We posted an article late last week titled 'The Big Squeeze' and written by ASI’s Michele Bell. The article is an in-depth look at the increased demands that some promotional products distributors are putting on suppliers, and reader response to the piece has been swift and sweeping in viewpoints.
Here is a sampling of the responses that promotional products professionals have sent in to us.
Letters were edited for grammar and clarity.
Alex Morin, Debco Solutions
I thought that your article was well written and tried to show the story from two points of view (distributor and supplier). The subject needed discussion, and I hope that it leads to that. The pessimistic side of me thinks that in a capitalistic society, the types of behaviors discussed in the article will perpetuate because there will always be companies that will work for below average profit margins. But the optimistic side of me understands that the best remedy to the whole situation (from a supplier perspective) is to be the best you can be. Screw what everyone else does and be unbelievable at what you do. Provide value and do business with those that share your ideals.
Andy Thorne, from Facebook
It's meant to be a transparent partnership that has a win win. Your supply chain should be respected and valued. Well, that's how we do it at Outstanding Branding, and it won't change now that we are in the US.
Stephanie Doucette, Greentree Publishing Inc.
Your article “The Big Squeeze” was an excellent (and sadly, accurate) report of the many “entitled” distributors to be found in the ad specialty industry today. As a small supplier of a niche product (The Almanac for Farmers & City Folk) we are perhaps lucky in that we don’t encounter too many predatory distributors, but we do deal with enough of them to be quite familiar with the “big squeeze.” Our philosophy – one that is necessary for our survival – is “just say no.” We bend over backwards to please our distributors, and we stand behind our product, but until we can find employees who will work for nothing, we must levy setup charges, or charges for spec samples, for example…and employees won’t wait two or three months to get paid, so we can’t offer 90-day terms. The supplier quoted in the article who suggested that if this predatory behavior on the part of distributors keeps up, it will force many suppliers to go direct, was spot on – and then where will the industry’s distributors be? Thank you for addressing a serious problem that’s usually only whispered about.
Mark Smith, from Facebook
But distributors are also being nickel and dimed by our customers. I'm also fairly confident that there is more margin being made by suppliers than distributors. Especially on the "commodity products" there are numerous suppliers offering identical or near identical products so distributors use that leverage to make more margin and win bids. I don't see a thing wrong with using leverage and competition to get a better deal.
Jeff Jacobs, former executive director of Quality Certification Alliance
A well-researched article from ASI's Michele Bell, many points are spot on. I would comment that I found interesting that the requests for indemnification from distributors to suppliers seemed to be lumped in with "unreasonable" expectations of discount, rebate and dating. The graphic noting that 50% of suppliers spent $1,000 or less on product safety in 2015 is scary proof enough of why this request is a no-brainer. I was an end-user client with a Global 500 consumer-facing company that used two Top-40 distributors in North America. Indemnification was not even a discussion point; it was in the contract before the first item shipped. That said, we knew that indemnification was really just a straw man to measure intent – if there was a product liability issue, we knew that our pockets were the one the lawsuits would be looking to pick...not the distributor, and not the supplier. We just wanted them on the hook with us so that they would focus on our product safety issues.
Anyway, this was clearly a lot of work to research this and a nice job of showing why the traditional model of supplier/distributor/end-user will implode from this kind of foot-shooting. Just a matter of time. You don't get enough credit for this kind of effort.
Samantha Kates, from Facebook
This is an important topic and one that has to be said. Having been on both sides of the industry, I can see both perspectives. End users are squeezing their distributors and so it gets passed up the line. But in the end, suppliers’ margins have to remain healthy to stay in business. And when you factor in free freight, sample budgets, escalating rebates, concessions, shows, catalog insertion fees, etc from larger distributors – someone had to pay for that. Ultimately it's in the cost of the goods.
Victor Macchia, J. Charles
Bravo for writing the article that I have been dreaming of reading for months, even years! The Big Squeeze helped make me feel like I was having a huge Dennis Miller style rant taken off of my chest! That’s the way we feel, and we’re sticking to it! You spoke the unspeakable, and all we can say is thank You. Great job!
Carol Waters, Rivers Advertising LLC
I just read your article about distributors making demands for longer term rebates etc. from suppliers. I am a second-generation, women-owned family business. My mother started the company in 1972 and I purchased from her in 1986. I appreciate all of the relationships I have developed with suppliers over the years. The large mega distributors have been a problem in recent years, as I have been put in bidding situations. I ask for fair pricing, pay on time and never ask for rebates. I try to treat suppliers the way I want my customers to treat me. I love this industry and hope big corporation greed does not ruin it for all of us.
Anonymous Top 40 distributor
Even though I am on the distributor side now, having been a supplier for more than 20 years, you were spot on! The additional stories I could tell you. I have been openly critical in previous meetings with distributors and wished them well in trying to find the right "partner.” Who cares if your sales with a distributor are in the millions when it costs you millions plus and lose money.
Chris Plante, from Facebook
Distributors who have forgotten how to sell, how to build value, and how to train their clients are unloading their weakly-structured deals on their suppliers. Time to go back to Sales 101.