How To Get Diverted, Expired Hair Products Out Of The Supply Chain
These days, just about anything you need can be found and ordered online.
So when you search for your favorite salon-quality shampoo or hair product, you may be pleasantly surprised to find it on Amazon, just a quick two-day delivery away. Much easier than going to a salon to pick it up, right?
Not always. You may be in for a less-than-pleasant surprise when you actually use that product in your hair.
It’s not uncommon to find that what you ordered isn’t quite right — it’s greasy, smells funny, or simply doesn’t work like it should.
If that happens, it’s very likely you bought a diverted or counterfeit hair care product. Diversion occurs when the distributor doesn’t send the product to authorized salons or spas. Instead, the product is sent to local retailers or placed on e-commerce sites like Amazon.
For most salon-quality products, you should only be able to buy them direct-to-consumer at a salon.
The reality is, these products get diverted all the time.
Back in 2009, L’Oreal sued Sally Beauty Holdings for selling their products to an unauthorized wholesaler. Eventually, those salon-quality products ended up in CVS and Target stores.
In fact, Target has been a frequent offender, and salon products from brands like Redken or Paul Mitchell often show up on their shelves — with a heavier price tag, to boot. While Target’s practices technically aren’t illegal, they do end up fueling the grey market for these products.
There are obvious financial and brand value implications here for the product manufacturers, but it’s also a safety concern for consumers.
For a long time, there haven’t been great solutions for diversion. But blockchain and other emerging technologies are helping to create some of the most effective solutions for this supply chain issue.
If the personal care industry is willing to try these technologies and get their hands dirty, it will take a few things to clean up the diversion mess:
Brands must gain visibility into where and when diversion occurs in their supply chains.
Many companies who come to my team for help with their supply chains already know they have a problem — they just can’t pinpoint where it’s happening.
Right now, they generally don’t have the ability to uniquely identify their products. Barcodes can’t differentiate between individual bottles or containers — they all share the same product identifier. And diverters have gotten smart. They’ll put new identifiers and barcodes onto products, or they’ll scratch off the previous ID to make them harder to trace.
Since companies can’t identify their products, they can’t track them. And that leads to problems throughout the supply chain.
Take, for example, a business intent on capturing an emerging market in South America. To do so, they send their shampoo to local distributors in the area. But all too often, those distributors don’t actually sell the product to authorized retailers in the intended market. Instead, they may simply send it back to America, or another established market, via Amazon and undercut the local distributors.
It’s a tough problem to resolve, but the solution starts with a creating a unique, covert identifier for the label to track individual products.
For example, Systech is creating a unique fingerprint for products using their existing barcode, which can then be tracked with a blockchain solution.
Yet even invisible identifiers and serialization won’t help much unless consumers agree to help track diverted products by scanning identifiers before or after purchasing a product. This is why it’s so important to raise consumer awareness about what’s going on.
Consumers have to understand the implications of the delivered product.
On the consumer end, there’s still a lack of awareness about supply chain problems.
People simply aren’t thinking that a product may be diverted — and diluted or expired — when they buy it online or in a store where it shouldn’t be.
And truthfully, e-commerce companies aren’t offering much assistance. The rise of e-commerce companies has helped create markets for diverted or counterfeit products that would otherwise not have existed. I like two-day shipping as much as the next person, but it’s important to realize that every product sold on these sites isn’t being carefully vetted the way you may imagine.
Convenience aside, it can be dangerous for consumers to use diverted products.
You simply don’t know what’s happened to it after it was diverted. Dilution is common — and so is replacing the real product with something made of much lower quality, and possibly harmful, ingredients.
It doesn’t matter if you’ve checked the label to make sure you aren’t allergic to anything if the label doesn’t actually match what’s in the bottle.
Consumers have to be willing to work with brands to help alert them to diverted products.
When unique identifiers are put on products, that can be as easy as scanning a label to ensure the product hasn’t been diverted.
And giving people some sort of incentive for doing so would be much less costly than the current damage to brand value and consumer perceptions that diversion causes.
The technology to solve this problem is available. It’s just a matter of raising awareness and getting the right people — both consumers and supply chain partners — on board with the solutions. If not, more consumers will wind up paying for hair products that are subpar and unsafe.
Thanks for reading!