How Close Is The Tipping Point For Our Industry?
Having returned from PPAI’s most recent highly acclaimed Product Responsibility Summit, I am more and more convinced that our industry is inching closer to a tipping point, where the standards required for a successful promotional products business are materially different than those of just a few years ago. I raise this point now, before it becomes universal, because as chair of our 11,000-member association, it is my hope that all PPAI members emerge as winners in this brave new world. However, I fear that unless everyone ramps up their efforts to evolve, that may not be the case.
At the beginning of this year’s Summit—PPAI’s most well-attended educational event ever—I asked the 185 attendees how many had “compliance” in their job title. Except for the CEOs and service providers in the room, the answer was nearly everyone. Wow! What a sea change this is from our first Product Safety Summit five years ago when almost no distributors or suppliers had dedicated compliance staff and the industry was still trying to sort out what product safety meant. Things have changed indeed. In our session on best practices, we heard from large and small distributors alike who vet supplier compliance thoroughly, seek out independent certification of suppliers and actively direct orders to suppliers who have the most comprehensive compliance programs. And since rigorous compliance, factory audits and product testing is very costly, the price of entry for success at the highest level in our industry has gone up dramatically.
Change is not just occurring in compliance. Technology is rewriting the rules for success in our industry just as it is in all others. While overall sales in our industry grew by a scant 1.1 percent in 2014 versus 2013, online sales grew by a massive 33 percent in that same period. Direct online promotional product sales rose to $800 million in 2014—four percent of total industry sales—and will continue to grow as more industry players and, quite possibly, well-funded non-industry players, offer compelling online solutions.
This is consistent with an April 2015 Forrester Research study entitled “Death of a (B2B) Salesman,” which predicts that a million business-to-business salespeople in the United States will lose their jobs by the year 2020 as more and more customers opt for self-service e-commerce websites. In a related article, Forbes magazine noted that nearly 75 percent of B2B buyers now say that buying from a website is more convenient than buying from a sales representative. Further, 93 percent say they prefer buying online rather than from a salesperson when they’ve decided what to buy.
Forrester contends that salespeople who are essentially “order takers” will fare the worst while those engaged in “consultative selling” will do the best. The Forbes article added that in a technology-driven world, companies will need to become “omni-channel,” meaning they need to provide the seamless purchasing channel their customer prefers—whether by an in-person sales call, web browser, tablet or smartphone, telephone, Skype, chat, text or email, social media, or through a brick and mortar showroom.
Harvard Business Review added a hopeful perspective on the Forrester Research in an article titled, “B2B Salespeople Can Survive if They Reimagine Their Roles.” In part, the article said: Today’s field salesperson should be an educator, negotiator, consultant, solution configurator, service provider and relationship manager. They are integral to discovering the “something more” that customers want. As customers will tell you, a salesperson must add value by becoming part of the product or solution.
In a full-day strategic planning session earlier this year, David Nicholson, president of Polyconcept North America (PCNA), led the PPAI board in a deep-dive discussion into these and other disruptive changes that are already happening or potentially threatening our businesses, our industry and our association. The discussion focused on changes resulting from the combination of globalization, technology and demographics, and the distinction between our well-established supplier/distributor industry and the overall promotional products marketplace.
Today’s promotional products buyer has many options outside of our industry. Aside from domestic options through new players such as Amazon, Café Press, Zazzle, VistaPrint and Custom Ink, there are many overseas options. For the past few years, there has been a “Small-Order Zone” at the Hong Kong Gifts and Premium Fair with hundreds of vendors offering small-quantity, quick-ship services. Alibaba and other Asian portals provide U.S. buyers with instant access to thousands of Chinese factories, but without the quality and compliance oversight of a PPAI member.
It isn’t just purchasing options that are evolving—so are our customers. Millennials—the youngest members of our industry who came into adulthood after the year 2000—have different norms, values and buying habits than their baby boomer parents. Technology isn’t something they’re just learning to deal with—it’s part of their DNA. They expect to be able to buy online, do research about you and your products and share their experience with all of their friends. They expect your website to work as well as Amazon with all the same rich features they’re used to, including comparisons, reviews and one-click ordering. They’re socially conscious. They care that you’re buying from factories that pay employees fairly and have safe working conditions. They expect the products you’re selling to be safe.
Webster defines tipping point as “the critical point in a situation, process or system beyond which a significant and often unstoppable effect or change takes place.” No one can deny there are great changes occurring in our industry. Some of us are experiencing them sooner or to a greater degree than others. How close is the tipping point at which the industry as we know it is irreversibly altered? How are you preparing by updating your business practices, by investing in technology and by educating your team, as so many did at the Product Responsibility Summit?
Whatever the changes, PPAI will continue to be your closest ally in providing support, education and affordable tools. I hope you will take advantage of all your Association offers, that you will respond to whatever challenges the future brings and that you will continue to have great success in the promotional products business for many years to come.