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Ethics Behind The Hair Extension Supplychain

November 08, 2021 Carla Seipp
November 08, 2021
Luxy Hair

Rapunzel may have been the OG influencer for extensions, but in some instances, the story of how those lustrous locks reach consumer hands is anything but a fairytale. The pandemic had an immense impact on the industry’s supply chain, creating a large price surge and scarce resources. The country of China provides 70% of worldwide hair supply, so when their borders shut, it caused unease across the globe. Imports were also largely suspended from the second biggest exporter, India, amidst the country’s COVID crisis. In March of this year, a large-scale smuggling attempt was stopped at the Chinese border, totalling $168 million in seized human hair.

But there are further issues to contend with. Counterfeit hair, be it as labelled from a different country of origin, or even trying to masquerade synthetic or animal hair as human hair, as well as underpaid labor sources, have been an ongoing industry issue. But as the demand continued to surge, some skipped necessary ethical protocol in order to keep up.

Currently valued at $7.5 billion, the hair wigs and extensions market is expected to grow by $4.66 billion between this year and 2025. The annual export value from Hong Kong is $30.2 million and $19 million from India. The US makes up 40% of global demand, with over $130 million in imports in 2002.

In the conventional mass market, hair is collected primarily from three sources. Donations come from Indian temples where the process of shaving one’s head is seen as a religious sign of devotion and humility. Another source is hair thinning, predominantly in China where it is especially popular in warmer months. A third source is hair collected from the floors of salons.

Factors such as whether the hair is virgin or color treated, hair density, and thickness, if all the hair cuticles are running in the same direction, and how much effort is required to create hair in extension-worthy condition, all determine price. As a result of the decreased accessibility to hair suppliers, many consumers were seeking out lower-quality, but more affordable, alternatives.

Thankfully, it’s not a case of “all cash and no policies.” Derrick Porter, CEO of Beauty Industry Group, which owns Luxy, an extensions brand offering 100% Remy human hair extensions, has put traceability and accountability at the forefront of all operations. Remy hair is untreated hair originating from a single donor, or simply put, the gold standard of hair extensions. The company spent 11 months auditing 32 factories before deciding on their supplier in Qingdao, China.

"We have found that hair collectors and factories have desired to rise up and improve not only transparency, but also traceability."
By Derrick Porter, CEO, Beauty Industry Group

Beauty Industry Group conducts independent social compliance audits, lot traceability, and human rights and ethical sourcing training for 100% of its suppliers, additionally using region tracing and collector commitment forms to ensure sustainable practices. The company requires that manufacturers comply with the United Nations Global Compact, ensuring not only fair prices but also sourcing hair from socially responsible suppliers. “Trusting yet verifying frequently, and ensuring that our code of conduct and ethical sourcing initiatives are met, and then trying to hold ourselves to a higher standard than what we've seen anywhere else in the industry and requiring our partners to do the same, has led to some really good positive benefits,” Porter comments.

This approach requires constant diligence and effort. Each quarter, a vendor scorecard ranks on delivery and receipt times, quality, complaints, and challenges, and internal as well as external audits, helping to illuminate room for improvement. On the subject of which, Porter and his team are looking to implement more blockchain technology into their supply chain, although he is quick to admit that it has been challenging. “For more than 100 years, hair has been collected and used for a number of options, so because it is such an old business, it’s very relationship driven. But we have found that hair collectors and factories have desired to rise up and improve not only transparency, but also traceability. The onus comes on the brands to say here’s the standard, here’s how to get there,” he states. An association of the top 10 industry leaders to create a more unified ethical standard across all hair extensions, with resulting certification, is another future ambition for Beauty Industry Group.

“It's not that it's taking so long to actually address it [within the industry], it's that it's taking so long to start talking about it publicly, is really the differentiator in my mind,” Porter comments, although he explains that part of this may also be down to the newness of the hair extension category when compared to other sub-sectors like perms and hair color. Despite its later startm the category has been booming.

“When I first began 15 years ago, there was no hair extension company that was doing more than $20 million a year. Today, the total addressable market has grown to $7 or $8 billion, so as that has grown it has brought the opportunity to begin addressing it,” Porter says. “As these entrepreneurs continue to grow and elevate, you’ll see more of that conversation taking place also.” Customers are demanding more ethical sources, with Google searches for ethical hair reaching a five-year high in 2020. Companies such as Coronet Blockchain, which tracks hair from source to consumer, are looking to provide technological solutions. Rebundle, a recipient of this year’s Glossier’s grant program, is an extensions brand creating hair from biodegradable plant matter in order to reduce the 30 million pounds of synthetic hair that ends up in landfills every year.

For Beauty Industry Group, hair is tracked from collection point all the way through to installation, with the price also being monitored to ensure fair prices are paid. The unexpected impact of the pandemic meant that the corporation had to change their strategy as well. “We've increased our stock levels. We've spent a lot more time focused on our supply chain. We are just about to open our own physical sourcing office with full-time employees in mainland China, as well, because we've been unable to be in those borders now for almost 18 months,” Porter explains. The cost of hair and the struggle to maintain quality standards are particularly challenging. Their solution has been to “pay a pretty high surcharge [10 to 20% above normal price] to vendors so that they don't have to go out and figure out ways to buy a product at a lower price, and therefore incentivize any behaviors that we wouldn't want.”

Porter sees a potential to rebrand the industry as a whole, replacing the term hair extensions with hair solutions. “67% of our customers, for example, buy a hair extension to solve a problem. Less than a third actually are buying it to simply go from short to long,” he explains. The normalization of hair extensions and wigs via social media has been another driving force in consumption, as well as the growth of a younger consumer demographic, Porter adds. “A rising tide will lift all ships, and my biggest hope is that many of our competitors can adopt the very processes and things that we’ve been acting on, and in so doing, the entire industry will continue to rise,” he states.

As the demand for wigs and extensions shows no signs of waning, especially amidst the rise in hair loss and thinning, the imperative for improved supply chains and a cross-industry ethical standard is more important than ever. With the correct technological advancements, and joint effort of different brands to combat counterfeits, exploitation, and environmental impact, all the tools for improvement are there—they just need to be harnessed.

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