Spas vs. big E-tail

Posted by Vivienne O'Keeffe on March 22, 2019 in Articles

Don’t let those online giants poach your sales. 

By Vivienne O’Keeffe 

Considering the worldwide scope of the battle between bricks-and-mortar establishments and online giants like Amazon, the fight for supremacy in spa product sales might seem like a mere skirmish. But with their higher margins than most hands-on services – and in some case higher volumes – off-the-shelf product sales for skin care, hair and other aesthetic needs are, for many successful spas, a matter of survival.

There’s no doubt that Amazon, eBay and others employ sophisticated analytics. Amazon’s multi-tiered ‘recommendation system,’ for example, pushes product info to web browsers in a number of categories: Recommended For You (based on categories you’ve been browsing), Frequently Bought Together (sales patterns of all shoppers), Recently Viewed (by you), Customers Who Bought This Item Also Bought, and several more. Amazon, which accounts for about half of all online sales in the U.S. and Canada, calls it “item-to-item collaborative filtering.”

Amazon’s sales figures leave little doubt that it’s working: consistently exponential growth since 2007, with a sales increase of 19.6% last quarter of 2018 alone to 72.38 billion ($US)  – driven in large measure by these crafty algorithms.

Amazon infiltrates spa business

And then there’s the e-tail giant’s downright cheeky incursion into the spa business. In an effort to bring professional-level care to the masses, the website Amazon Professional Beauty puts scads of products, services (including professionals) and even free advice to within point-and-click mousing range of browsers.

Some frustrated product manufacturers and distributors, faced with slumping in-store sales, are pulling out their lines (and maybe their hair) and switching to other sales channels. I know that some spa owners are feeling the heat from Big E-tail as well, and thinking of dropping some of the product lines they carry because of poor sell-through.

But hold on a sec. Why not use your many advantages to fight back?

Yes, your many advantages.

Brick-and-mortar spas’ advantage

1. Product prescription program

Amazon’s integrated recommendations program compares poorly to the product prescription program that’s been used in successful clinics and spas worldwide since the beginning of the industry. Remember, skin or body analyses are the first things we do. We are in a much higher position of trust and understanding, offering a far more personalized experience than a computer interface. We need to dust ourselves off, have confidence in our abilities and methods, and deliver on the long-term relationships we’ve cultivated. Having just spent anywhere from 30 to 90 minutes one-on-one with a client in a situation of intimate trust and caring – giving a facial, massage or other treatment involving touch – your skincare professionals and aestheticians are in the power seat. Their opportunity for product and service recommendations using skin analysis followed by prescription selling is huge. No one knows your client’s skin better. A computer screen can’t build that kind of personal trust or rapport. And today’s consumers are looking for personalized shopping experiences.
 

2. Competitive pricing

Price can be another advantage. Contrary to the perception that in-spa products cost more than their online counterparts, prices are generally about the same – or less when you factor in shipping costs.
 

3. Convenience

Yet another is convenience. Why wait for your skin cream when you can walk away with a bottle right now?

Having just spent anywhere from 30 to 90 minutes one-on-one with a client in a situation of intimate trust and caring, our skincare professionals and aestheticians are in the power seat.

So why aren’t spas exploiting these advantages?

One problem is that when presented with the opportunity to promote a product, a lot of young inexperienced skincare professionals project their own perceived lack of funds onto the client. Young employees may also have different financial priorities than those of their clients, preferring to spend $50, for example, partying with friends rather than on a bottle of anti-wrinkle cream.

They need to know that today’s spa clients, even millennials, spend more on professional spa products (including $50 bottles of anti-wrinkle cream) than you might think. Instead of feeling reluctant to suggest products, therapists need to make professional recommendations and then let clients decide for themselves.

All too often after a professional recommends a skincare product to a client, because of the clinician’s inability to close the sale, the consumer goes home, checks the reviews and buys the product online. Spas can address this simply by posting printed reviews (and prices) alongside the products, thus pre-empting this last step of typical savvy consumers and leaving no unanswered questions in their minds.

The challenge for us as an industry is to empower team members to free themselves of their self-limiting perceptions and fears of rejection. Honestly promoting products, treatments and experiences that will help address customers’ needs and concerns – by personalized prescription selling (more powerful than just recommendation) – is a skill that can be learned and practised.

We also need to consider the mindsets of modern (so-called ‘conscious’) consumers. Their buying decisions are based on a lot more than price. They’re looking for values in the brands they choose that are consistent with their own. They’re reading the ingredients in products and the effects of those ingredients on their health and the environment, while also noting the kind of packaging used for the product and the origin, culture and values of the brand.

6 Things today’s consumer wants in a spa product

In short, today’s conscious consumers are thinking about:

1. Clean ingredients in effective products.
2. Eco-friendliness. Products that don’t add to global warming, bottle-strewn beaches, plastic pollution, etc.
3. Fair trade. Products that support local, marginalized groups with limited accessibility to resources.
4. Animal friendliness. Cruelty-free skin and body care products.
5. Experiences vs. accumulation. Modern conscious consumers are leaning away from mindless material acquisition in favour of meaningful connections and experiences – the kinds that spas are so superbly equipped to deliver.
6. Personal recommendation. In a social-media-influenced marketing world, never underestimate the value of good old personalized email communication to time-starved, overwhelmed customers. Emails absolutely must be relevant to the customer’s needs, concerns and interests.

I believe today’s whirlwind of conscious consumption trends, from the rise of veganism to growth in organic food sales to rejection of single-use plastics, is here to stay, and will in fact expand into more retail sectors through 2019 and beyond, particularly in the health-and-wellness world of spas.

Interestingly enough, Amazon does about as good a job of embracing and communicating these modern consumer values as any online site can. But (and here’s the kicker) they KNOW their web-based sales model will always lack the human-to-human contact that only a physical shopping experience can offer. Which is why Amazon is so busy acquiring and opening bricks-and-mortar stores of its own – all (according to online site Econsultancy.com) with online data driving decisions about format, product range and location. They wouldn’t be doing it if they didn’t think physical retail sales held value.

Talk about coming full circle – Amazon competing with you on your own turf. Except you already have the customers, the systems, the staff, the rapport and the goodwill. And you’ve been doing it a lot longer than they have.

So empower your team with product knowledge and skills to embrace and deepen your customer relationships. Follow up with the confidence and certainty of knowing how valuable an ongoing, quality skincare program is for your clients.

Then go get ‘em.

Published as “Taking on Big E-tail” in Spa Canada March-April 2019

Vivienne O’Keeffe, AAD, PEA, CIBTAC, is President of Spa Profits Consulting Inc., and an expert in designing successful spa concepts. She is also an international consultant in developing product lines, quality systems, treatment plans and training programs, a member of ISPA and a recipient of the Spa Industry Association of Canada Outstanding Industry Service Award in 2001, 2005 and 2012.

Background stats on Amazon sourced from https://www.statista.com/statistics/273963/quarterly-revenue-of-amazoncom/