The 'Direct to Consumer' Problem: How Distributors Can Navigate an E-Commerce World

The age demographics of the promotional products industry are changing. Millennials are now well into their 30s, and Generation Z is starting to graduate college and fully establish itself as a part of the workforce.

Because of this, a lot of distributors who are firmly established in the promotional products industry don’t know a life before what we refer to as the direct-to-consumer (DTC) companies. These would be companies like CustomInk, VistaPrint, Amazon, and others that allow end-users to shop around on a website for a product, maybe mock up the decoration themselves, and order directly, thus removing the distributor from the equation pretty much altogether.

The emergence of these types of companies has been divisive over the years. Paying attention to some distributor conversations, there’s concern that it could impact or even kill the distributor as a job. It’s something that countless other industries have seen over the years: Companies like Amazon come in, and the convenience of ordering from home and absurd delivery times kills the business.

In promo, though, these “direct-to-consumer” businesses aren’t quite the Main Street-killers that some might have feared they would be — at least not yet. Especially when you ask distributors on the younger side; they’re just a fact of life being a distributor, and there’s room for both to have their own lanes.

And, just like cars, as long as each stays in their lane, there won’t be any issues.

Griffith McDaniel, president at Aliso Viejo, California-based distributor Brandwell, has been in the promotional products industry for about two decades now. So, he’s seen these companies grow from their infancy to where they are now.

From the mid-1990s, VistaPrint grew from a desktop publishing software for print products to where it is now as a part of Cimpress’ larger overall scheme, and continues to buy up companies to enhance its printing and customization footprint within the industry.

“VistaPrint was mainly just printing when it first started, so I wasn’t too worried about it,” McDaniel says. “Custom Ink looked more simple on the T-shirt side, until they started buying up promo companies.”

Custom Ink also started with modest beginnings but, in 2021, purchased swag.com, and in 2022 purchased Printfection. Just this year, the acquisition of swag.com gave way to a new white-label service called Swag Space, where distributors can set up sites for their businesses to design and print promotional products. The service handles the common pain points associated with the distributor business like warehousing, logistics, and more.

“We’ve streamlined the entire buying, production, and distribution experience, and now we want to share that platform with other promo distributors, so they can use that same technology, scale, production, and distribution chain to power the success of their own business,” Jeremy Parker, Swag Space founder, and former CEO of swag.com, told Print & Promo Marketing upon the site’s launch.

According to Parker, this venture isn’t meant to be the distributor-killer that some might fear, but the natural progression and evolution of the position. Why wouldn’t the distributor want to adapt to the times and have a greater focus on the web? Why wouldn’t they want to remove some of the most tedious parts of business ownership? And, as Parker also said at the time, if a distributor doesn’t want to do it, they don’t have to. Plain and simple. And that’s why, if you ask people like McDaniel, there’s room for both to exist in the promotional products ecosystem.

“Their emergence, or anything like that, didn’t seem like an issue or a threat or anything like that,” McDaniel says.

And he still largely feels that way today. What sets those two businesses and business models apart — the metaphorical lane divider on the highway they both share — is the human aspect. People People

Jonathan Hopkins, strategic account executive at Avail Labs, Charlotte, NC, has been in the industry for just over two years. It’s recent enough that the DTC companies have always been there, but long enough that he’s learned how they exist side-by-side.

“DTC companies have always been relevant since I’ve joined the industry,” he says. “Internally, we are aware they exist, but we don’t consider ourselves direct competitors. They are really good at their target market, but we are looking for partners that need just that — a partner.”

The human aspect is really what sets the distributor model apart. What a distributor can provide is a level of expertise that just doesn’t come with some of these services, and most distributors recognize that, especially the ones who are relatively new to the industry and have had to “compete” with these other business models the whole time.

What the DTC services provide is a certain buying experience for a customer who doesn’t know much about the process, and doesn’t intend on learning much about it. The same way Amazon exists for people who know nothing about, say, carpentry. You can buy a saw on Amazon, but if you go to your local hardware store, chances are the person working behind the counter can provide some useful tips, or maybe even point you in the direction of a product you didn’t intend on buying, but is more suited for your needs.

“I think that they’re geared toward people that don’t necessarily need a high level of expertise when purchasing something, and they maybe prefer to do self-service,” says Christina Maag, CEO and brand consultant at Hoopla in Garden City, ID. “So, I don’t really see them as a threat, because the clients that I work with, I think that they are not just going on my website and saying, ‘I want 100 of these.’ They’re looking at me to be the expert, to come up with the ideas for whatever campaign, giveaway, or event that they’re planning for.”

It’s not unlike the AI debate, really. People, particularly those in jobs that require human finesse, are/were afraid that the advancement of AI technology would render them obsolete. That was, until people realized that even though something like ChatGPT could spit out 1,000 words in the blink of an eye, it still needed a human guide to proofread and make sure it didn’t make any robotic mistakes.

In that way, even with a platform that operates seamlessly and “robotically” in the front end, where the end-user slaps a logo on a T-shirt design and hits “Order,” there will still be a need for the “traditional” human element of the business.

