How Beauty Products Are Sold: Part One

Customers don’t know very much about how beauty retailers sell them products. The process by which a lipstick goes from factory to store to you is pretty opaque. Sure, we know conceptually that beauty has high margins and a big markup. But while newer brands like The Ordinary and Beauty Pie have started to offer a bit of transparency into pricing and how brands are ultimately made available to consumers, there is still a lot of mystery baked into the process.

The recent apparent shuttering of an indie beauty brand and its lawsuit against Sephora helps shed some light on how truly complex it is to sell beauty products — and the costs that get passed on to shoppers.

A few weeks ago, the beloved indie makeup brand Obsessive Compulsive Cosmetics (OCC) abruptly shuttered its website, its New York City store, and all its social media accounts. While the brand has not made any official statement and none of its third-party retailers like Nordstrom and Urban Outfitters have confirmed anything, it’s widely assumed that the brand has gone out of business. Founder David Klasfeld seems to have started a new Instagram account under the handle @dkwmakeup, and notes in the bio: “I founded and ran the world’s first 100% Vegan & Cruelty-Free Cosmetics line from 2004-2018.” (Racked has reached out again to OCC and will update if we hear back.)

If this is the case, what happened? The only person who knows for sure at this point is the founder of OCC, but a lawsuit with Sephora dating back to 2015, may provide some clues. It also sheds some light on things like who actually is responsible for building and filling the product testing fixtures you find in stores, what large markdowns mean for a brand, and how store exclusivity works.

There are two legal documents publicly accessible, one from 2015, first published by blogger Zadidoll, and one from 2016. These provide an incomplete record of the full proceedings, and it’s unclear if Sephora and OCC settled this case or what the final outcome was. But what is clear is that retailers hold a lot of the cards and OCC probably lost a lot of money. A representative for Sephora sent the following statement to Racked: “Per company policy, we do not comment on pending litigation.

The terms of a Sephora contract

According to the 2016 order, OCC and Sephora signed a contract in 2012 stating that the retailer would sell the brand’s products and that OCC would be 100 percent responsible for the costs of the fixtures, which is the system of shelving and pigeonholes where testers and products for sale are displayed in the store. They can vary in size from a small box on a shelf to an aisle-long behemoth. Per industry sources, this is a pretty common arrangement. (More on what those fixtures cost in a bit. Hint: a lot.)  OCC then alleged in the suit that it entered into a verbal agreement with Sephora to alter the original contract in two ways: first, that Sephora would become OCC’s exclusive brick-and-mortar retailer with the understanding that it would place enough orders to make up for the ones OCC would have to decline from other retailers. Second, Sephora was supposedly going to help defray the costs of the fixtures by contributing 50 percent, since it supposedly wanted to increase the number of stores selling OCC, which would then necessitate building more fixtures. OCC alleged in the suit that Sephora reneged on these oral agreements by not placing more orders and not helping to pay for fixtures. Sephora argued that it was a moot point because the original contract stipulated that the contract could only be modified in writing and therefore the suit should be thrown out.

However, the judge ruled that OCC could continue pursuing it, because he determined that OCC had acted in such a way (turning down orders from other retailers, for example) that made it seem clear that OCC relied on Sephora’s verbal statements. (He threw out a fraud allegation that OCC made about Sephora, however.) Sephora was given 20 days to serve an answer, but the conclusion or settlement does not appear to have been made public.

But that’s not the full story. An earlier 2015 order details exactly how much money OCC stood to lose in the Sephora deal. Sephora wrote a letter to OCC to terminate the deal in 2015, stating it would sell the products it had until a certain date, while also requesting OCC to fulfill two outstanding purchase orders that OCC hadn’t shipped yet. After the date in the termination letter, Sephora expected OCC to take back leftover product (this is called a return-to-vendor, or RTV, clause) and reimburse Sephora for the unsold product. The bottom line? Sephora said it expected to be reimbursed $832,700 for the unsold products. Otherwise, it allegedly said it would liquidate its remaining stock at fire-sale prices. OCC asked for a preliminary injunction, arguing that “if provisional relief is not granted it will suffer irreparable harm because an immediate mark down of the outstanding inventory would have financially devastating effects and moot any award of damages.” According to the lawsuit, OCC never reimbursed Sephora for remaining stock, and Sephora did end up marking down the remaining products and selling them off quickly, according to Revelist. Ultimately, OCC claimed damages of $521,647.20. This is where the paper trail ends.

