As the manifold effects of coronavirus continue to develop, the popularity of at-home beauty rites seem to rise. The modern-day individuals exert substantial amounts of effort to master the treatments that do not require them to step out of their house because self-care well becomes a necessity.
While sourcing the products, the shoppers usually look for three things – affordable price, brief delivery time, and highest convenience – which often compel them to make unofficial modifications or else they fail to get what they desire.
This not only hampers the safety quotient but also damages a brand’s overall reputation. While nothing new in the cosmetics industry, one must be cautious now more than ever, given the pandemic situation.
Can Radio Frequency Identification (RFID) be the Solution?
In a warehouse on the West Coast of Canada, an amalgamation oforganic, luxury beauty products sold only in salons and spas and a few cautiously vetted ecommerce platforms, are embedded with RFID chips, scanned and ready to leave from the circulation unit.
The experts offering the best RFID inventory management system said this overly simple procedure has created a profound dent in the battle against these products sold on the grey market, stated to drain approximately $65 billion of the industry sales.
Diversion Decoded
The grey market is a significant problem for the entire cosmetic industry. Diversion – where the items are sold in shops or on websites that are not approved retailers of the concerned brand – is believed to be a universal phenomenon.
It usually happens when the diverters procure items from the distributors who are contractually bonded with the main manufacturers or brands. The distributors give out the items to channels where they must never be sold.
The problem with counterfeiting is also escalating at an alarming pace, and the social media has a huge role to play in all of this. The cosmetics rank in top ten counterfeited products, and according to the copyright protection act, social media accounts for almost 55% of the black market sales.
What is the Impact on the Consumers and Brands?
The brands are quite aware of this problem. The recent researches have showed that losses experienced because of online counterfeiting of the high-end goods, which includes cosmetics, amount to almost $350 billion last year.
Diversion alone means complete absence of brand control, which harms the image of a renowned or prestige line. Diversion also breaks the relationship between the brand and its consumers.
The consumers are at great risk because no one knows where a product came from, how old it is, and how exactly it is handled during storage and shipment. The consumers get excited seeing the low price, and have no idea that they stepped into the shady grey market area.
The Future of RFID
After the Canadian brand, specified at the very outset of the write-up, tasted success thanks to RFID, other companies realized that the technology can allow them to regain control over the supply chains, and to access data on every product. The latter is done by installing a RFID tag to each product.
Radio frequency identification has dramatically enhanced visibility and the beauty brands ended up tracking diverted items, and recognizing the grey market distributors. With RFID enabled tags or labels, the cosmetic industry can curb diversion, and be its genuine self in front of wide base of clientele.