Of course, it was Sting. In 1994, a used copy of The Police front man’s album, Ten Summoner’s Tales, featuring the hit single If I Ever Lose My Faith in You, became the first purchase fully transacted—from order to payment to shipping, through a website called NetMarket—on the internet.
Or maybe that initial internet sale was for a large pie with extra pepperoni. According to Pizza Hut, the red-roofed chain restaurant started selling pizzas over the internet that same year. And another company, launched in 1994, can also make a credible claim to the first online sale: a small, garage-based bookseller called Amazon.
Muddy as the early days of ecommerce may be now, the past 25 years have made clear that shopping is one of the primary uses of the internet. Cars, groceries, furniture, medication, plutonium, zombie survival guides, the latest Sting album (2019’s My Songs) and anything else you can imagine can be purchased online from your phone or laptop. According to the U.S. Commerce Department, consumers in the United States spent $513.61 billion online in 2018, a 14.2-percent increase over the previous year, and those numbers show no sign of decline.
As the internet has grown from text-based BBS messages to instantaneous live video and around-the-clock updates, the promotional products industry has evolved to embrace the changing technology. As customers have flocked to the internet, distributors have moved to meet them, combining traditional sales and marketing knowledge with cutting-edge ecommerce platforms to create a new model for the market: the online distributor.
For those on the outside looking in, online distributors can seem simultaneously familiar and foreign. The products, the suppliers and the colleagues you see each year at The PPAI Expo are the same, but the business model can seem dramatically different from the face-to-face, road-warrior style that has traditionally defined the promotional marketplace. As distributors continue to adapt to an increasingly online world, they must learn what makes an online business tick—and why their current sales skills are more valuable than ever.
RE: Business As Usual
When discussing the online side of the industry, it’s important to first understand what the term means—and what it doesn’t. For any online distributor in the promotional products world, the operative word is “distributor.”
“The term ‘online distributorship’ can mean different things,” says Steve Paradiso, president of ePromos Promotional Products in St. Cloud, Minnesota. “Some companies create storefronts and focus primarily on online optimization and conversion. Others may focus not only on the optimization piece, but also on the user experience, perception of the brand and the relationship that forms after the initial contact. This is historically the strategy of a traditional distributorship; providing an experience to the buyer in which they can touch, feel and see several ideas at once in a setting that’s most comfortable to them, whether it be at their office or in a storefront setting at the distributor’s [facility]. Many of the larger online distributors in our industry today have mastered both.”
The business model of an online distributor is the same as any other distributor. They work with the same suppliers and decorators, provide the same products, are subject to the same changes in the marketplace and face the same obstacles such as artwork quality, shipping delays and short turnaround times. And contrary to the rumors of private equity-backed invaders coming to overwhelm the marketplace, most online distributors are also overwhelmingly created and staffed by people with years of experience in the promotional world, and who are invested in the industry—they’re the same people behind every other distributorship out there.
“I don’t think there is anything that separates online distributors from traditional distributors,” says Bret Bonnet, president of Quality Logo Products in Aurora, Illinois. “There is nothing an online distributor can’t do that a traditional distributor can, and vice versa.”
Where online distributors differ from the competition is not in what they do, but how. “The primary difference is the method of acquisition of new customers,” explains Dale Denham, MAS+, senior vice president and chief information officer of Lewiston, Maine-based Geiger, which owns the online distributor Crestline. “Online distributors acquire customers using SEO and paid advertising rather than the more traditional relationship-building method used by most distributors. It is critical for traditional distributors to recognize that the most significant difference is the method of acquisition.”
That change in customer acquisition—from face-to-face interactions and word of mouth to a search-centric model—brings with it its own set of benefits. “An online distributorship has a lot of advantages including allowing customers to purchase anytime they want without having to talk to anyone, and leverages tech for speed and accuracy,” says Jason Loui, marketing director for Anypromo in Ontario, California. “Ecommerce is very self-service-oriented, which the modern buyer enjoys and prefers.”
