Should You Join Them?
Needing to have 150,000 T-shirts screen-printed last summer, buyers for a large insurance company set out to identify the company they were going to give the order to. They weren't about to trust the massive order to just anyone. They wanted to see where the order would be fulfilled, how it would be handled and the care with which the distributor would take.
In short, they wanted to trust, without a doubt, the company that would handle this important order.
After speaking with a few different potential vendors, this insurance company chose to go with Overture Premiums & Promotions (asi/288473). Why? Simply put, Overture has control over apparel orders because of its in-house decorating operation.
The Vernon Hills, IL-based distributorship earned the coveted job because it is capable of quickly producing top-quality embellishment on high-volume orders of apparel. "They liked us because of the scale of our operation and because of the quality control we offer," says Tej Shah, Overture's vice president of e-commerce and marketing. "The initial order of 150,000 sold so well they ordered another 50,000 shirts."
As Shah indicates, increased control over the quality of apparel decoration is just one of the significant advantages experienced by distributors who screen print, embroider, or offer another decoration method (like direct-to-garment digital printing) in-house. While most distributors don't embellish because they're loath to take on the additional headaches and costs, ad specialty firms that overcome the challenges are likely to have a leg up on the competition.
"We can add a huge amount of value for our customers that our competitors can't," says Jeff Becker, owner of Kotis Designs (asi/244898), a Seattle-based distributorship that embroiders and screen prints.
To help you understand if in-house apparel decoration could work for you, Counselor offers this exclusive look at the benefits and challenges of becoming a decorating distributorship.
Benefits of In-House Decoration
If you want something done right, do it yourself, right? Kim Boone is an example of the adage in action. Frustrated by sluggish turnaround times from decorators, Boone's All My Best Inc. (asi/117012) began embroidering, screen printing and heat-pressing about two years ago, in part to gain more control over production schedules and better meet rush order demands. A recent order illustrates how definitively the Rocklin, CA-based distributorship has gained just that.
One Wednesday, a client popped in around 5 p.m. to have 300 T-shirts screen printed. The catch? He needed them finished before 2 p.m. the next day to take to a trade show. By shifting the order of decorating jobs on tap, Boone's shop met the deadline with time to spare.
"We were done by noon the next day," says Boone, noting that the delivery reinforced the client's loyalty.
That ability to meet tight deadlines is one benefit, which is also enhanced by the increased control and attention to detail that in-house decoration offers to distributors. Overture targets Fortune 500 companies and other large organizations. For such high-end clients, every piece of apparel has to be decorated to perfection. "The overriding reason for decorating in-house is the quality assurance factor," says Shah. "We have the ability to walk over into our warehouse and see exactly what's going on and immediately take care of any issues."
Part of that control centers on heading off decorating problems before they become expensive mistakes. Recently, a valuable, longtime client ordered 30,000 T-shirts. When the shirts came in and Overture created pre-production samples, the design's colors didn't reproduce as anticipated.
"Because we have everything in-house, we caught the problem before it went to press," says Shah.
After switching inks and making other client-approved modifications, Overture quickly completed the high-volume run. "When you screen print or embroider yourself, you can always guarantee the quality will be at a certain level," says Shah.
By decorating in-house, distributors can also offer lower prices. "Because we're making money on the product and the embroidery, we can offer a lower price," says Robert Albert, owner of Impressive Imprints (asi/230512). Relatedly, decorating distributors save clients the expense of shipping garments to and from a contract decorator – a cost elimination that could become even more attractive as freight costs rise.
Albert, though, says the biggest boon of decorating in-house is that you become an expert in embellishment, allowing you to develop creative solutions for customers that competitors who lack such expertise cannot. "We're always mixing different mediums, coming up with unique designs and looks for clients," he says.
And the clients are impressed. For example, creative experimentation with embroidery helped Impressive Imprints win an account worth hundreds of thousands of dollars. The North Tonawanda, NY-based firm had devised a unique method for embroidering on stretchy material like spandex, a development that enabled it to stitch on a product for a medical company that couldn't find another vendor that could perform the work properly.
"Because of research we'd done on hooping," Albert says, "we were able to embroider the product just right."
This ability to impress clients and gain their loyalty is helping distributors that decorate apparel in-house increase their sales and improve their businesses. "There are people who come to us now because our decorating ability gives us even more credibility," says Boone, noting sales have doubled over the last year, a rise driven, in part, by in-house decorating. Similarly, embroidering and screen printing has, along with other business improvements, helped spur several years of 35% to 40% growth at Kotis.
