A Distributor Asks:
An industry supplier is offering an online fulfillment program using gift cards. It lets end buyers select cards in varying amounts and then give them to clients. Recipients of the cards go online and choose a gift equal to the card’s dollar amount. While on the site, recipients can choose to purchase additional items and pay with their credit cards. The supplier told me that even though the end buyer is my client, I won’t receive a commission on items purchased by card recipients with their own credit cards. Is this an acceptable industry practice?
Lee McCubbin, CRS
McCubbin Trophy & Engraving
This is not an acceptable practice in my book. I don’t care about the commission as much as the fact that my client is now learning they can purchase direct from my supplier. Even if it takes the “credit card” to access that supplier’s website now, it does not mean it will in the future. I would think it far more appropriate for the supplier to provide an opportunity for the client to create a “wish list” of items or promotions for the client (or supplier) to show to the distributor for purchase through that distributor. The supplier still sells the product without taking the commission and relationship away from the distributor that worked to earn it.
Joseph G. Scott, MAS
Scott & Associates, Inc.
UPIC: SCOTTASCThe industry supplier should pay commission to the distributor for the additional purchase. I assume that the margin for the supplier is the same for items purchased via gift cards as they are purchased with a credit card, less processing fees. The supplier is also getting “breakage” on the amount of the gift card not applied to purchases and for unused gift cards.
Bruce Aldinger, MAS
Harmony Promotional Solutions
I am aware of at least one supplier that offers gift selection programs via gift cards to both end users and through our industry distribution channels. It’s not the typical way that most of our industry suppliers do business, but those who offer gift-card programs are usually up front about their programs being available to end users. If the distributor initiated the sale with the supplier, the distributor should be fairly compensated for the transaction. If the end user, who happened to be a client of the distributor, dealt directly with the supplier without the distributor’s involvement, I don’t think that the distributor should benefit from the sales transaction.
Lauri Laufman, MAS
Senior Vice President
This is interesting and has no clear-cut answers, but I will put my best foot forward using two scenarios.
Scenario 1: Jim is given an XYZ card for $50, but once at the store or website, he spends an additional $300 because he sees additional items he personally wants. Non-program related items under this scenario don’t warrant additional revenue to the distributor, though it sure would be nice.
Scenario 2: ABC offers gift cards for distributors to provide to their clients in addition to their own additional distribution channels (special markets, stores, etc.). If the provider’s website allows your buyer and recipients to purchase gift cards online or via contact information on the website without further commission back to the distributor, he or she may want to shop for a different supplier partner or client solution altogether.
Incentive, retail, special market and some traditional supplier providers offer distributors various distribution and collaboration opportunities, and this inquiry is a perfect reminder to ask potential partners about their business practices and weigh the options first.
Now I ask you: If a buyer comes to you and says they give $50 gift cards to employees as annual safety incentives, but you found out at The PPAI Expo that you can provide these gift cards so they no longer go direct. Do you try to work things out so you can offer them? I thought so.
A Distributor Asks:
I placed a small order on an industry supplier’s website. My credit card was charged, and I received my order— no problem. Then I received a separate e-mail from the supplier asking me to pay shipping charges. I thought shipping was included in my initial order. There was no mention of a separate shipping charge during the transaction. Is it normal to pay shipping separate from the invoice for the products, or should I be suspicious?
What’s your answer? E-mail answers along with your name, title and company name to Question@ppai.org by March 30 for possible inclusion in an upcoming issue of PPB magazine.