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Old 12-12-2001, 11:37 AM   #1 (permalink)
 
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Diversion is a very serious issue for the professional tanning industry. The sale of professional tanning products through flea markets, the internet, beauty outlets, and other unauthorized channels has grown over the past few years, and is a significant threat to the integrity of the manufacturer’s brands, and the profitability of our salon partners. The effort to control and stop diversion will be expensive, time consuming, and take the united cooperation of manufacturers, distributors, and salon owners.

We at TW Tan believe that the major manufacturers are very committed to their anti-diversion efforts. ETS has actively pursued Internet retailers and beauty outlets, and spent hundreds of thousands of dollars in legal fees to enforce their anti-diversion policies. California Tan has also shown their commitment by exiting the beauty channel, and initiating product-marking technology to police their anti-diversion efforts. John Abate has exiting the beauty channel and worked closely with distributors to address the issue. Nearly all manufacturers have amended their contracts to include specific language addressing diversion issues, and we believe that while some manufacturers have different channel strategies, they all support professional tanning salons as their preferred retail channel.

On the distribution front, TW Tan has worked closely with our manufacturers to combat diversion. Over the past 18 months, we have gathered evidence from many sources and cross referenced our database to identify customers who have diverted products through unauthorized channels and we have discontinued our relationships with those customers. The majority of these customers were tanning salons that had relationships with Internet sites. This is a tough issue for a distributor or manufacturer in that these relationships are difficult to identify, and these customers are a legitimate outlet for tanning products through their salon locations.

To improve our anti-diversion efforts, we have purchased product-marking equipment and will begin coding product shipments. Any customer found to be diverting products through unauthorized channels will be notified that TW Tan will cease all further shipments. We encourage our fellow distributors to follow us in this very important initiative, as we believe that this is the best way to work with our manufacturers to monitor compliance at the salon level.

Diversion will not be stopped by one program, one manufacturer, one distributor, or in one month or one year. The beauty industry has spent millions over many years, and yet “salon only” products can still be found on the Internet, and in many other unauthorized channels. It is a difficult problem from an operational as well as a legal perspective. Diversion can only be stopped by the full cooperation of all participants in the distribution chain. We hope that as an industry we can unite to combat diversion, and stop the divisiveness and competitive posturing that hinders the cooperation necessary to successfully address the problem.

Mark D. Oslund
President
TW Tan 1-800-9TW-TANS Ext. 121


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Old 12-12-2001, 01:32 PM   #2 (permalink)
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TW, Thank you for coming on board and dealing with this situation. I commend you for your efforts. As you state, it will tall all in the industry to combat this problem. I for one will do all that I can. If any distributor is found of dealing with in appropriate channels, I for one will not give my business to them. As for flea markets, I am on to them in my area and will be policing them when they open back up, as I have in the past. The internet guys/gals will get theirs also. I think if we all stand together we can make a big difference in our industry. It is a shame that the big boys are willing to walk away from revenues only to find that our own peers, salon owners, will be stabbing us in the back.

Notice to all, we will be watching
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