Impressive Imprints provides a great example of how a distributorship can tap into new revenue sources with embellishing. Like most distributors who decorate, Impressive Imprints began embroidering to meet its own stitching needs. But soon, other distributors began coming to Albert's company for stitching services. Seeing opportunity, Albert increased the setup from one four-head embroidery machine to multiple machines comprising more than 20 heads. He then launched Thread Branders, a contract decorating business that serves Impressive Imprints and a host of other distributors.
The business, which has expanded to include screen-printing and laser-cutting apparel decoration, is a significant source of revenue. And to avoid potential conflicts, a confidentiality agreement ensures Impressive Imprints' reps will not have access to or pursue the other distributors' clients. Since business is booming at Thread Branders, clients clearly trust Albert.
"We've invested just shy of $1 million in a new facility to meet demand," he says.
Despite the upsides, decorating in-house presents constant daily challenges and considerable start-up and recurring costs. When, for example, Howard Potter decided to start screen printing at his Yorkville, NY-based A&P Master Images, he paid upwards of $25,000 for equipment and supplies. Of course, the larger your operation, the more you need to invest. Wanting to handle all decoration itself, Overture has spent hundreds of thousands of dollars on more than 150 embroidery heads and a number of screen-printing presses that enable the distributorship to print up to 800 shirts per hour and stitch 1,000 standard-size left chest logos per day.
"You can start smaller, but we had a big client base and we wanted to take care of their needs ourselves," says Shah.
Even operating on a smaller scale comes with significant expense. All My Best runs three screen-printing presses, a heat press and six embroidery heads, but in order to stay profitable, make payments on equipment and keep employee paychecks from bouncing, the distributorship needs to rake in an average monthly minimum of $40,000.
If you want to decorate in-house, chances are you, like All My Best, will be paying for your equipment over time, rather than in a lump sum. But beyond that recurring expense, you must have cash at the ready for machine maintenance. While some fixes can be handled by staff, others may require a professional technician and expensive parts. "There are costs to upgrade machinery and keep it running well to ensure you're providing the best service," Shah says.
Naturally, distributors also need a large enough facility to store all that equipment. Finding a suitable place to rent can prove pricey, and even if you own a space, upgrades may be required to make it fully functional. Kotis, for example, has spent tens of thousands in building and electricity upgrades to accommodate its embellishment operation.
Another expense – and challenge – to consider is the overhead involved with additional employees. Having top-shelf decorating equipment will be for naught without reliable employees to run the machines. All My Best, for example, brought on seven new staffers, while Kotis put another 12 individuals on the payroll. Additions included management-level hires. "You need to hire someone to run the shop," says Becker.
To manage a shop effectively, distributors must develop an in-depth understanding of decorating processes. Becker worked hard at the task through personal research and discussions with experts. "I'd say I knew more about screen printing than many other distributors, but even then there was a gargantuan amount of learning still to do," he says.
The acquisition of expertise involves learning how to decorate a wide variety of apparel. "There are so many different types of garments out there, and what works for one might not for another," says Albert. "There's a lot of testing you need to go through to get it right."
Beyond understanding the nuts and bolts of decorating, distributors must learn how to charge for their embellishment services. Not surprisingly, there a lot of variables to consider, from stitch count in an embroidery design and the palette of colors in a screen print to what you pay employees. In the end, pricing comes down to tabulating all the costs that go into producing orders and then setting a fee that allows you to make a profit without pricing yourself out of competition. To help achieve that balance, Boone says it's essential to have, as she does, an experienced operations manager. "It can be a challenge to pinpoint the right pricing," she says, "and you need that expertise."
Distributors Counselor spoke to, though, pinpoint the continuous overhead and maintenance involved with managing an in-house decoration operation as the single biggest challenge. Plentifully supplied with a constant flow of orders, the apparel-decorating operation at Overture is rarely, if ever, idle. Whether machines are humming or not, Overture is paying for the equipment and the employees who run them. As such, if there's no stitching or screen printing going on, decorators say they're losing money.
"One of the biggest things for companies is keeping machines running long enough to get their money's worth," says Shah.
Given the challenges embellishing presents, it's understandable that many distributors prefer to stick to their expertise – selling. But for those who've weighed the pros and cons and are willing to take the leap, much can be gained. "If you sell a lot of lower-end commodity items, then it doesn't make a lot of sense to bring things in-house," Shah says. "But if your clients do a lot of apparel and you're looking to expand there, then decorating is a real value-added benefit that can give you an edge."
– E-mail: email@example.com; Twitter: @ChrisR_ASI