The threat of direct sales

By Michael Cornnell

What About the Supplier Perspective?

Direct selling doesn’t just affect distributors. Suppliers face their own direct-selling issues, with distributors (and sometimes even their clients) leapfrogging over them and buying direct from factories and other manufacturers. Phil Saks, director of operations at supplier EMT, Indianapolis, offered his perspective on the supplier side of the issue.

Print+Promo (P+P): Do you find that end-buyers and/or distributors are “buying around” suppliers more these days, going straight to more direct manufacturing sources? If so, how is this affecting your business, if at all? If not, why do you think distributors and end-buyers are sticking to the traditional supply chain?
Phil Saks (PS): EMT’s customers have been with us for a very long time, so it hasn’t affected our business. Our partnership with our distributors is something we pride ourselves on, and they come to us with critical needs—when orders have to be right. Establishing that sort of trust takes many years and a lot of trust that you will not get when you “buy around” with a less experienced supplier.

P+P: Are direct-to-consumer e-stores (Zazzle, CafePress, Etsy, etc.) cutting into your business more these days, if at all? Why or why not?
PS: Not our business—we offer custom emblems. Not everyone offers the customer service, design options or the knowledge that EMT does.

P+P: Do you see the impact of direct selling on the promotional industry increasing, decreasing or staying the same in the near future? Why do you feel that way?
PS: I see the impact of direct selling with very generic items increasing, but EMT has a very custom, specialized product line with an in-house art team and over 35 years of emblematic experience—so this gives us an edge with our market segment. Distributors rest easy when they place an order with us.

Direct selling, where suppliers jump your spot in the supply chain and sell directly to your customers, has always been an issue in the industry. But it’s also been an issue prone to prediction and supposition, with many industry insiders trying to guess how and when it’s going to escalate—and how much it’s going to affect the industry. Whether it’s a more sophisticated and e-commerce-enabled Internet or a younger generation accustomed to buying and searching for information online, there are several social and technological factors many suspect are making direct selling more common. But, is that the case? And if direct selling is increasing, is it actually a threat to your business?

The answer, it turns out, is both “yes” and “no.”

WHY DIRECT SALES ARE INCREASING

The first question with direct selling is always, “Is it happening more?” And for now, the answer seems to be “yes.” Suppliers are diversifying their revenue sources, opening up new avenues for sales. Sometimes these avenues are parallel to your business, not crossing over with your client pool, and sometimes they’re not. Jeff Scott, CEO of Tigard, Oregon-based DocuSource Print Management, a Safeguard company, explained why suppliers are opening new sales channels, and how they might affect your business.

“I do think more suppliers are creating alternate channels of distribution, attempting to not disrupt current channels, but there will be conflicting situations,” said Scott. “Channels evolve based upon necessity. If the suppliers are gaining market share and growing, they will support the channel. If they feel they need more opportunities, it wouldn’t surprise me to see suppliers going direct in certain situations.”

“You already see many industries playing both sides of the fence,” Scott continued. “Amazon hosts sites that are competitive, Microsoft sells hardware and sells software to hardware companies, insurance companies offer services through brokers but also sell direct in some situations. Bringing it home, look how many companies have entered the [promotional products] industry for personalized products,” he said. “It wasn’t long ago Cutter & Buck [wouldn’t] sell to us, only to pro shops, Nike, Columbia Sportswear, the list goes on.” On the flip side, he mentioned how Nike allows consumers to buy personalized shoes, and how that business could easily lead to decorated apparel for companies.

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