product; their business is to provide service," says Bannett. How do manufacturers define service?
Hovie says European Touch looks for distributors who promote education. "We look for someone who will offer education and service, which is what our industry is all about."
Weiss-Fischmann’s checklist of what constitutes a good distributor for OPI Products best defines what manufacturers mean when they speak of service: "We look for distributors who provide education, have salespeople who visit salons, hold regular sales meetings, do promotions, and have some type of publication for salons. They have to promote the lines they carry. You want distributors who are computerized so they can track promotions and inventory. They have to turn inventory often, without miming out of stock. And they must be able to service the customers — customer service is the ultimate. They have to respond to the needs of the salons by delivering orders on time, in good shape, and take back inventory if necessary If there's a problem, help with it; if there are exchanges, make them immediately. And they must inform nail technicians of seminars, classes, and symposiums."
Why such an emphasis on education? Because each product has peculiarities that can't be learned from printed instructions; for example, the basic technique for acrylic systems is the same, but I you use that same basic technique for all systems, you'll get different results with each one. Nail product manufacturers know that to gain market share, they have to educate technicians on the product. The most logical source of education is the distributor.
Education ranks high with manufacturers, but service ranks even higher. The reason goes back to what Bannett said: You can get product anywhere. Service includes carrying a manufacturer's full line of products, having those products in stock all the time, hiring knowledgeable salespeople, demonstrating how products work, showing salons how to merchandise retail products, and more. Distributors who do not meet these "basics" are order-takers, not salespeople, says Bannett.
Too Many Lines Equals Too Little Service
Like nail technicians, manufacturers, too, are concerned about selection of products. But while nail technicians complain that the) can't get all the different products they use from one source, manufacturers say that sonic distributors try to carry too many lines.
"Too many distributors want to have A through Z; they end up being a jack-of-all-trades and master of none. A lot of distributors carry everything, but because they do, we've found that some salespeople who've been with a distributor of our product for three years didn't even know they had the line," says Bill Martens, executive vice president of Seche, Inc. (Laguna Beach, Calif).
Adds Tom Clifford, chief of operations for Alpha 9 (Van Nuys, Calif.): "Being in the nail business requires a significant investment, so I can understand the distributor who can't support an entire line. But I think distributors who earn a multitude of lines make a dedication to one line then manage the other lines by numbers. It's frustrating to the manufacturer when a distributor wants you to do education but carries only your powder liquid, and primer and not the other support products required by the technique."
Additionally, distributors who carry a multitude of lines may be less familiar with each line. Says Essie Weingarten of Essie Cosmetics (Elmhurst, N.Y.), "Distributors who have a hundred lines of polish don't care about each line. Once they go over five lines, it's a mess. Their salespeople can't keep track." Weingarten chooses to have only 20 distributors nationwide, she says. Potential distributors must commit to stocking all 160 Essie polish colors — with enough stock for each color so they don't run out. It's tough to police distributors, she says, but her customers do a fine job. "If a distributor is out, the salon will call us right away to find out what's wrong," explains Weingarten.
For other manufacturers, especially those with large distribution networks, monitoring what the distributor does and does not carry in a line is difficult. "We make distributors take the full line," says Hovie, "but then they'll only reorder a partial line. We don't know until a technician calls to tell us her distributor doesn't carry a certain product."
Adds Kurt Kittleson, president of Pro Finish (Scottsdale, Ariz.), "To have an incom plete product line is a disservice to the nail technician. Carrying a complete product line shows a commitment to the nail technician."
To nail technicians who say they buy from three or four distributors, Tony Cuccio president of Star Nail Products, Valencia, Calif.), offers this advice: "Look to stand behind one professional-only line and one distributor that stands behind that line. It's better to have one good relationship than four flighty ones."
Open-To-The-Public Beauty Suppliers — A Necessary Evil?
Open-to-the-public beauty suppliers are the bane of the industry, according to many nail technicians In the NAILS 1995 Reader Survey, 44 7% of technicians reported that they look specifically for beauty product sup pliers who do not sell to the public Professional nail product manufacturers understand nail technicians' frustration, and some agree that beauty supply stores that sell to the public are taking profits from nail technicians' pockets But other manufacturers (especially those whose products can be found in open-to-the-public beauty supplies) say these stores are a legitimate, sometimes vital, source for products.
Says Susan Weiss-Fischmann, "We distribute through professional beauty distributors, but we do sell to some OTC stores in some areas like Southern California, OTCs are a major part of the distribution network"
Adds Kim Hovie, "Our commitment is to make our products available to all professional nail technicians. We employ different means of distribution, choosing the way that makes products the most available to nail techs. In some parts of the country that's professional full-service distributors. In other parts of the country it's professional-only stores, and in other areas it's a mixture of mail order and OTC."
Other manufacturers take a harsher stand. Says Michael Bannett, "This is a professional industry. You have to go to school, take a test, and be licensed, then you go buy products at the drugstore. That doesn't make sense. As a professional, why aren't you patronizing professional distributors?"
A good point, but open-to-the-public beauty supplies have a proven place in the industry.In fact, 27% of NAILS 1995 Reader Survey respondents say open-to-the-public beauty supplies are one of their primary sources of products. And in some areas, open-to-the-public beauty supplies are the only place technicians can go to see, touch, and sample products.
Nor are open-to-the-public beauty supplies necessarily competing for your clients, says Tony Cuccio. "OTC places are for women who want to do their nails, just like women who buy perm kits Women who perm their own hair haven't hurt the hair industry," explains Cuccio. "Nail technicians have to realize that open-to-the-public beauty supply stores are always going to be a sore point. But it's a separate customer base and it won't affect them. Nail technicians just have to remember that products they retail should be available through professional-only distributors so that they remain the exclusive source of products for their clients."
