Are Promo Industry Firms So Desperate For Short-Term Gains That They’re Willing To Gamble Their Future?

Every July, Advertising Specialty Institute (ASI) publishes the annual State Of The Industry Report. The 2018 survey results reveal some very interesting and, quite frankly, disturbing facts about the state of product safety in the promotional products industry: It’s almost nonexistent.

Let’s look at the numbers. According to the research, suppliers spent the following amounts on product safety in 2018:

• Thirty percent spent $0
• Seventeen percent spent $1,000 dollars or less
• Twenty-five percent spent $1,000 to $5,000
• Fourteen percent spent $5,000 - $25,000
• Fourteen percent spent $25,000+

What?

A third of them spent nothing. Nothing! Nearly 40 percent spent less than $5,000, with 17 percent spending less than $1,000. That’s a lab test or two, at best. C’mon man. For the 14 percent that spent $5,000-$25,000, that’s still just a handful of tests and completely anemic. It’s only the final 14 percent spending more than $25,000 that shows any kind of seriousness.

And that’s not all. Looking ahead, the vast majority of suppliers don’t plan to boost product safety spending in 2019—even though 90 percent of their distributor customers feel a personal obligation to ensure the items they sell are safe.

If the vast majority of distributors recognize the importance of product safety, then why aren’t they demanding that suppliers get in the game? Why don’t these distributors move their business to suppliers that have compliance programs? Why isn’t anyone putting money where their mouth is?

The Lies We Tell Ourselves

Whether we want to admit it or not, we tell ourselves little lies all the time. I wasn’t driving that fast over the speed limit. I was only a tiny bit late for work. I’ve only gained a little weight. Product safety isn’t that big of a deal. The products I sell are surely manufactured responsibly.

In my article “Rationalizing Your Way Out Of Responsible Promo Sourcing,” I talk about the most common lies people tell themselves to rationalize not being serious about product safety and responsible sourcing. My customers aren’t asking for it, competitors aren’t doing it, it’s too expensive, no one has been caught. I don’t want to repeat what I’ve already written (you can read the article in its entirety via the link above), but here’s the bottom line: These excuses are nothing but a bunch of B.S.

The reality is that customers are asking for it, competitors are doing it, it’s not too expensive and people have most certainly been caught. Just ask Badger Sportswear how sourcing apparel from a Chinese factory with alleged forced labor worked out. (Hint: It’s not good. Many schools and universities that are the company’s mainstay stopped using their products and removed all current inventory from shelves.) So where do we go from here?

What Buyers Really Want

Going back to the State of the Industry data, the report “shows that while distributors and suppliers agree safety matters greatly, end buyers don’t feel as strongly.”

Hold on here, folks. I have to strongly disagree.

Sure, there are buyers that don’t seem particularly concerned about product safety. The report does note that “geography and markets that distributors serve factor into the equation.” That said, just because a company may not explicitly express that they require safe and responsibly sourced products doesn’t mean they don’t want them. My guess is that most of them assume the promotional products they purchase to support their brand will do so without posing risks to recipients or the brand itself.

The difference between small, local businesses and large regional, national or global corporations is that product safety and responsible sourcing isn’t “something that would be nice to have.” For large corporations with significant brand equity—Google, Apple, Coke, Home Depot or NBC for example—it’s an absolute prerequisite for even being in the room to talk about the potential for business.

If you want to land greater, more lucrative opportunities by working with larger companies, then you must not only understand and address the issues, but also have third-party verification of the processes and documentation necessary to meet buyers’ demands. Otherwise, you don’t even get a seat at the table.

“You’d be surprised how many questions we get about the background of our products and how they are manufactured,” says Kelsey Brown, marketing manager for Aurora, Illinois-based Quality Logo Products. “Purchasing from suppliers who undergo meticulous safety evaluations is one of the most important decisions we make to protect our customers.”

Putting an entire company’s procedures under a microscope can be uncomfortable. However, Chris Pearson, director of compliance and overseas operations for St. Laurent, Quebec, Canada-based Spector & Co., believes the challenge to better the company has paid off in many ways, including landing new business.

“We had been restricted from quoting on jobs from a specific customer until we became QCA Accredited,” Pearson says. “The Accreditation opened the door for discussion and collaboration on projects that we previously could not be a part of.”

Creating Competitive Advantage

What many people don’t realize is that brand safety and responsible sourcing are selling tools that can be used to increase loyalty with existing customers as well as to convert prospects into clients.

