Here’s a beauty secret you might not have heard: Many websites and popular stores aren’t authorized to sell the salon-brand hair-care products they offer, according to LoxaBeauty.com founders Danielle McDowell and Janell Shaffer. But the Indianapolis business owners think they’ve found a better way to give consumers what they want—easy access to these top-shelf products—without using the distribution channel that feeds a large unauthorized market.
The problems McDowell and Shaffer see with the gray market are quality and commissions. Take Paul Mitchell. They say the company doesn’t allow big-box stores or websites to sell its product; it has contracts exclusively with stylists, and before the Internet age, salon owners would sell plenty of Paul Mitchell to their clients and earn commissions. Now, Paul Mitchell and other top brands are commonly diverted to the gray market and show up on shelves and websites. Consumers like it because they can buy these products when they’re not already plunking down money for a pricey cut and color, but there are reports of inconsistent quality. And in the meantime, salons have seen their sales and commissions plummet.
McDowell and Shaffer learned about these woes when they developed a website called My Best Friend’s Hair, a find-a-stylist service and beauty blog. “We started to understand the relationship between stylists and professional products,” McDowell says. “At the same time, we kept hearing stylists say they can’t compete with Amazon. And there’s no way to know if the product is authentic.”
“Our solution was a way to offer [these products] legitimately,” Shaffer adds.
Loxa Beauty developed a sales tool that inserts the stylist into an authorized online sale. At checkout, buyers can designate a stylist to receive the commission for that sale. If their own stylist isn’t available, they can award the sale to someone else local, or even have the site divvy it out. The founders’ ultimate goal was to attract a business partner with relationships with top brands (their expertise lies in technology and marketing), and within six months, they sold the site to Beauty Systems Group, a subsidiary of Sally Beauty Holdings. The Hoosiers still run Loxa, but now it’s bigger. BSG’s involvement instantly boosted the selection from about 250 products to more than 3,000—even pet shampoos.