The truth behind direct selling

By Michael Cornnell

What About Cutting Out Suppliers?

Distributors going direct to factories and cutting out their supplier partners is another side of the direct-selling dilemma. Are suppliers being hit any harder than distributors by the issue?

PRIME LINE

"In general, direct buying from our distributor to our manufacturer has not had a material effect on our business. In fact, it's gone in the other direction, with distributors wanting to buy more from Prime with our overseas sourcing programs because of the issues and complexities of product safety. They trust us and [want] the peace of mind of us handling their large-quantity order projects."

– Jeff Lederer, president of Prime Line, Bridgeport, Conn.

CLEGGPROMO INC.

"We have found that people looking for some savings versus a proven quality supplier end up getting a bad deal. We get countless calls where distributors [who] were trying to go direct have the factory fail them, then come back to us paying more than the original price we quoted them three weeks before because their 'direct' experience was not working out too well.

There are seasoned distributors who have clients that demand the very best price possible and expect them to be at low margins. This is the nature of the beast. These distributors have relationships with factories overseas. If those factories fail, we will be there to pick up the slack. We do not make mistakes, or very rarely make mistakes on overseas products. We manufacture ourselves and have a QC team that is one of the best in the industry. Has this cost us some business? Absolutely. But we must be looking toward the future of the relationship versus taking an order.

We value our distributor relationships, and we know that some distributors need to do what it takes to keep their client happy. We will increase our business in other ways to keep that relationship going."

– Michael Bistocchi, senior vice president of sales and marketing of CleggPromo Inc., Gardena, Calif.

SNUGZ USA

"One can't bury their head in the sand and say it doesn't have an impact on their business. Any time one goes outside the distribution channel it will have an impact. For SnugZ USA, we've taken a very proactive position over the past 20-plus years in dedicating ourselves to providing our distributor partners with the products and service they deserve. We don't waste energy in looking for opportunities to go around them. We feel 100 percent confident that has impacted our business positively."

– Brandon Mackay, CEO of SnugZ USA, Salt Lake City

While the Internet and supply-chain transparency are for the most part pretty great (being able to download any movie ever, knowing which overseas factories are responsible for packing gunpowder and live, sting-crazed hornets into children's lunchpails), there have been some downsides. Your great aunt Selba's constant Facebook posts about ferrets and their relation to the American political system for one, but also (and perhaps slightly more importantly) direct selling.

It's always been an issue, but with the rise of the all-knowing information dispenser, "the Internet," direct selling has reached an all-time high. Once-exclusive suppliers and manufacturers can set up seemingly separate, direct-to-consumer wholesale webstores with minimum effort. And on the other side, once-loyal clients can now Google and LinkedIn their way to your supplier with approximately 45 minutes of research.

It's a difficult and scary situation—at least at first-glance. With everyone having the ability to cut out the middle portion of the distribution channel, it seems like eventual irrelevancy would be an absolute fact. But, the exact opposite seems to be the case. Rather than eliminating the middle of the print and promotional supply chain, direct selling has shown exactly how critical distributors are to the process. Read on to hear how many distributors are not only unconcerned with the threat of direct selling, but have turned it into an opportunity to highlight their strengths and deepen their relationships with their customers.

HALO BRANDED SOLUTIONS
"Direct selling has not had a meaningful impact on our business. Each participant in the chain of distribution, from designer to manufacturer to importer to distributor to end-user, has to earn his or her place in the chain by delivering value. Our valued account executives deliver value to their end-buyer clients through their creativity, sourcing, reliability and know-how. As a result, they play a critical role in quarterbacking the entire process from conception to delivery and continue to earn their place in the chain by delivering quantifiable value. HALO's mission is to add value to our account executives by supporting their efforts and anticipating their needs. As a result, we also play a critical role in the process, and we earn our business every day of the week through our logistical, event, technology and sourcing capabilities, and support services that make our account executives more effective."
– Marc Simon, CEO of HALO Branded Solutions, Chicago

1 2 3 All Next »

0 Comments

View Comments

Companies:
Proforma

Michael Cornnell Author's page

The Mythical Threat of Direct Sales