Tej Shah, vice president, marketing and e-commerce for Vernon Hills, Illinois-based Overture, says that the company has strengthened existing relationships because of their knowledge and ability to provide brand safety.

“One of our large health care clients has been so impressed by the significance of our participation with Quality Certification Alliance (QCA) that the company has asked us to speak at its national sales meeting specifically on the importance of sourcing safe and accredited merchandise,” he explains. “Because of our QCA affiliation, this client very much trusts our decision-making and sourcing expertise.”

Additionally, Shah says this commitment to brand safety is helping the company gain competitive advantage and land new business.

“Our affiliation with QCA and commitment to responsible sourcing helped us win an RFP in the consumer packaged goods industry, and this has now grown to become our second largest client today,” he says. “The client was so impressed by the importance of QCA that it wrote QCA requirements into the contract to ensure that we only source from QCA Accredited Suppliers.”

Shah isn’t the only one seeing new growth from promoting product safety and responsible sourcing.

“More than 90 percent of our new orders are for products that come from QCA-accredited suppliers,” says Michael Wenger, vice president of Quality Logo Products. “We are always glad to answer questions about QCA, and the QCA seal next to products from accredited suppliers is a conversation starter for many new leads. After receiving so many questions, we even started blogging about it.”

Because there is such a demand for promotional products that are safe and responsibly sourced, one distributor is making compliance a cornerstone for her business. Tara Milburn and her team founded Ethical Swag with the intention of only providing socially compliant, safe, high-quality and environmentally-conscientious branded merchandise. Being laser focused on clients who demand to know the background of the products that bear their brand is a growth strategy that’s working.

“Our clients rely on us to know the story behind the products we carry, and they regularly ask about the supply chain, social compliance and sustainability,” Milburn says. “They ask us what we mean by ‘ethical’ in our company name to ensure it aligns with their values and expectations. These customers come to us because they are specifically looking for brand safety and responsible sourcing.”

Are You Setting Yourself Up For Success—Or Failure?

Here’s what I don’t get: Why are so many promotional products companies blind to the opportunities that come from being able to sell products that are actually safe and responsibly sourced?

Yes, compliance is an investment. But so is your website, sales team and facility. You don’t hear people complaining about those costs. They’re just part of doing business. So why do so many believe that product safety and responsible sourcing are considered optional?

Today’s business market is extremely competitive. Landing new clients is hard. Pricing pressures have caused lots of commodity damage. So we’re left with a choice. One, we can demonstrate our marketing expertise by educating clients on what a few cents more per item will buy them in terms of documentation that the branded merchandise they use is safe, of high quality and made ethically. Two, we cower, lower the price to get the business (consequences be damned) and turn into order takers.

When comparing business models, there’s a big difference between a trusted resource and an order taker. Ask yourself these questions:

• Are you so focused on getting “any” order that you’re missing out on the actual business that’s right for you?
• Do you really want to work with customers that will nickel and dime you to death?
• Ones with no loyalty that will jump to your nearest competitor to save pennies?
• Ones that would inevitably sue you in a heartbeat should something go wrong?
• Do you really want to expose your business, everything you’ve worked for, to those kinds of risks?

Or would you rather cut those buyers loose to free up your time to get real, long-lasting business?

Our industry is at a crossroads. The decisions we make now have the potential to set us up for success—or failure.

Most end-buyer corporations have stringent product safety and social responsibility policies and procedures in place for the products they manufacture and/or sell. They are now beginning to require the same level of protection for the promotional products that bear their brands.

If our industry continues down the path of ignoring product safety and responsible sourcing, there is a threat that corporate clients may forgo branded merchandise altogether and divert their marketing spend elsewhere. However, if we begin to take the issues seriously, there’s actually significant opportunity for those promo firms who can consistently deliver safe, high-quality, socially compliant and environmentally conscientious merchandise—and have the documentation to back it up.

“Our clients expect us to be educated on all matters, but none more than compliance,” says Jon Levine, CEO of Holland, Ohio-based The Image Group. “Suppliers that want to grow their business need to make investments in this area or face the prospect of becoming irrelevant to our end-user clients. We cannot just talk about it around the edges. We all must adopt practices that ensure a safe and compliant supply chain.”

Taking the initiative to ensure safety and responsibility throughout the entire supply chain not only protects the brand equity of end-buyers, but also secures our livelihood in the promotional products industry. Sure, you could continue to gamble by ignoring product safety and responsible sourcing in order to achieve short-term gains, but the safe bet is to invest in the policies and procedures now to protect the entire supply chain and have long-term security. The future of our industry depends on it.