New Sunshine Combats Diversion With RFID SolutionNovember 9, 2012
Professional salon products—shampoos, conditioners, styling aids and indoor tanning lotions—are increasingly showing up in unauthorized outlets such as online retail Websites, drug stores, grocery stores, flea markets, etc. This product diversion, although not illegal, hurts everyone. Not only are the brand owners, distributors and salons being affected, but also consumers—due to products that are outdated, damaged, tampered with or counterfeit.
Diversion has had a detrimental effect on many businesses across the United States, but has been an industry-wide problem for professional tanning and beauty salons for years. According to New Sunshine, “product diversion is the sale of products through an unauthorized, unofficial or unintended channel that damages brand integrity, erodes distributor loyalty, reduces salon profitability, and puts end-user customers at risk.”
Putting a Stop to Diversion
New Sunshine, of Indianapolis, has been fighting product diversion for more than 10 years. The company manufactures well-known tanning lotions, such as Designer Skin®, Australian Gold®, Swedish Beauty® and California Tan®. With a product philosophy and positioning built on “nutrition of the skin” for its Designer Skin line, New Sunshine promises to provide the ultimate in skin nutrition through the use of advanced skincare ingredients and formulas.
However, the growing problem of product diversion has heightened the company’s need to protect its product philosophy and positioning to ensure its customers only receive the highest quality and safest products. To combat the problem, New Sunshine set out in December 2010 to find a way to “diversion proof” its premier collection of Designer Skin professional indoor tanning products, including bronzers, lotions and tan extenders.
Diversion is disruptive to salon owners because it reduces sales when third parties undercut the price of salon products and, in turn, reap huge profits. With 15,000 salon partners and 19 distributors, New Sunshine was looking to make an investment in not only protecting the goodwill of its brand, but also in protecting its salon partners and distributors, as well as consumers. New Sunshine does not sell its Designer Skin products directly; therefore it counts on its distributors to only sell its lotions to professional salons.
“In the past, our customer service department has reported situations in which our bottles have been filled with generic brands of lotion, then sold online as authentic products,” said Scott Matthews, general counsel, New Sunshine. “End users have expressed their concerns about us having changed or cheapened our formula.”