Expanding an exisiting business into distribution. Need help and advice.

[classixuk]

Hi Everyone,

This is my first post here and I hope I can get some valuable advice, or at least a couple of pointers in the right direction of where to steer my latest business venture.

Let me tell you a little about it and me...

My background

I'm 30 years old and I've been involved in the hairdressing industry for over 15 years having done many things from celebrities hair, world travel, education and teaching and of course business ownership.

I currently own 2 successful salons in the North-West (been in business since 2001) and as part of my business I produced my own hair products around 4 years ago. These were always intended for use and sale in my salons only, but from doing that little exercise I caught the bug.

Obviously though I was realisitic, reasearching and developing a full range of professional hairdressing products (hair colourants, peroxides, perms, bleaches, shampoos, conditioners, styling products and back-up merchandise) was way beyond me, however it did intrigue me.

I began searching for companies already successfully manufacturing such products, but who weren't being distributed in the UK yet.

Over the past 3 years or so I must have tried around 15 different brands of hair colour and styling, sent to me as samples but I've been dissappointed with the results.
That was until last October.

I was recommended by an industry friend who lives in Australia to contact a company. He had began using their products and could not sing their praises enough. So; intrigued, I contacted the company and asked if the products were available in the UK. "Not yet", they told me. It turned out that they were looking for an English team with industry experience and technical knowledge to distribute the product.

To cut a long story short, they sent me the samples. I knew instictively how to use each of the products and what should be mixed with what to acheive the desired result. After this I placed them in my salons and they were used on the staff. They loved it! After this, they asked regular clients if they would allow us to use the products on them to test them, and guess what? Not only did the hair colours out-perform our current line, but the clients asked immediately where or when they could buy the shampoos and styling products we had used on them.

After this, we test marketed other salons with questionaires to identify weaknesses in the market and ask them about the product packaging etc. That all went swimmingly well.
My partner (experienced in distribution of other products) and I met with the company and each party agreed that we should work together, so we signed an exclusive UK wide distribution deal. So here we have the acorn!


What happened next

I arranged space in a warehouse, picking, packing and delivery etc. Computer software, business cards, post cards etc. Had a website built (almost ready for launch). Brought the stuff over and had it unpacked into the warehouse, inputted as inventory and recruited a small team to begin building sales systems here in the North-West before going UK wide.

What happened next was shocking. After visiting around 10-12 salons (this was November), I realised I had missed one very important question off my list when carrying out market research...

"As a salon, do you stock each of the colours you offer clients in the colour shade chart (the book of hair swatches you look at when deciding what colour to have on your hair)". I wish I had asked this one instead of presuming that all salon owners run their business like mine. Honestly guys, around 50% of the salons I visited only stock 5-6 shades of the 75+ they show you! So if you've ever experienced being in a salon and they tell you that the colour you have picked won't suit you and that they will apply something "a bit darker" or "a bit more caramely"...well you now you know why! It's because they don't even have the colour in that you asked for. STUPID??? I found it quite irritating to be honest that these people tell others that they are professional hairdressers/salon owners, when that just obviously isn't the case.

But hey...one of the things we identified in our market research was that most salon owners complained of getting little to no education and would like that to be offered by a hair colour company. "No problem", I thought (back then). That's something I'm very good at, qualified to do and well respected for already (not just here in the UK, but abroad as well). I can factor that into a deal and provide it for 'free'. Once a lot of these salon owners are a little more educated, they will feel more confident trying different hair colour shades or products as they will understand what the end result will be. They liked that idea too.

But of course...that was when I was presuming these salons spent say £200 per month on hair colour and products (our salons spend much more than that so I thought that was a low figure).

I have since found, that 50-60% of salon owners (because of only stocking 5-6 different colour shades) spend more like £40-50 per month on hair colour.

Honestly, I have dropped my deals, made them smaller and cheaper. We're struggling to get commitment to a £70 opening order AND they still want either me or one of my salon technicians to come in and train their staff on the latest styles for a day!

