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Hot Idea: Expand Your Business Online

In today’s increasingly competitive marketplace, where price means everything, one thorn is consistently in the side of many, many distributors: online vendors. Repeatedly, distributors continue to complain that their biggest nemesis and price-gouging competition exists not so much on the street, but online where web-based vendors undercut offline distributors at increasingly drastic rates.

In fact, 41% of distributors in the State of the Industry survey say that websites selling promotional products are the top competitive threat. This is an increase from just 26% five years ago in 2009. That’s making it harder and harder for distributor clients to resist at least glancing, if not flat out scouring, the web for the best price they can find on their desired product.

And while many of today’s distributors are “coming in kicking and screaming about the Internet, I think the Internet’s here to stay,” says Bob Horwitz, president of Minneapolis-based Idea Workshop Inc. (asi/229563).

However, the shift to online commerce is not just the result of clients seeking out the lowest prices possible, Horwitz says. Having the ability to research products and prices after hours, as well as the convenience of shopping, and quickly clicking on products online is driving online distribution companies just as much as price points, he says. Ultimately, it’s where purchasing habits are heading.

“I think corporate customers are looking for service and reliability, and the same way travel agents have fallen by the wayside and people are booking their own travel online, I think corporate gifting is headed that way too,” Horwitz says.

If for no other reason than productivity and ease of use, at many companies an assistant or marketing coordinator is making individual promotional product purchases, Horwitz says. If she can “find the product online and get it done,” perhaps a one-time purchase, he says, “people are trying to do it with more self-service which could be late at night or early in the morning.”

The Shift Has Begun

Certainly some distributors are accepting the idea of doing business online, with e-commerce now accounting for about 16% of overall distributor revenues, according to the State of the Industry survey. This translated to $3.35 billion of the $20.5 billion worth of promotional products that distributors sold in 2013.

Indeed, more and more companies say they’re feeling online ordering is gaining traction in the industry. Some believe the web effect is so great that it’s starting to blur previously accepted, albeit unwritten, boundaries between suppliers and distributors. In recent months, Judi Brown, owner and corporate wellness engagement consultant of Getting Personal Imprinting LLC (asi/205008), based in Lakewood, WA, says she’s noticed additional competition coming from suppliers as opposed to other local distributors. “Frankly, some of the suppliers are selling direct online,” she says.

The hard reality is that distributors may see themselves being drawn into the world of e-commerce faster than they’d expected or hoped for in the next few years. And many of them may struggle to get up to speed on just how to sell promotional products online. A 2013 e-commerce report from Intershop Communications Inc., an enterprise solutions provider for e-commerce, reported “25 key b2b retail statistics.” Among them: Nearly half of those surveyed (46%) said it’s difficult to bring offline customers online. More than half (54%) predicted that building easy-to-use interfaces would be their biggest challenge in moving business online. And, yet 82% of those surveyed said they were being pushed by clients to move order processing in that direction.

In other words, get online or get out of line. And the faster a distributor can launch an efficient  e-commerce site the better, say some. “If you’re not already doing well on the web it’s going to be somewhat more difficult to compete in the future,” says Jason Robbins, CEO of ePromos Promotional Products Inc. (asi/188515), a New York-based distributor which already does most of its business online.

For distributors who make the leap to the web, “you may be seeing that it can be very painful for under-funded and under-experienced web e-tailers,” Robbins says.

Particularly for smaller distributors attempting to build e-commerce platforms meant to rival those of the industry’s biggest players. “So if you’re a little guy and you’re like, I have this website, you start it up, and you personalize it with a home page. You carry certain products and make cool categories and change the pictures on the home page and that’s great,” he says. But, “to get yourself ranked you have to have a lot of people point to your site.”

Perhaps, but there are places to begin. For starters distributors can play up to the price-conscious customers who are heading online in the first place, and draw them in with online offers. ePromos offers $50 off a client’s first order (a great way to nab those conducting first-time searches for products), as well as ongoing offers, such as 10% off a certain product line.

Those who have launched their sites say business is building, and bringing up new opportunities for faster reorders, while increasing their attractiveness to new prospects and larger firms looking for more sophisticated ordering systems. Other say that their move to e-commerce actually helps level the playing field between large and small companies. Ultimately, if your business can take an order online, you’re suddenly as large as any competitor out there – even the price-cutting nontraditional websites selling promotional products that so many in the market view as their top competitive threat today.

Still, more see the move online – from clients and other distributors – as just another evolution in the distributor sales model that will, for most companies, enhance their business and service offerings. “I don’t think there’s anything drastically different going on,” says Tej Shah, vice president of marketing and e-commerce for Overture Premiums & Promotions (asi288473), a distributor based in Vernon Hills, IL.

“I think e-commerce in and of itself is growing quite a bit,” at least 20 percent for companies either inside or outside the industry, Shah estimates. “There’s just a shift in mindset and how consumers shop today.”

It’s only natural, Shah suggests, for that purchasing strategy to shift over to business-to-business buying, as well.