Rick Spence’s recent National Post article on how Branders.com succeeded in “marketing just one point to triple volumes” was a fascinating look at one of the promotional products industry’s largest players. The single point Branders markets is price. It’s the one thing most experts tell you not to compete on – but alas Branders has owned it and succeeded. Succeeded in short term financial terms anyways.
The article boasts of extreme cost cutting measures, constant shifts to lower cost production and massive layoffs as tenants of success. Branders success is pegged on their target customer – ones that scour for low cost and nothing else. While it’s proven successful – it’s not without risk.
The Branders model doesn’t leave much room for developing deeper connections with your clients, relationships that ensure their custom products are a) needed and b) on brand with the campaign or promotion and c) align with their values.
The Branders model runs the risk of amplifying all that is wrong with the promotional product industry. Specifically, the issue of quantity over quality and the issue of more and more useless stuff being handed out, likely destined for landfill. There is an emerging backlash against the industry and the products it creates – recently the State of California banned the use of promotional products as a cost cutting measure.
Increasingly, our clients are becoming aware of the brand risk using promotional products can pose. Can a price driven model account for supply chain risks similar to the likes we’ve seen with the recent cadmium laden McDonald’s Shrek Glasses (also reported in the National Post)?
That Branders has succeeded by owning the race to the bottom is nothing new in this industry – what is new is the scale at which they’re doing it (according to industry stats only 4-5% of distributors are over 2.5M a year in sales – Branders does 120M).
We entered this industry with a very different intent – to build relationships with our clients, to ensure that any promotions they do drive real outcomes, reflect their values and don’t’ put their organization at risk. In short, we’re the opposite of Branders. But given that we’ve seen an average annual growth of 86% over the past 5 years – in an industry that has according to industry stats averaged -3% in the past 4 years – it seems there is a place in the world for custom branded products that consider more than price.
The Fairware team reflects those values so well. Thank you for being the opposite of Branders and being a trusted source for promotional products that actually serve your customers and the earth well. Here’s to your continued growth and success!
PS: could you have also have mentioned lead in lululemon bags from their “new” supplier? http://www.lululemon.com/shoppers
Thanks for the comment Suzanne, there is a long list of ‘things gone wrong’ with promotional products, Lululemon’s bag fiasco is just one of many. To Lululemon’s credit, they saw that there was a potential risk, tested for it and responded.
I have to agree with Denise on this one. The ability to suceed in the Branders model is solely based upon some Darwinian economics.
To capture business on price alone will work for a while but the downward pressure on suppliers, manufacturers, sales people, and everyone in the supply chain eventually comes to the basement.
When the basement is reached (as seen recently by Wal Mart) they then have to create a value proposition based upon something other than price. One of Wal Marts world wide initiatives is to go green….They know this will make them less price competitive compared to their non green item but have recognized that being seen as the cheapest did not do for their business and image what they hoped. Wal mart was seen as a pariah preying on the supply chain. Now they are seen as an emerging leader in the green movement all helping to resurrect their corporate image and at the same time offering something that they felt their customers wanted (aside from the cheapest)
In closing the lesson is simple, if you don’t stand for something you will invariably fall for everything……the promo world is littered with company’s who purported to always be the best price and they imploded leaving suppliers and employees high and dry and having their “loyal” customers move on to the next “best priced supplier”.
John, you would know, having worked in this industry for many years. Rick Spence did make a good point on twitter in regards to this – ID what you’re good at and stick to it.