SOI 2018: Diversification in the Promo Industry

More distributors are benefitting from thinking beyond promo products.

Data shows that an increasing number of distributors are expanding their sales focus beyond traditional logoed items, and their efforts are paying off. Last year, distributors generated an average of 64% of sales from logoed items, but also supplemented their income by providing graphic design services, company stores and warehousing and fulfillment, among other offerings.

State of the Industry 2018 Index Page

“Customers want to work with one shop to handle their marketing and branding efforts,” says Identity Marketing Group (asi/229993) co-owner Mark McCormack. “Having the biggest set of tools to go to market with is a great advantage to our business.”

Brandinc’s (asi/145212) business has expanded and evolved because clients demanded it, according to the firm’s president and COO Tad Webster. “It’s become increasingly important to provide a one-stop solution,” he says. “We’ve added staff to our design team to develop art for clients, to create custom proposals and respond to RFPs. These assets are really important to our business.”

The company’s online stores and fulfillment services are “continually growing,” and Brandinc can now offer on-demand print production, deliverable within three to five days, eliminating the need for inventory, says Webster.

Retail packaging is City Paper Co.’s (asi/162267) core business, representing 60% of sales. However, in the last five years the company has put a heavy emphasis on areas like promotional products, e-commerce and printing – all expanding segments.

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“When we looked at our existing packaging client base, we saw an opportunity for cross-selling,” says Stephanie Friedman, the firm’s vice president of sales and marketing. “We leveraged our opportunities and now we work with clients on both packaging and promo, which has changed the persona of the company.”

City Paper now features what it calls its “secret weapon” – an in-house art department called City Paper Studios. “We offer and incorporate mixed media into our packaging, and provide copywriting and digital graphic design, among a host of other creative design services,” Friedman says. “It’s a great asset that helps us win business.”

At Identity Marketing, “from early on, we took the model that the best creative and best overall service provider will usually win the business,” says McCormack. The Omaha-based distributor has added a number of services over the years, and “has a lot of innovations coming in the technology and web services side of the business,” McCormack says. “So far, they’ve been well received and are generating a significant source of income.”

“Mixed media is a great asset that helps us win business.” Stephanie Friedman, City Paper CO.

When Crackerjack Shack expanded into company stores, “it totally changed the direction of our business and created a stream of income we thought we had lost to big companies like Amazon and Custom Ink,” says CEO Sandy Higgins. After investing some time in research and planning, it launched Spirit Stores two years ago. “The first year we booked $150,000 in online sales, and knew we were onto something,” Higgins says. In addition, Crackerjack Shack added a fundraising element to its Spirit Stores, “so the customer gets a ‘kickback’ check and the sponsors/coaches don’t have to do anything.”

While most of Image Source’s (asi/230121) business still comes from promo, the company is tapping into a growing segment – experiential events – to drive opportunity, says president Tom Goos. “We’re doing more custom packaging and kitting, centered on ‘purpose’ clients who want more than a product. They want to add value to a campaign and create a story around it,” he says.

Printing Money

Of all the added services distributors are offering, one in particular is providing a breakthrough with sales.

Print is not dead – in fact, it’s giving additional life to promo industry sales. Distributors who offer printing services to their clients are much more likely to post annual revenues of over $1 million, according to SOI data. Also of note, distributors offering printing services are getting nearly 30% of their overall company revenues from that segment.

“Print is a great solution to add to your sales process,” says Mark McCormack, owner of Identity Marketing Group (asi/229993). “If you can automate the print process you can win – and make some good money. Just don’t put an antiquated process in place to handle it.” He recommends using online ordering and solutions that make it easy to implement for both the distributor and the customer. “Your customer will appreciate it and think of you as a solution provider.”

At California-based Brandinc (asi/145212), “print is a growing part of our business, and continues to increase as a percentage of our total annual sales volume,” says president and COO Tad Webster. “Print is an important component of custom packaging and gift wrapping, and we offer full-service packaging solutions.”

Bob Chester, senior sales consultant at American Solutions for Business (asi/120075), attributes some of the rising interest in printing to the emergence of digital offerings. “A lot of traditional print shops are going digital to offer post cards, brochures and flyers that can be done quickly and in small lots,” he says. They’re also adding large-format printers for banners and posters, which are used for signage, trade shows and canopies, Chester adds. Demand for labels is on the rise as well, with government regulations requiring more warning and UPIC labeling, says Chester.

Better Returns

Distributors that offer printing services tend to generate more overall sales. In fact, nearly one-third of distributors that offer print produce annual revenues of at least $1 million.

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