Tuesday, April 14, 2015
THE HAIR EXTENSIONS BUSINESS IS FINALLY GETTING THE MAKEOVER IT DESERVES
Nicole Sanchez is a natural entrepreneur. A graduate of Harvard Business School and former consultant at Bain & Company, she was out on the fundraising circuit for a different startup when she came up with the idea for hair-extensions company Vixxenn. “I was changing my hair extensions, because I was going to all of these different events," she says. "But instead of talking about my business, we ended up talking about my hair."
Yet, while the New York-based Sanchez — who has been wearing hair extensions since she was 14 — says that African-American women make up 70 percent of the market, the way the business is run does nothing to benefit the community. “There are 10,000 beauty supply stores that specifically target African-American consumers,” Sanchez says. “Only 1 percent of those businesses are owned by black people.” Salon owners often can’t afford to buy and sell hair extensions, which can cost hundreds of dollars per set, so the wearer goes to an independent retailer, buys her own and pays the stylist to weave them in. In turn, the wearer has no guarantee that those extensions are of high quality, so they’re often stuck with hundreds of dollars' worth of hair that breaks long before the expiration date.
With Vixxenn, Sanchez wants to make it easier for salon owners and stylists to benefit from the business of weaves. Like Avon, the company uses the direct-selling model to sell hair; stylists act as distributors for Vixxenn's product. Each stylist has an account on Vixxenn.com, where a client can log on and purchase her desired weave. (For instance, 12 inches of raw, high-quality Cambodian wavy hair starts at $149.) Stylists new to the program receive a 15 percent commission on each sale, and there is a 30-day guarantee. Sanchez says she can help a stylist increase her top line by 40 percent. (She declined to say how many stylists are currently working with the company.)
Vixxenn, which launched this spring, is just one firm looking to make the process of buying and selling hair extensions more seamless. After all, the market is robust. Wigs and hair piece stores in the U.S. sold $299 million in goods in 2014, according to a report by IBISWorld. And that number is likely higher than estimated, given that the research firm was only able to track down 867 businesses. There's more, though: $774 million worth of haircare products geared toward black consumers were sold in 2014, estimated to be $876 million by 2019. (That number doesn’t even include wigs, extensions, hairstyling appliances, or products that are not specifically marketed to or formulated for black hair.)
Vixxenn’s competitors are few, but compelling. The Needham, Mass.-based Indique Boutique, a chain of upscale stores founded in 2007 by Ericka Dotson and Krishan Jhalan, sells to the customer, not the stylist. It does, however, offer classes for stylists that want to refine their hair extension techniques. (Indique's celebrity client list includes Lala Anthony, Rihanna and Lady Gaga.) Launched in late 2013, the Oakland, Calif.-based Mayvenn is the most similar in concept to Vixxenn. Unfortunately, there is little information about the company's progress since launch, and my attempts to interview founders Diishan Imira and Taylor Wang about their progress were declined. (According to a rep, they are both “booked” for the entire month of April.)
While the extensions market is made up predominantly of black consumers who wear weaves (hair extensions woven into braids or a mesh cap), there are concepts popping up to address those looking for fused-on or clip-on hair extensions. In February 2015, RPZL — a sort of Dry Bar for hair extensions -- opened in New York. (The Flatiron District salon does offer blow-outs as well, which start at $40.) Founders Monica Thornton, a human rights attorney, and Lisa Richards, a marketing exec in the entertainment industry, came up with the idea for RPZL after mediocre experiences with hair extensions. They've been developing the concept for four years.
“There’s nothing on demand, and it’s extremely costly,” Thornton says. “You often have to pay for a consultation, and then put down a deposit on the hair, which you don’t get for two weeks.” RPZL services include clip-on hair extensions ($250) — available in 12 different colors — as well as adhered-on extensions that last up to eight weeks ($350-$550) and keratin-bonded extensions ($550-$850) that typically last for three months or more. (The last two are each available in 22 different colors.) Along with high-quality hair, a convenient walk-in experience and decreased time in the chair, RPZL touts its uniformly trained network of stylists. “The beauty industry in general is so fragmented,” says Richards. “It was important to us to create that centralized body of knowledge.” For the first month, the company’s goal was to do one set of extensions a day. It averaged more like 10.
To be sure, the early buzz around companies like Vixxenn and RPZL suggest that more hair-extension businesses will likely pop up over the next couple of years. “As a consultant by training, I think the weirdest part for me to get my head around was, ‘Is this real? Is the market really this big?’” Sanchez says. The answer, it appears, is yes.
Posted by BKDAILYNEWZ