The ability to take an order 24/7, 365 days a year is a major strength behind the ecommerce business model, and one that is in sync with retail buying trends. And as Millennials and younger people move away from personal interactions to complete business, developing a robust online presence is going to become crucial for all industry salespeople, regardless of whether they identify themselves as an “online distributor” or not.
This gradual movement online is reflected by the industry’s largest and most established distributors. Most companies with tens or hundreds of millions in annual sales began with cold calls, feet-on-the-street sales and personal relationships, and they continue to use those tactics while also incorporating the newer technologies customers have grown to expect.
“Have you seen the top distributor list lately?” Bonnet asks. “Putting the more agency-type businesses aside, most of the pure distributor players that appear on that list are promotional products companies with a strong online presence.”
The 404s Of Online Distributors
Like malware, chain letters and Rick Astley’s Never Gonna Give You Up, not everything is great on the internet. Ecommerce distributors face the usual hurdles that come with the promotional products industry, while also having a host of new challenges that are native to a digital environment.
“To take a line out of Google’s anti-trust playbook, ‘the competition is just one click away,’” Bonnet says. Online, you don’t need to drive across town or make a half dozen calls to find what you want if your first destination comes up short—you just go to Google and click on the next link in line. Surviving as a digital storefront requires constantly staying one step ahead, not only of your competitors, but of the algorithms employed by search engines and social media.
“You live and die by Google, and to some extent, Facebook. These are the two great gatekeepers of the internet, and your business can depend on the traffic these sources provide. In short, for some, your business is one algorithm change from becoming irrelevant,” he adds.
Technical issues, from SEO to web design, are also much more pronounced when a company’s business is primarily online. It’s hard to believe that the iPhone only launched 12 years ago, and in that time, it ushered in a whole new world of potential sales—and potential problems—in the shape of the mobile web. “Mobile is a real challenge in terms of understanding the audience and having the interface, user experience and functionality mimic what users are accustomed to when shopping retail,” Paradiso says.
From desktop to cellphone, the increased access provided by the internet can result in a corresponding decrease in customer loyalty. So much of traditional sales is based on relationships—relationships with a store, a brand, a salesperson. Once rapport is built, it’s easier to continue to shop with the same vendor, because so many questions have already been answered: you know who you’re dealing with, you know what you’re getting, and you know you don’t have to put in the work to create a new relationship.
Online shopping blows up that paradigm. “The biggest challenge is creating a meaningful relationship with customers,” Denham says. “Creating those relationships online is very different than having the chance to visit face to face and create a personal relationship. The retention rate of online distributors is lower than the retention rate of traditional distributors. Online buyers tend to price shop more and do not value the salesperson as much.”
In many ways, the online end buyer is an entirely different animal from the traditional client. They buy with a short-term mindset, they don’t expect discounts and they aren’t as receptive to consultative selling. “Since we are an ecommerce site and customers have a good idea of what they already want, it’s hard to suggest things,” Loui says.
In the online world, the biggest advantage is also the biggest issue—the computer or phone screen between you and your customer. “Buyers buy from people they like,” Denham says. “A great salesperson has a huge advantage over an online distributor in keeping a customer as well as in the chance to create an initial connection.”
Put another way, the grass is always greener. “I would say both models have their pros and cons,” Loui adds. “Neither is unfair, each of us is just doing what we are good at.”
What’s Next For The Web
The internet was built on curiosity and innovation. (And Sting CDs.) While predicting the next major trend can be a game of roulette, it is safe to assume that these core founding principles are going to continue to dictate the direction of technology, culture and commerce.
“Businesses are compelled to constantly innovate because of intense competition, increasing customer demands and the ever-changing supply chain economics of this industry,” Bonnet says. “All of which have been propelled exponentially by technology and the use of data science to improve decision making.”