Tammy Taylor, on the other hand, says it doesn't matter if the supplier carries the same retail products as the salon. It's the availability of artificial application products to clients that upsets technicians. "But things like polish, lotion, and cuticle oil can be purchased at K mart or the drugstore, so you're better off having them purchase these items from a reputable person in the industry because then it promotes people being interested in professional nail care," she adds.
No matter who you side with, open-to-the-public beauty supplies are here to stay. The best advice on how to deal with them came from Kym Lee, who says, "If it really upsets you, use a line that is strictly professional-only."
Nails-Only Divisions Succeed Every Time
Manufacturers insist that distributors must commit to the nail industry as a whole first before they can make any decision about particular products. In fact, says Cuccio, "1f you quote me on this: Full-service " distributors need to lake the nail business more seriously. They need to build separate departments and treat them as separate businesses."
Distributor salespeople who do not specialize in nail products, says Weiss-Fischmann, don't have the product knowledge or technical skills needed to sell those products.
Martens agrees: "A distributor in the Midwest took on our line three years ago and did horribly with it. Two years later, they wanted the line back, saying they now had a nail division. Now they have performed phenomenally well with it. The distributorship is in Paducah, Ky., which is not a metropolitan area but it's now one of our top 20 distributors."
Martens recommends that distributors hire a nail division manager who is nail technician with good sales skills and have sales people who are dedicated exclusively to nail product sales.
Education Builds Credibility, Gets Customers
Why is education so important? "Any time you, the distributor representative, go into a salon you should go with education on the products you're selling," says Tammy Taylor of Tammy Taylor Nail Products (Irvine, Calif). "If you don't know your products, the nail technician won't have faith in you. If you do a demonstration, she'll think, 'This person knows what she's doing.' If you answer questions and build credibility, they'll buy from you."
Education should not be limited to product knowledge only, either. The nail industry has tremendous growth potential in retailing. II you don't believe it, look at the volume of business drugstores, grocery stores, and open-to-the-public beauty supplies are doing. Distributors have an incredible opportunity to help salons earn higher profits through retailing by showing them how to display and sell retail products. Part of that education comes from how the distributor displays and sells products. "Distributors could do a better job in their store presentation," says Kittleson. "They need to design their stores like retail outlets."
Manufacturers say they are willing to work with distributors to help them build their business. "The manufactured' has a huge responsibility to help distributors increase their client base by giving them product knowledge, offering classes, and helping them to obtain their own educators." says Kym Lee, founder and CEO of Galaxy Nail Products (Corona, Calif.).
Manufacturers take that responsibility seriously. Creative Nail Design Systems, for example, has created a niche marketing program called Nail Advantage that it offers in partnership with its distributors. "Tools we specifically provide [through Nail Advantage] include convenience and availability of products and information through professional distributor stores, nails-only shows, competitions, nail catalogs, tele-servicing, telemarketing, information hotlines, comprehensive education, school programs, direct mail, and product samples," says Jan Arnold, president.
Most manufacturers have company-trained educators throughout the country who will teach distributor classes, do in store demos, and work at distributor shows. Many manufacturers also offer other support materials. For example, says Hovie, "We have an advertising support program for their publications, we have a school service program, we offer window boards, fliers, and do listings in their papers."
We've Come a Long Way From the Old Days
Nail services continue to be the top growth area in the beauty industry, and many distributors have already redirected their energies to serving nail technicians' needs. As the category continues to grow, product availability and distributor service and education will continue to improve. As Taylor says, "I think the industry is 100 times better than it was 10 years ago.
I think the education has gotten better and the quality of the businesspeople has gotten better. I don't see too many negatives because if we continue to be education and service-oriented, we'll be up-to-speed soon.
If anything, manufacturers are sympathetic to distributors' growing pains. "We started out hitting the salons," reminds Taylor, "so we know what it's like to be in a distributor's situation."
Exclusive Distribution: Does Everyone Benefit?
Some manufacturers offer an exclusive on their products to distributors, meaning only one distributor in a territory carries that line of products. "Exclusive distribution came from the hair care side of the industry," says Kim Hovie. "It was a way for manufacturers to lock a distributor into a certain area and guarantee sales and loyalty."
The logic is that if a distributor is the only one in a territory carrying a product, the distributor will work harder to sell the line, knowing other distributors aren't competing for the same technicians' business. When two or more distributors are competing for business, manufacturers say, they will start competing on price. Lower prices are welcomed by nail technicians, but manufacturers say it eventually leads to product diversion.
"If you have two distributors in a territory, they will compete on price and then products will start being diverted and then technicians will stop buying those products because clients will be able to get it everywhere," Hovie says.
The cost of products to distributors is often based on volume: The more the distributor buys, the less he pays per unit. If the distributor has exclusive distribution in a territory, he has a greater chance of selling high volume. If distributors are competing for business, manufacturers say there are only two ways for them to keep their volume up: by discounting prices or by reselling the products to a retail establishment.
"I wish they would compete on service, but in the real world they discount or divert to keep their numbers up. Then the image of the manufacturer's line is damaged," adds Bill Martens.
But exclusive distribution also has its dark side, says Tom Clifford. "One of the cardinal sins a distributor will commit is to sit on a product line without promoting it so that someone else in the territory won't have it," he says.
Mark Moesta, marketing manager for American International Industries, agrees. "A distributor may take on a product and want a certain area, but they're just guarding from the competition getting it. Let's say I have a new kind of cuticle nipper. I go to a distributor in Connecticut. That distributor does $150,000 with another nipper manufacturer who will give him a 10% rebate if he hits $200,000 in sales. So you take on the cuticle nipper to guard against anyone else in your area getting it, then do nothing with it to get your rebate," Moesta theorizes. "That's just one scenario."