So the orders are trickling in. They are stretching themselves to the £70 opening deal becuase the products perform so well and I am at the end of the phone offering technical advice when they are stuck on how to perform a basic colour service on a new client (nothing to do with the product or how to use it, more like "This lady in my chair wants her hair coloured like Posh Spice. Help...what do I do? I've never done that before."

2 new accounts keep ringing my sales rep to place orders for "2 tubes of this, 1 tube of that and 3 bottles of smoothing lotion" for delivery every 5-6 days. No matter how many times we tell them that the minimum delivery amount is £55 (it costs us £7.95 plus picking fee to get it dispatched from our warehouse), these salon owners just can't seem to budget in either products or finance.

So I have realised why these salons used to buy from hair and beauty suppliers/wholesalers. They could call up and order half a dozen tubes of ABC colour with some cheap shampoo and have it delivered by the man in the van every Monday or Thursday. They paid by credit card over the phone (£30-£40) and then repeated the same thing each week.


What I'm thinking now

I'm thinking that these smaller salons should still be supplied, but that I would be better off directing them to their local hairdressing wholesaler to buy the products. I feel that in any given area or city, 20-30 of these weekly £40-£50 orders could be quite easily met and would be warmly welcomed by any hairdressing wholesaler, especially seeing as they already supply the same salons with hair-pins and other supplies. The product itself offers great profit margins, and the packaging and performance is second to none.
I feel that on my part, it would be very easy for me to provide the wholesalers with 2-3 technical visits per year in their premises from one of our qualified colour technicans, which they could then invite the smaller salons purchasing the product from them to attend as a course (free or charged for, whatever they felt).

We can also supply all of the merchandise, stands, promotional stock, incentives, colour shade charts etc. for the wholesaler's premises, and of course, would actually have the time to do this considering we would not be spending all day chasing individual orders.

The problems for me begin there though. I've used wholesalers all throughout my career, but I've never approached any about proposing something like this.

I have absolutely no clue about what they are looking for. I've rang up 5 or 6 of the ones operating in our area and now have the buyers telephone numbers and names, but how on earth do I go about this? What sort of things does a buyer from a wholesaler look for when meeting with a new product provider? How much mark-up does a wholesaler generally expect to make? What would make the buyer say, "Yes...let's try it in some of our stores", and even more importantly, what would make the buyer say "No, it's not for us." Do wholesalers look for exclusivitey within an area, and if so...should I consider that and under what terms?

All I know is that currently I have ran out of books to buy in Borders. I have salons telling me, "Wow, this covers grey hair perfectly...Wow, these styling products are literally flying out of the door...Wow, I really love the blonde shades, they look so natural". In my own salons, the clients have bought so many of the shampoos, conditioners and styling products that both salon managers have re-ordered 3 times in a 4 week period, and it's now looking like I will need to bring over an extra pallette of stock in January just to satisfy our own demand! The packaging looks fantastic, the products perform brilliantly and pricewise it's just unbelievable!

But I'm entering a new world here...dealing with wholesalers, and I don't want to burn any leads. I need as much advice as I can get to get this product out there, and leave me dealing with the bits my team and I know best...providing education, technical support, arranging merchandise and getting the product from A-B.

Sigh...if you got down this far, let me say thanks for reading. This is the first time I have managed to write it all down and get it off my chest. I sat down to browse the net looking for information to help me with my problem and found this forum. Just watch, I've spent that long writing this that I'll press post and it will disappear! LOL

Thanks for reading, and thanks in advance for any and all assistance/advice you can offer.

Cheers,

Chris.

[Donny]

Sounds a great product. Seems to me like you need a revised business plan and some advice on how to set up many different routes to market, including wholesalers.

I used to work for the biggest wholesaler in the UK doing distribution and sales deals with small comapnies through to Coca Cola sized companies. I now run my own businesses, which includes looking at other startups, opportunities etc.

I know nothing about hairdressing, but I do know lots about wholesalers, distribution and sales. If you would like to talk to me, please send me a personal message and I will get in touch

David