Attention shoppers: disintermediation in the cosmetics aisle.

stow-away-lipstick-hed-2016

Speaking of disintermediation as a marketing communications challenge (as we were, just a couple of weeks ago in class)….here’s a great example. AdWeek has an article about a new breed of cosmetics companies that market directly consumers. As Julie Fredrickson, the co-founder of the new Stowaway brand explains in the article, the sizes of product currently on the market make them hard to afford and hard to use up before their expiration date.

“Our attitude was we don’t need to leave room for Sephora’s margin; we can just sell it to you directly so that it can be half the size and half the price.”

This entrepreneurial move not only affects traditional retail channels, but spending on advertising as well:  “Rather than spending big dollars on traditional advertising, Fredrickson and Crowley have focused on earned media and building relationships with mom and professional blogs.”

What are the benefits of disintermediation? Does it also present new risks? For whom?

Full article here:

http://www.adweek.com/news/advertising-branding/these-direct-consumer-brands-are-disrupting-beauty-industry-169435

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One thought on “Attention shoppers: disintermediation in the cosmetics aisle.

  1. emilyvwong

    With the rise of the popularity of the internet and e-commerce, disintermediation makes complete sense. The clear benefits are having more control over the supply chain, access to data or information – gathering feedback quickly and obviously reducing costs because you don’t need to consider intermediaries’ margins.

    On the flip side, I was reading this article: http://www.jamieparfitt.com/blog/2014/5/4/disintermediation-reintermediation-and-cybermediation

    The article argues that as a manufacturer who also becomes the distributor, many supply chain-related issues will be encountered that they could be unfamiliar with. These brands are also competing with the intermediaries (who could have been former channel partners) which sabotages relationships. In addition, companies must set up facilities for after sales support and account for costs of shipping smaller quantities directly to consumers. Lastly, consumers may not trust these new, unheard of brands compared to sampling them in stores such as Sephora which they already trust. Overall, I wouldn’t consider these as risks but rather new considerations and costs as marketing costs will increase (unless they can capitalize on social media/word of mouth).

    Reply

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