Salt & Pepper V - The Next Big Industry Shift
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Welcome to Salt & Pepper! Salt & Pepper is basically the PromoKitchen equivalent of debate team. The purpose of this monthly article is to open up discussion and conversation on different challenges facing the Promotional Products Industry. In this edition of Salt & Pepper, Chef Kirby Hasseman and industry veteran Bill Petrie the next industry shift.
Who are your opinions? We welcome your comments!
NOTE: Salt & Pepper is intended to foster intelligent dialogue between professionals. This is not a dagger throwing contest. Be honest and authentic, but please also be kind and keep it classy.
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Salt: Kirby Hasseman
The one constant thing in the universe…is change.
With change happening throughout the business world as fast as it is (and has been for the last 10 years), it’s tough to predict “the next big thing.” The one certainty is change. So as I put on my silly hat and look into the crystal ball, here are the big changes I see in the industry over the next 24 months:
Apparel Moves (More) to one P.O. - I know. I know. This has already begun. My prediction is this continues to increase. More and more apparel suppliers will continue to create in house decoration. Though established (and strong) decorators will remain strong. Many of the lesser decorators will shrink market share, or go away completely. Suppliers that are only wholesalers of blank goods will see a shrink in market share as well.
Manufacturing Moves from China - With the safety, pollution, and quality issues that have been seen in China, more suppliers will move to get manufacturing away from China. This does not necessarily mean these manufacturing jobs will come back to the United States. However, with proper credit to Jonathan Isaacson (from Gemline), these are not necessarily jobs we want.
At SkuCon this year Jonathan asked the crowd, “How many of you have children, grandchildren, nieces, nephews, or even kids that you like?” Nearly everyone in the audience raised their hands. “How many of you want them to work in a sewing factory?” No hands. Wow.
I do, however, think that this shift will create an environment where, with the right product and process, North American made products can become more economically viable.
Two Distinct Ways to Buy: Finally, I think the ways for consumers to buy promotional products will divide more distinctly over the next two years. More and more “traditional” distributorships will feel the need to provide comprehensive marketing solutions. In addition, more great e-commerce companies will enter the market as well. These are two totally different ways of going to market and therefore two distinct lanes for consumers to engage in business with our industry. Over the next two years, the middle of the road will be littered with distributors that simply can’t compete.
Time to pick a lane!
Pepper: Bill Petrie
Our industry has evolved dramatically in the past 20 years. From email replacing fax as the preferred method of communication to the continued consolidation of distributors, change is always on the horizon. The challenge, of course, if to anticipate the next major industry shift. From my perspective, I believe the next jolt to our industry will be when a major (and trusted) online retailer invests the necessary resources to enter and excel in our marketplace.
The old adage states that people by from people they know, like, and trust. In the Internet age, I believe this statement resonates more than ever today - with one addition: people buy from people and companies they know, like, and trust.
In only 20 years, Amazon has evolved from a simple online retailer of books to the biggest online store on Earth. With seemingly infinite product selection and what is generally regarded as the best customer experience anywhere, what happens when Amazon decides to get into the promotional products business?
Laugh if you want, but with $20B in revenue and no true dominant distributor, Amazon (or another trused, forward-thinking online retailer) will enter our marketplace and attempt to disrupt the supply chain. If you think it won't happen, look back 20 years at the office products industry. There were several large suppliers (Daisytek, Azerty, Corporate Express) providing wholesale office products to to smaller "mom and pop" stores in local communities. These stores would in turn resell the products to the end user. Does this model sound familiar?
Fast forward 20 years and there is one true office supply company remaining: Staples. Through acquisition and pricing pressure, they disrupted the marketplace and eliminated the local office store, destroying the supply chain. The office products space has become so commoditized that personal service became unimportant and price became king.
I'm not suggesting that Amazon entering the promotional products marketplace will yield these same results - our business has too much foundation built on customization and relationship. However, it will cause significant marketplace disruption. People already know, like, and trust Amazon and one Amazon figures out how to create a client experience focused on our industry's model, the supply chain will be more than rattled. In addition, it will be a whole new world when Amazon figures out how to deliver promotional products by drone.
YOUR TWO CENTS: What are your thoughts on the next big industry shift? One PO apparel orders? Amazon making a play in our marketplace? Middle of the road distributors being all but phased out? None or all of the above? Join the conversation!