The Mythical Threat of Direct Sales

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

PROFORMA
"We are a $400 million leader in the printing and promotional products industry. We are growing at 10-plus percent a year. We have agreements with our preferred suppliers that they do not and will not sell direct. If suppliers want to keep our business, they need to be true to their word. That said, our 750 members and their 1,000-plus sales reps are free to deal with whatever supplier they choose. From time-to-time, we do hear that some of these non-preferred suppliers may be selling direct. Usually the complaints we hear are more complaints of surprise that a supplier may also be selling direct rather than a complaint of losing any business. At the end of the day we are in the business of relationships, not the business of products. Years ago I had to fire a printing supplier due to quality and service issues. That supplier approached my largest customer and offered to sell them everything at my cost. This was a 50 percent margin account. Fortunately, my customer called me and informed me of their offer. He also informed me that he kicked them out of his office and told them off for their lack of integrity. It's all about the relationship."
– Greg Muzzillo, founder and co-CEO of Proforma, Cleveland

PROFORMA-BPM
"We have had a couple of clients try to go direct with their print and promo needs, but they both came back to us. The time they save by utilizing our services outweighs any price savings. By the time they select the product, set up terms and figure out the artwork, setup fees and the purchase order we would have had the order already being processed. Also, when we are given a specific product to quote we will also add a few alternatives the client may not have known about or considered. Many times they end up going with one of our recommendations over their original choice. To them that is a value-added service the manufacturer does not consider or have the time to implement."
– Mike Beckman, president of Proforma-BPM, Atlanta

AIA CORPORATION (ADVENTURES IN ADVERTISING)
"Fortunately, we haven't seen any problem in this area that I'm aware of. I believe our owners understand the value of relationships and have the ability to offer their end-buyers a wide range of products and advice, which keeps them loyal."
– David Woods, president and CEO of AIA Corporation, Neenah, Wis.

KAESER & BLAIR INC.
"Clients who try and get to good factories and deal with them on a direct basis are usually disappointed to find out that factories don't want their direct business. There are some players out there who will basically take any order that comes along, and I don't think there's anybody that, if the order is large enough and they can figure out some way to make it work, might not take another look at it. But, we try to work with vendors who aren't interested in doing direct business. There's a lot more risks involved, they have to worry about credit worthiness, or processing on credit cards, and it has not been a big issue with us because we deal with some of the best factories in the country. There are a few who are so [against] deal[ing] direct that they've sent customers to us to ask me to get them a good deal, and when I asked them what's special about [the customer], they told me it was their cousin. So they wouldn't even sell a direct order to their own family [member]."
– Gregg Emmer, vice president and chief marketing officer of Kaeser & Blair Inc., Batavia, Ohio