Nailco Heads North of the Border

This month, $60 million business-to-business cataloger/retailer The Nailco Group will do its first mass catalog mailing in Canada. The salon supplies marketer is polybagging 200,000 copies of its U.S. catalog with an outsert that explains some of the differences and requirements for Canadian customers.

Using a list compiled by New York-based Hugo Dunhill, the mailing will reach every salon in the English-speaking provinces of Canada, says Nailco president Larry Gaynor. Nailco chose not to mail to Quebec, because the province requires that all packaging be in French as well as in English.

“Our goal is $1.5 million for our first year and $5 million in sales in a couple of years,” Gaynor says. The Farmington Hills, MI-based company presently does $750,000 in annual sales in Canada through distributors.

Gaynor claims that Nailco has no catalog competition in Canada. “There are some distributors,” he says, “but most salon owners have to get their supplies in stores.” The products they seek, he says, are mostly comparable to those used by U.S. salons.

Shopping from the U.S. marketer will be no bargain for Canadian customers. For one, Canadian buyers have to pay in U.S. dollars at an unfavorable exchange rate of $1 to about $0.65 Canadian at press time.

Nailco’s Canadian customers, who must spend a minimum of $50 an order with Nailco, also have to pay a goods and services tax on all purchases. And Nailco won’t do backorders in Canada, because the cost of shipping smaller orders to Canada is considerably more than in the U.S. “We’re forcing them to reorder if items are out of stock,” Gaynor says.

Nailco also instructs Canadian customers to call its customer service line if they want to return items. “Then we decide if they should bring the items to our Canadian courier, return the item themselves, or just dispose of it,” Gaynor says.

Nailco has an arrangement with Purolator Courier to ship all orders from its Taylor, MI, warehouse to Canadian customers. Purolator, owned by Canadian postal service Canada Post, will take the packages through Canadian customs and into its own Toronto-based distribution center before finally delivering them. For standard shipping to Canada, Nailco will charge customers up to $4 more than it charges U.S. customers. When requested, Nailco can fulfill next-day air requests in Canada for an upcharge.

Some of the electric products Nailco sells, such as hairdryers, need to meet different safety requirements in Canada than in the States. “So we’ll have to do some double inventory on those items” and stock some electrical items in Canada that have already passed Canadian regulations, Gaynor says.

Extra credit

Back in the U.S., this month Nailco is introducing a debit card to enable customers to “order” credit to apply toward their catalog orders.

“Salon owners often use their own personal credit cards to make purchases,” Gaynor says. “But we’d rather they use our debit card because by holding onto their money in advance, it’s free money for us.”

Gaynor says that coffee retailer/cataloger Starbucks has been using a similar card for the past eight months and has added cash flow to reduce its debt load. The card required a $25,000 investment for Nailco for a custom software program.

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