McDaniel says that his distributorship isn’t competing with what companies like swag.com advertise on the front end, but rather what they’re quietly doing on the back end.

“On the back end, they’re still going to have the traditional account executives, people reaching out and doing the normal promo channels with the actual enterprise accounts and larger accounts they’re serving,” he says. “So, on the front end, we’re not really competing with what’s advertised to the masses, whether it’s 150 T-shirts with a quick turn, easy platform online. But, if they were to get an enterprise client through those things, like say swag.com that got purchased by Custom Ink, that’s more in our competing space.”

Adaptations

That is where distributors have had to change the way they operate. It’s less of a response to these DTC brands and more of a response to the buyer habits that influenced these brands in the first place. People didn’t decide they wanted convenience, and expect convenience, because of these companies. The companies just recognized that people like things to be simple and fast, so they created a simple and fast business.

The Custom Inks and VistaPrints of the world aren’t the only companies capable of that, though. If you do view them as competition, it’s possible to see them as healthy competition, which spurs on change and adaptation, as Parker envisioned his own company doing.

“I believe they do a good job at pushing the industry forward with tech,” Hopkins says. “It forces us to keep up with the experience customers demand, but overall it doesn’t affect what we do day to day.”

If all a distributor does is take orders, then yes, they could be left behind, Hopkins believes. But it won’t just be from brands like Custom Ink or Swag Space. “If they are playing middleman between suppliers and customers, they will be left behind,” Hopkins says. “It is becoming easier for buyers to use the tech available to make purchases than it is to send an email or pick up the phone and place orders.”

This is where Avail has made it a point to bulk up its own tech to stay relevant.

“Not only have we built a retail style e-commerce platform for company web stores, but we also created a swag management system,” Hopkins says. “This not only simplifies the management of programs, but it also gives our partners the ‘Amazon’ model that young shoppers are accustomed to.”

Coming into the industry recently, Maag was able to tailor her business to that buyer habit from the get-go, creating a business that looks like it was made for the internet age, rather than dragged into it kicking and screaming.

“I think what we’re seeing on the distributor side and the buyer side is a changing of the guard in the sense that the baby boomers are kind of starting to exit the workforce,” she says. “I would say that the baby boomers, whether they’re on the distributor side or the buyer side, are all about that handshake, that personal relationship, and then under them you have Gen X and the millennials, and then you have Gen Z, which is what’s in the workforce right now, but the younger generation. Gen Z, I think, are the opposite of the baby boomers. They don’t want to go to a meeting or meet someone in person, at least initially. They want to just get something off of their plate, which means going to Google.”

You type in what you want in the search bar, you are brought to a page where you can fulfill that need, and you don’t have to utter a single word out loud if you don’t want to. Sounds great to some people.

Where distributors can bridge that gap, though, between the anonymity of a fully online service and the handshake-centric lifestyle of yesteryear is through offering expertise and putting faces to the name. Being available if and when someone does want to bend your ear.

You can also provide more than what the AI algorithm suggests for products by actually listening to the customer’s need and using your human creativity.

“I kind of don’t mind doing a lot of hand-holding, especially when people are new to buying branded merchandise,” Maag says. “I think that sets me apart. Also, I don’t get lazy about just sending clients the top three trending items, drinkware, or whatever it is they’re asking for. I take the time to understand if there’s a call to action, if there’s a certain demographic that’s going to be receiving these.”

You need information aside from just quantity, budget, and in-hands date, Maag says. Those are what can take a serviceable promotion to a work of art, a memory.

“I try to get a little more information so that I can tailor suggestions to them that aren’t going to be thrown away and are going to give them brand recognition in a positive light,” Maag adds. “Because, as you know, if you go to any event and you get a bag of giveaways, usually half of the things in there, you’re like, ‘Ugh, I’m never going to use that.’ I think that’s another way we try to set ourselves apart.”

“Ultimately, clients don’t know what they don’t know, so when you bring in the experts to the thing, we’re able to advise them on what’s needed, maybe bring something to the table that they didn’t know they needed or that can drive the sale,” McDaniel says. “I guess I look at it in the sense of, if I’m going to the mechanic, and they ask me what I’d like to do to the car, I’d say I don’t know. There are certain things where there will always be a need for the mechanic, and there will always be AutoZone, I guess.”

And yet, Autozone still exists online, because it needed to adapt. It’s not just a brick-and-mortar, because in today’s day and age that would be business suicide. So, if you do see the DTC companies as competition, it could be good to reframe your perception into seeing them as something that moves the industry forward by force.

Maybe it forces you to increase your web presence, adapt your online capabilities, and make your ordering process easier for the customer.

What’s clear is that these large DTC companies aren’t going away. They’re constantly adapting to stay competitive and viable, especially as they get larger. This means you as the distributor, though perhaps in a different lane, need to keep up.

And, if you need further proof that what you’re doing is still the gold standard, remember the fact that imitation is the purest form of flattery.

“Custom Ink, as they’ve purchased traditional distributors, I think that is a sign that there is a need for the traditional distributor in that sense, the actual account executive looking and growing internally with a company,” McDaniel says. “And I think being able to have that hands-on account management is very important once you reach a certain level of need.”