Distributors: Small is the New Big

How Many Distributors Are There?

Chicago is a market with many promotional product distributor companies.  It is not uncommon to have two or three asi distributors located within blocks of each other or even in the same office complex.

Competition has always been fierce.  It is not uncommon to call on a customer and see the same supplier catalog with a different distributor’s sticker on the front cover!

Distributors Going Out Of Business

Recently a friend of mine was working for On Time Promotions.  They boasted to be in the top 5% of all promotional product distributors in a 37,000 square foot facility.

Then they ran into the buzsaw of the current economy. With many sales people earning draws against commission, salaries of their support staff, on-site embellishment, rent, health care, etc. the economic scales tipped against them.

Unable to pay suppliers, they could simply not get new orders produced for their salespeople and were forced to shut their doors.

Is the Grass Greener Elsewhere?

Clients need servicing.  Company stores with inventories and the sales people who managed them needed a new place to hang their hats.  Groups of sales people have defected to several other well-established local distributors.  In some cases the move is only blocks away.

Desperate to finance their customer’s purchases, many of the sales people took deals that seem unjust.  My sources tell me that the largest group of sales people went to work for another distributor and that the commission splits were 60% in favor of the house vs 40% for the sales person, OUCH!

Sales, Margins and Profits are Down

Winning new business is tough.  Everybody knows that the industry is down.  What nobody discusses is that margins are down as well.  This is true for both suppliers & distributors.

Suppliers looking to move inventory have cut their prices.  Distributors looking for orders have followed this trend working tighter than ever.  End-user customers are spending less.  Instead of buying a $10 item, they are looking for a $5 item.

This is the unfortunate triple threat that has become the reality in our industry.

Open Your Own Company

With today’s technology, it’s amazing what the little guy can do.  Quickbooks, the Internet, cell phones, virtual PBX systems, supplier specials and digital supplier catalogs can make anybody seem like a well-established BIG organization.  Contract screen printing & embroidery are readily available (check your emails!)

Suppliers have inventory and want your business! It’s amazing what you can get in today’s market with a company profile, federal tax id # and a credit card.  I have yet to see a situation where a supplier wouldn’t sell me based upon providing this information.

Work from Home

In my 10+ years in the industry I can count on one hand the amount of times a customer has come to my office.  By saving money on rent and tapping into your home internet connection you will have lower overhead than the bigger distributors.

In addition to saving on rent, you’ll find you drive less, spend less on lunch and can actually use the time you spent commuting working  (if you choose to).

With lower overhead and no commission to split you can be more efficient and price competitive than the big guys!  Trust me,  your customers want great service, low prices and quality products.  They don’t care about your office!

ASI, Sage, Distributor Central or other?

There are different platforms for different budgets.  The competition here is fierce as well.  Monthly plans are affordable and Distributor Central is free.

Logo411 would like to invite any and all distributors to register for a free Virtual Filing Cabinet.  To learn more about Logo411 watch the 2 minute video.  The virtual filing cabinet can be used as a stand alone website or in addition to an existing website.

About Logo411

Logo411 was developed as a permission based marketing platform for the Promotional Products Industry. It is owned and operated by Premium Stores, Inc. (PPAI#273265) – a DISTRIBUTOR of promotional products.

The system we have developed will help both suppliers & distributors manage the mounting email clutter problem. For distributors who are Web 2.0 savvy and understand the power of Viral and Social Marketing, Logo411 is the ultimate “Word of Mouth” marketing tool.

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