PART TWO COMING NEXT WEEK

FDA Investigates Multi State Outbreak (Recall List)

The FDA is advising health professionals and consumers to avoid using products that have been recalled by Shadow Holdings dba Bocchi Laboratories as they might be contaminated with bacteria within the Burkholderia cepacia complex, also commonly called Bcc. The FDA is investigating whether other products manufactured by Shadow Holdings dba Bocchi Laboratories may be contaminated with Bcc and present a risk to consumers. The FDA is currently advising health professionals and consumers to avoid using products that have been recalled by Shadow Holdings dba Bocchi Laboratories, as these products may be contaminated with the bacteria Burkholderia cepacia complex (Bcc). The FDA is particularly concerned about potential contamination in recalled lots of Medline Remedy Essentials No-Rinse Cleansing Foam, since laboratory analysis by the FDA confirmed that samples of this product contained Bcc matches Bcc isolates collected from the Shadow Holdings dba Bocchi Laboratories facility and from ill persons. The matches were detected by pulsed field gel electrophoresis (PFGE), a type of DNA fingerprinting. Shadow Holdings dba Bocchi Laboratories has recalled other products made in the same location.

Current Recalls

Shadow Holdings DBA Bocchi Labs recalls Eufora BEAUTIFYING ELIXIR BODIFYING CONDITIONER, 1.7 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls Eufora BEAUTIFYING ELIXIR BODIFYING CONDITIONER, 1.7 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls Eufora NOURISH HYDRATING SHAMPOO, 8.45 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls John Paul Mitchell NEURO REPAIR HEAT CONTROL BLOWOUT PRIMER, 0.85 oz. and 4.7 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls John Paul Mitchell INVISIBLEWEAR MEMORY SHAPER, 8.5 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls John Paul Mitchell SUPER SCULPT GLAZE, 8.5 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls John Paul Mitchell NEURO LATHER HEAT CONTROL SHAMPOO, 9.2 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls John Paul Mitchell NEURO LATHER HEAT CONTROL CONDITIONER, 9.2 oz. due to potential contamination with Burkholderia cepacia complex (Bcc.). FDA has confirmed the presence of the bacteria in some lots of foaming cleanser.

Shadow Holdings DBA Bocchi Labs recalls Medline Remedy Essentials No Rinse Foaming Cleanser: No Rinse Foam; CHG Compatible, pH balanced, Fragrance Free – for all ages 4oz (MSC092FBC04): 24 bottles/case; 8oz bottles (MSC092FBC08): 12 bottles/case; Ingredient: Water, TEA-Lauryl Sulfate, Aloe Barbadenis, Propylene Glycol, Sodium Lauryl Lacitylate, Iodopropronyl, Butylcarbamate, DMDM Hydanton Triethanolamine, Citric Acid. Manufactured for Medline Industries, Inc. Northfield, IL www.Medline.com; Item number MSC092FBC04; lots M06691, M07247 ; Item number MSC092FBC08; lots M05703 and M06691, due to  potential contamination with Burkholderia cepacia.

Avlon Industries, Inc recalls KeraCare Hydrating Detangling Shampoo—Sulfate-free, 8 oz., and gallons; 8 oz.-12 bottles/case; gallons-4 per case; UPC 9670838012, Item #53227; UPC: 9670833053, Item #53943 (Lot 16G1503 and Lot 16K3I03) due to the presence of Enterobacter cloacae.

The resources listed below are related to recalls of cosmetics and other products regulated by FDA, as well as other safety alerts related to cosmetics. To learn about FDA’s role in recalls of cosmetics, see FDA Recall Policy for Cosmetics.

 

