PPB September 2018

Online Vs. Offline Sales Online sales comprise 23 percent of total industry sales, according to PPAI’s 2017 Sales Volume Study, which defines online sales as, “…orders placed by consumers through an online store or website.” For some context, when we consider the might of a company like Amazon, remember that though they are responsible for 44 percent of all U.S. e-commerce sales, they command just four percent of all U.S. total retail sales. The first real question about online promo sales—the one that no one seems to be asking—is: What kinds of sales are these? Have we become so fearful about outside threats that we’ve failed to examine just what kind of threat this really is to our business? There are typically two types of online sales: consumer-driven, small orders (though there are also huge orders coming to online players too), and price- driven customers, who are different than the average clients in a consultative, creative distributorship. Online sales are, for the most part, transactional; offline sales are, for the most part, consultative. To help us gain a different perspective, consider the food industry. Comparing transactional sales and consultative sales is like comparing fast food and fine dining. Both serve food, both are in the food industry, but they serve two completely different markets for two different reasons. What does fast food sell? Convenience. What does fine dining sell? Experience. Does fine dining cower under the threat of fast food? No! It’s ridiculous to think so, because they are not in the same business. A fine dining establishment isn’t threatened by fast food; therefore, they don’t even think about trying to become fast food—they don’t allow the fast-food industry to reshape their identity. Yet in the promo industry we are still trying to be all things to all people and serve all markets. We are also trying to build an ecommerce component into our consultative enterprises even though these are two entirely different businesses. For example, to seriously play in the promo online space requires an all-in attitude—no part-timers or dabblers can make a dent in that space without a serious investment in both infrastructure and ad spend. And by serious, I mean serious. Generally, six figures (or more) in tech infrastructure and six-figures in ad spend, annually. The second serious question that no one seems to be asking is: What about the other 76.5 percent of the business? What about the $17-plus billion that is “the fine dining experience” of the promotional products industry? This vastly larger part of the market has higher margins, higher order averages, larger per-client-revenue and is high- touch service (which means it cannot be easily replaced). Is the saber rattling in our industry so deafening that we’ve lost all common sense? Why isn't everyone in the fine dining business trying to get into fast food? It’s virtually impossible to focus on two separate markets with the same business. I wish we could trade every minute we talk and worry about Amazon or suppliers selling direct for a conversation simply about building better businesses for our clients. If we traded all that time and negative energy for positive ideas, we could future-proof our industry. While watching for the online disruption, are we ignoring building better businesses that focus on and could command more of that $17-plus billion pie? The Wrong “E” Commerce I don’t want to be dismissive about the impact of ecommerce on a certain sector of the business. Some distributors will be disrupted by the Amazons and Walmarts of the world, and these are likely distributors who cannot solve problems for their customers and cannot clearly define their unique value. The online players will continue to take business from offline, transactional companies who provide no real solutions. I would also not suggest that ecommerce is unimportant; it is vitally important and has influenced the way B2B customers buy. But the “E” commerce we should be passionately pursuing is engagement commerce. Given that shopping cart-driven ecommerce is 23 percent of a $23 billion market and drop-ship sales from a highly engaged and consultative approach represent 77 percent of the market, it’s time we stop focusing on the threat of ecommerce and shift our attention (and resources) to enhance the customer experience through richer engagement. The consultative companies that provide solutions-through-product via consultation and that enhance and streamline the customer experience through technology will continue to command higher margins, continue to grow and continue to thrive. In the end, the final question becomes more about a question of being. If you were to become a restauranteur tomorrow, would you want to open a five-star steakhouse or a McDonald’s? Both are valid decisions that can lead toward profitability, but you can’t arrive at an actionable answer by asking, “How do I capture all food sales?” Yet, in the promo business, that’s what many try to do by becoming all things to all people, which is exactly how to commoditize your business and sacrifice your identity. German philosopher Arthur Schopenhauer wrote, “We forfeit three- fourths of ourselves in order to be like other people.” You only answer the final question by asking: “Who do I want to become? Which clients would I enjoy serving the most? What kind of business would bring me the greatest return, the most profit, and (dare I suggest it), joy? And, what distinguishable, engagement experience do I want to create for me, my team, and my customers?” Bobby Lehew is chief content officer at commonsku, an industry business management platform. He has won multiple PPAI Pyramid awards and was named to OKC Biz magazine’s 40-Under-40 in 2009 and to ASI’s Hot List in 2010. | SEPTEMBER 2018 | 73