Perspectives - Transformational Change: Is Our Industry At The Tipping Point?
No one can deny that the promotional products industry is undergoing change. Some people wish to turn a blind eye or build walls to protect what once was. Secret codes are not so secret anymore. No new letter coding system will hide the results of a Google search. Suppliers are no longer hidden behind a PPAI number. We are in a global economy where distributors buy direct from China, suppliers sell direct to end users and overseas manufacturers even sell direct to end users. Our industry is not just undergoing change, it is undergoing transformational change.
Has the current distribution model of supplier to distributor to end user completely collapsed? I talk to industry professionals all the time who wonder if and when this will happen. Will suppliers decide to take the risk and openly sell direct to end users with hopes to maintain most of their distributor business? Could a large conglomerate that owns both a supplier and distributor just use their own entities and create an exclusive relationship within their companies? There are many scenarios, and some might be happening right now without the majority of the industry even cognizant.
The key to understanding the change in buying models is to understand the buyer and the channels within the industry. Millennials, who are projected to make up 50 percent of the workforce by 2020, buy differently than previous generations. They are purchasing personal items online, and companies like Amazon deliver product in a few days or even in a few hours to satisfy that approach. Does Amazon Prime Now ring a bell? A year ago some might have said it was impossible to deliver a product in a few hours. Now, in some markets, you can order a humidifier, for example, at 8 pm, with delivery same day before 10 pm.
In today’s fast-paced commercial environment, those in the industry should consider a few questions to validate (or check) the continued effectiveness of the current model. Is buying a promotional product as easy as a few clicks? Does the same go for the right promotional product or strategy? Is being an expert promotional products consultant and creating trust enough to keep customers?
From the distributor side of the ball, value-added service is critical to maintaining a strong position in the game and success in the longer horizon. It’s critical to ask yourself and your company whether you are truly adding value. Those who have value propositions that put the service of customers at the core are better positioned to withstand the direct model and continue to thrive in today’s (and tomorrow’s) market.
I submit that I don’t have the answer to solve all of our industry challenges, and I have much on the line as owner of a top 100 distributor. I keep my mind open and my eye on the ball. I also push my company to add value and build trust within our client base. While building trust is not only a major factor that helps us grow business, it is crucial to stay in business.
In May, your PPAI Board of Directors, PPAI staff directors and executive team along with a professional strategic planning consultant who focuses on transformational change, will meet in Washington D.C. to work on a new strategic plan for PPAI. The industry has many new threats that weren’t prevalent five or 10 years ago. Government regulations, product safety, social responsibility, technological advances, changes in buyer procurement methods and globalization of purchasing and distribution all play a significant role and influence change in our industry. These and other change-drivers will be considered, and the goal of this significant event is to develop a framework for a new strategic plan. This plan will outline the major change-drivers affecting our industry and the role of PPAI in that transformation. This plan and critical thinking should help us understand where the industry may be in three years as well as the make-up and functions of our Association.
PPAI is working on your behalf to legislate, advocate and educate key stakeholders. This is a critical time for our industry, and your Association has a focused and driven staff and board to take on this challenge.
Tom Goos, MAS, is president of Image Source, Inc. and PPAI board chair. Reach him at firstname.lastname@example.org.