The Value of Cosmetology Licensing

 All cosmetologists, barbers, manicurists, skin care specialists and makeup artists in America are trained and licensed beauty professionals from accredited cosmetology schools. Professional beauty programs offer courses to teach individuals skill sets to enhance clients’ appearances hair, nails, skin, and makeup and maintain a safe salon environment.
One of the most valuable features of all professional beauty programs ,from a comprehensive cosmetology program to a shorter nail technology program, is safety and sanitation training to minimize the transfer of infectious diseases and risk of accidents for clients. Upon completing their training, students who pass their exams are awarded certificates and licenses to work in hair salons, barber shops, nail salons, spas and other personal care service facilities. Currently, professional beauty licenses are set and administered by state offices and the requirements vary from state to state and specialty to specialty.
Among the various disciplines with in the beauty industry, cosmetologists and barbers usually undertake the most comprehensive programs that cover multiple teachings and skills from safety, sanitation and technical skills to customer and business management skills.  Full time programs in cosmetology and barbering range from 9 to 24 months and can lead to associate’s degrees in cosmetology. Professional cosmetology schools also offer shorter, more affordable programs such as nail treatment, skin care and hair styling designed to teach specific skills to work in the beauty industry. Upon completion of study, beauty professionals take exams to demonstrate their knowledge, skills, and capabilities required to perform their jobs. After passing required exams they are awarded with certificates and licenses to work at hair salons, barber shops, nail salons, spas, nursing facilities and performance art centers.
Registered professionals are proven to be accountable for the benefit of the consumer. Professional beauty licensing is an essential component to the health of America’s economy and to the health of its citizens. Beauty professionals touch nearly all Americans across every demographic in large and small communities. These professionals acquire their special skills to provide safe, high quality services to their clients through extensive training, certification and licensing. The professional beauty industry is a critical element in America’s economic landscape and professional beauty licensing is an essential component to the overall health of American consumers and beauty professionals.
Ultimately, licensing of beauty professionals supports an industry of over 2.2 million workers who earn $31.6 billion in wages and contribute $85.8 billion in goods and services to the U.S. economy. The beauty industry is dominated by small businesses, self-employed individuals and exemplifies gender and ethnic diversity. The beauty industry touches almost every American in large and small communities. These trained professionals attend accredited institutions to acquire special skill sets, including hair, nail, skin treatments, business management, sanitation, hygiene, human anatomy, and infection control to provide safe and high quality services for their clients. As with other professional education programs, participants have to pass standardized course exams to demonstrate their knowledge and ability to perform their skills in the marketplace.
With a higher level of training, beauty professionals are able to earn higher wages. Licensing safe and well-trained beauty service providers protect customers from unqualified beauty workers. To ensure consistency from state to state, industry professionals are pushing to harmonize the requirements and  processes to obtain professional beauty licensees to strengthen safety, remove barriers and ensure economic performance of the industry.

Is Ulta Repackaging and Reselling Used Makeup to Consumers? A New Lawsuit Says Yes

A new lawsuit filed in Chicago last week alleges that beauty giant Ulta has been repackaging and reselling used makeup to its unsuspecting customers for years.

Attorney Zimmerman represents Meghan Devries, a Chicago woman who works in the beauty industry. She became suspicious about some of the products she purchased from Ulta.  A woman claiming to be a former Ulta employee first brought the allegations to light in early January. Posting under the Twitter handle @fatinamxo, she wrote that whenever a customer returned a product, employees were instructed by Ulta to repackage or reseal the item and put it back on the shelf for sale. This practice, she said, included everything from makeup to hair and skin-care products, fragrances and hair styling tools.

She said that makeup palettes, for example, were cleaned up so that they looked new and returned to the shelf for reselling, unsanitized. She then shared screenshots of other Ulta employees making the same claims. Those tweets were cited in the class action complaint (pdf) Zimmerman filed in Cook County, Ill., last week. The suit also cites the claims of former employees that Ulta has a limit on how many returned items can be thrown away. “Managers will take used products out of a damaged bin, and if they look good enough to resell, they’ll put them back on the shelves and resell them so they don’t exceed their quota,” Zimmerman told ABC7.

He said that some of the products purchased from an Ulta store on North Michigan Avenue in Chicago seemed to have been previously used, including eye shadows missing a brush and face cleansers that were already open. Those products, he said, could have pathogens on them that remain for weeks. “There is E. coli and Klebsiella bacteria, which is commonly found in intestine and expelled with fecal matter,” Zimmerman said.  Zimmerman told ABC7 that the goal of his lawsuit is to change the alleged company practice that limits the number of items that can be thrown away, as well as to provide compensation for customers who may have bought used products.

The Campaign for Safe Cosmetics

We at The Real Hair Truth were more than happy to endorse the Campaign for Safe Cosmetics on there recent cosmetics safety discussion draft bill. They had 120 organizations endorse the letter. Including The Real Hair Truth and Bravo to them for the well done job they constantly do for the consumers of this country!

Since 2004, the Campaign for Safe Cosmetics has used smarts and sass to pressure the cosmetics industry to make safer products.