Take a look at the trends happening in retail ecommerce, and you can see what will be important to your business in the coming years. “The introduction and use of curbside pickup, same-day delivery, lenient return policies, text notifications, subscriptions, chatbots, etc., are all changing buyer behavior and expectations,” Loui says.
Some suppliers are already starting to develop strategies to manage these expectations. One of the most successful innovations in the past several years has been the introduction of on-demand customer service. “Live chat is one of the biggest areas where online distributors hold a significant competitive advantage over the traditional distributor,” Denham says. “Customers want instant responses regardless of where they purchase, and every distributor firm should be giving customers instant access to the information they seek.”
Ecommerce is still in its infancy and has a lot of room to grow and mature. That means opportunity to find new solutions and strategies to address today’s biggest problems—and that starts with deciding what role you want to play in the future.
“It all comes back to deciding what type of business you want to be,” Paradiso says. “If you want to compete on price, you’ll need economies of scale and the ability to invest in technology. If you want to build a business based on relationships, you’ll need to invest in service and a platform that supports your efforts across all facets of the business, both internally and externally.”
“The companies at the top of our industry, supplier and distributor alike, have done some amazing things in the last five years and, yet, there is still so much room to grow for us all,” Bonnet adds. “The good news is, no one has cracked the nut that is perfection. There is still room and time to innovate, but you have to want to. There are no more quick wins. Those died a long time ago. Stay curious and solve complicated problems, and the rest will take care of itself.”
Sound like a big task? It is. But everyone starts somewhere, and the reality is that if you’re a distributor, you’re already online. Email, Facebook, LinkedIn, message boards—if you use any of these, you are part of the web community. There has never been a better time to make the leap from a distributor who is online to an online distributor, and salespeople in the industry are uniquely positioned to make the most of the market.
“We believe that a talented local salesperson, combined with the power of a full ecommerce experience, has the best chance of building long-term profitable relationships,” Denham says.
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For distributors, both online and off, no conversation about the changing market can happen without discussing Amazon. The omnipresent online retailer has disrupted industries as varied as book stores, music and film, and groceries, and with its enormous installed user base—95 million people in the U.S. have an Amazon Prime account, according to Statista—people in the promotional product world have been waiting for the day when it gets into the custom decorating department.
But is that really a possibility? It’s true that online retail has had a direct impact on consumer purchasing habits and their expectations, but that isn’t the same thing as overtaking the market. So, the question remains: Should online distributors be concerned about competing with companies like Amazon and Alibaba?
“In the short term, this question is nearly irrelevant,” says Dale Denham, MAS+, senior vice president and chief information officer for Geiger in Lewiston, Maine. “Very few customers of online and offline distributors are sourcing promotional products from either firm today.”
Several distributors interviewed for this article mentioned that Amazon has absolutely changed—some would say defined—online shopping and customer behaviors. Things like next-day shipping, accommodating customer service, online inventories and a buying process free of human interaction are now expected by clients, and Amazon is to thank for those demands. “Living in an Amazon world with same-day delivery, it’s hard to manage customers’ expectations sometimes,” says Jason Loui, marketing director for Ontario, California-based Anypromo. Still, most people quoted here stopped short of accusing the company of crossing into the promotional world.
Even though Amazon doesn’t seem likely to start quoting EQPs to buyers, there was one exception where distributors do see some overlap: the single-purchase buyer. When a (usually small) company needs to make a one-time purchase, they may be more likely to look at Amazon—especially if they have no long-term marketing plans or are only concerned with cost.
“At the end of the day, there will always be customers who will shop on price, and others who will value a relationship and what that value provides,” explains Steve Paradiso, president of ePromos Promotional Products in St. Cloud, Minnesota. “The small, transactional, one-time-purchase business will be the only side affected, and we don’t foresee the enterprise businesses moving to purchase in that space.”
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Kyle A. Richardson is a writer and editor living in Philadelphia and the former editor-in-chief of Promo Marketing magazine. Reach him at www.karichardson.com.
