Danger Ahead?

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.