The Campaign for Safe Cosmetics coalition, a project of Breast Cancer Prevention Partners (formerly the Breast Cancer Fund), works to protect the health of consumers, workers and the environment through public education and engagement, corporate accountability and sustainability campaigns and legislative advocacy designed to eliminate dangerous chemicals linked to adverse health impacts from cosmetics and personal care products.

The Campaign has educated millions of people about the problem of toxic chemicals in cosmetics, which has led to an increased demand for safer products in the marketplace. Now hundreds of cosmetic companies fully disclose ingredients and avoid the use of cancer-causing chemicals, reproductive toxicants and other unsafe chemicals, demonstrating these practices are not only possible, but profitable. Retailers, too, are becoming part of the solution by requiring the national brands they sell to eliminate chemicals of concern and practice a higher level of ingredient transparency.

There is no doubt that the multi-billion dollar cosmetics industry is safer now than before the Campaign was launched. But there’s still more work to do to get toxic chemicals out of the cosmetics we use each day. Bravo!!!!

Read More about there Bill!

15 March 2018 Campaign for Safe Cosmetics Public Comment on HELP Cmte Cos Safety Discussion Draft(1)

How Can You Make A Living?

Today I went on an Interview for the “Hell of It”, to a new business in the Orlando area.  I am currently employed and have my own business. But from time to time I go out and see what the industry is offering in the industry employment wise that is.  Today I went to a new business it is a “Blow Dry Bar”. And my appointment was at 11:30 so I arrived 20 minutes early and the manager took me and started the interview with me. She was very nice and informative, the decor of the salon was beautiful red and grey colors. When I was told to take a seat the salon chair was ready to fall apart. This is where services and clients are seated on. Not a good sign for me, right off the bat.

My interview started off with the familiar questions, “How long have you been in the industry, What are you looking for, Blah Blah. I was informed the salon is open for only one month and there are 12 employee’s in the salon. There are three shifts and the salon opens at 7:00am to closing which is at 9:00pm. The salon offers blow-dry’s, makeup, and keratin treatments. The manager told me we are a “Finishing salon”. No other services are offered. So if you are hired you are expected to clean, clean and fold towels. There is no wages only a cut of you $39.00 blow dry. Which was only $15.00 dollars. HOW DO YOU PAY YOUR BILLS? How? While is was being interviewed there was only one client in the salon. I asked the manager “If there are twelve employee’s in the salon they all need to be built up, client wise. So how can I offer you my loyalty if I am being used to clean, promote and do makeup without any formal wages. So If I go to work and I do nothing, I get nothing. CRAZY.” And then on the flip side of it all. How does a salon employer expect to keep professionals. And of course keep motivated driven people. Theirs no way at it. Its like a candle lite on both ends, sooner or later the business is gone. Crazy.

I went to see their makeup counter and there was hardly anything to work with. And cleanliness was something to be wanted in the salon. They teach you for 3 days how they want the hair styled and there are no other ways to do except their way. So there are only six looks you can leave with. That’s it. No makeup training at all. And a very somber atmosphere in the salon. So if you want to go in debt try this place out. So many professionals in my industry are not paid a minimum wage for their time, the salon owners want free labor.  They want to have a love overhead. At the expense of the employee’s. Which is so sad. And so many people come and go in the industry. I have seen so many talented professional leave and get discouraged. In a constant worry of how they can even get gasoline money and food. Basic housing is another story. How can you concentrate on your work if you have no way of paying your basic needs. The industry is famous for it.

A college graduate will get a job and receive a wage, if you walk into Burger King you get a wage, WalMart will give you a wage. Also sick day pay and vacation pay. When will this start in my industry.  But in my industry there is still the old Gothic way of paying you. Commission that’s it. This has to be changed.

This can no longer be. This is FREE LABOR.

 

Monat Hair Care Interesting Situation

It seems as though a few plaintiffs in the beauty industry have filled a restraining order against the hair care product manufacturer MONAT.  Trisha Whitmire and Emily Flores have filed in the state of Florida a restraining order against MONAT Global Corp in the Courts of South Florida.  Monat sells its products using a direct sales model, under which it engages a number of independent sales representatives, referred to as “Market Partners,” to market and distribute its products. The two individuals claim that MONAT Global Corp have been harassing, threatening, and intimidating the potential class members in multiple ways. Interesting, I may say.  Whenever MONAT becomes aware of criticism of its hair care products, the defendant quickly moves to silence it all.  REALLY. Read More My Friends.  Interesting situation.

10.MotionforProtectiveOrderTROandPreliminaryInjunction