As featured in May/June 2014 edition of Beauty NZ Magazine.

At S.H.E one of the most common challenges we hear from business owners is the difficulty they have retailing skin care products to their clients due to the vast availability of these products online. It began with websites like Strawberry Net, which sell many professional skin care ranges as well as other main stream cosmetic brands at significantly reduced prices. Since Strawberry Net there has been many other competitors joining the market, most recently sale sites like NZ Sale and Brands Exclusive, which the industry has labeled ‘grey market’ meaning non-authenticated product distributors.

Beauty therapy salons throughout New Zealand are being severely impacted by such websites, “unfortunately many clients don’t realise the risk of purchasing from unauthorised websites that may supply expired, end of line and in some cases counterfeit product. Our therapists do a good job of educating them otherwise but in many cases, they just see the cheaper price and that’s enticement enough” says Natasha Gee, Managing Director of S.H.E.

As distributors of Dermalogica for over 20 years, we here at S.H.E (formerly Dermal International NZ) knew that in order to support our stockist network and continue to grow the Dermalogica brand in New Zealand some drastic action was necessary.

In 2012 we implemented a generous loyalty programme for Dermalogica consumers in NZ, which offered consumers up to 30% added value with their Dermalogica purchases. Whilst the loyalty scheme has been extremely successful, the availability of product online has only increased so it was back to the drawing board. We are very excited to introduce two new concepts to the NZ market this year to help compete with the ‘grey market’ and encourage Kiwis to support their local Skin Centres.

Price Harmonisation
In order to close the gap between local and grey market prices of Dermalogica products, the Recommended Retail Prices (RRP) of all Dermalogica products is being reduced as of 1st May by an average of 23%. This change will mean that consumers can now shop for Dermalogica locally at a great price and benefit from the expert advice and knowledge that only a therapist can offer. That said, taking a price decrease is not a decision made overnight, and requires any business to look at their cost structure in order to be able to make this change.

This exciting development is part of a global initiative that the Dermalogica brand is working on in order to harmonise pricing across markets. New Zealand will be the third country in the world to roll out this change. Globalisation is not a problem that is unique to the beauty industry and many importers and retailers will need to consider their pricing structures in future in order to ensure in-store prices are on par with online.

S.H.E Microsite Initiative
Whilst price harmonisation will definitely help Dermalogica stockists to retail to their clients in store, another challenge for the industry is that consumers love to shop online. The convenience of shopping online is particularly tempting when purchasing their skin care products in between visits to their therapist. “Many clients are happy to travel to see their favourite therapist for treatments, yet that Skin Centre may not be handy to where they normally frequent. If they run out of their cleanser or moisturiser in between visits they may look to the internet to restock. Our stockists need to be able to offer their clients a place to shop online, yet the costs and resource involved in building and maintaining an e-commerce website are high and it’s an out-of-reach opportunity for most of our stockists”, says S.H.E Sales Manager Leanne Winsor.

Understanding these challenges, we have developed the S.H.E Microsite initiative. Now S.H.E stockists can operate a sophisticated e-commerce website for a very competitive price. Their Microsite will be branded with the Skin Centre’s information and feature all of their Skin Centre’s contact details, treatment menu and online booking as well as hosting their own web shop selling any of the S.H.E brands that they stock (Dermalogica, NVEY ECO organic makeup and eyeSlices). Any orders placed come direct to S.H.E’s head office and are packed and shipped freight free within one business day on behalf of the Skin Centre. The Skin Centre is credited their profit on all sales and given a report of who has purchased and what they’ve bought so that they can do their own follow ups with the client.

From their perspective clients will feel that they are visiting their local beauty therapist’s website and are buying direct from them, it is only behind the scenes that S.H.E will handle the transaction. Not only will the Skin Centre benefit from the fast and professional delivery that S.H.E offer but they also won’t have to invest in additional inventory that would be needed to service a web shop or the time that is involved in fulfilling web orders. We’re extremely excited that our stockists will be able to offer their clients a place to shop direct and remain loyal to their local Skin Centre. “S.H.E’s Microsite initiative will take Elizabeth Palmer Skin Care into the new age of information online. With the expert knowledge our team already have in partnership with S.H.E we believe our business will thrive” says Dermalogica Skin Centre of the Year owner, Justine Palmer.

The first Microsite was launched in early April 2014 (www.enhancechurtonpark.co.nz), with many more being launched this month. For Dermalogica stockists who have already invested in their website and aren’t looking to upgrade, they can simply encourage their clients to order from www.dermalogica.co.nz through an Affiliate Marketing link from their website to Dermalogica’s and they will also benefit on the profit from that sale.

The Microsite and Affiliate Marketing concepts are an evolution of the online initiatives that S.H.E has offered their customers in recent years. Knowing that online shopping was on the increase we launched our company owned web shop www.dermalogica.co.nz in 2009. Whilst we knew that it was necessary to develop an online shop for Dermalogica, we didn’t want to do it without supporting our stockists at the same time, so all consumers who purchase direct from the website have the option of choosing an ‘Online Partner’. All Dermalogica stockists are listed as Online Partners and if selected receive a commission on that sale. “We’re not selling online to compete with our stockists, but rather to support them as the shopping habits of consumers change” says Gee.

Connecting with the Industry
Along with the price harmonisation strategy for Dermalogica and the online initiatives that we have developed for our stockists we are also working hard to become more connected with the beauty therapy industry in New Zealand throughout 2014. Last December we launched our new website www.s-h-e.co.nz and with it a blog developed especially for beauty therapists and business owners working within the industry in NZ. The blog is written by team members from S.H.E working within sales, marketing and education and offers great information from latest technologies and skin care ingredients to social media and sales tools. We are also very excited to be hosting, in conjunction with the International Dermal Institute, the ‘Future Skin Today’ event on Monday 28th July. This event, open to all in the industry, brings three international guest speakers, Dr. Diana Howard, Dr. Libby Weaver and Emma Hobson to our shores to update and inspire on the latest trends and innovative technologies that are happening in our industry today, and provide insights as to how lifestyle and diet impacts on skin health.

Never ones to stick our heads in the sand, the team at S.H.E like to tackle challenges we see in the market head on and find ways to build opportunities for our customers out of them. After all, our business is fundamentally about supporting our customers to grow their businesses and be successful. This is the measure of our own success and a driver of strategy.