Counselor Commentary: The Alibaba Opportunity

What The IPO Means For Suppliers And Distributors

Dave VagnoniNo, Alibaba is not Godzilla, although to some in the ad specialty industry the company seems as menacing as the 160-foot Asian invader. The Chinese firm’s 2013 financials are staggering: a 44% profit margin, 72% sales growth and 230 million active buyers. And yes, unless you’ve been in a cave or just don’t care, you know that sells promotional products – not just in China, but everywhere.

Now that Alibaba is set on an IPO in the U.S., there’s no question the company’s influence in North America will expand. But will this expansion disrupt the marketplace, raining down monster-like fire on your business, or could it actually have a positive impact on the industry? Smart companies and leaders already understand there’s a choice in this.

“In the promotional products industry, we’ve become accomplished at the ‘people’ and ‘products’ sides of the business,” says Brad White, vice president of sales development at Boundless Network (asi/143717). “But it could be argued that we’ve done very little to improve the ‘process’ part of the equation.”

White believes – and he’s not alone – that ad specialty firms have good people that generate creative ideas and provide the right branded products. But in a world where Amazon delivers merchandise in less than 24 hours, promotional products companies seem slow-footed. The reality is you can’t expect your customers to provide you great lead time on orders and then wait weeks for products to arrive. So listen up suppliers: You don’t need to buy a fleet of drones, but it would be helpful if you could speed things up. And to you distributors: Enough with the order errors that slow the process down.

As Alibaba’s shadow creeps closer, here’s what you should be asking yourself: What is my company doing to add value to an order? What am I doing to make the buying process easier for my customer? “Buyers want simplicity,” says Terry McGuire, senior vice president of marketing at Halo Branded Solutions (asi/356000). “They will choose to buy from a trusted account executive that will recommend the best few products for their particular need, which is an intuitive service that even the best websites cannot replicate.”

So are you being intuitive or are you just slapping virtual logos onto something you first saw in a catalog? Are your products innovative or just idea knockoffs from a fancy booth at a Hong Kong tradeshow? Are you an advertising consultant or just a middle man with a catchy company name? The ad specialty industry is growing, but it can do better. “What does a good process bring to the client?” White asks. “It’s about convenience, efficiency, visibility, speed, social connectivity, time savings, and cost savings. If you continue to try to compete at a product level, then you are going to lose quickly.”

For goodness sakes, don’t be the bit actor that Godzilla steps on. Consider yourself warned.