How to Compete With Big Online Promo Distributors: Don't
Welcome to Vegas! All week long, Promo Marketing will be reporting live from the PPAI Expo 2019 at the Mandalay Bay Convention Center. If you're at the show, stop by booth 3237 and say hello. If not, keep an eye on our newsletter for product information, session wrap-ups and a whole lot more, brought to you right from the show floor. Up now: We recap Bill Petrie's education session, "How to Out Amazon Your Competition."
These days, everyone in the promo industry is a little spooked by Amazon. It's hard not to be—after all, the $427 billion behemoth has extended its tendrils into just about every market. That includes promotional products. A number of large distributors are already selling via Amazon. One, C2BPromo, has its own microsite right there on the platform. And that's before you even get to the mega distributors, like 4imprint, that sell almost exclusively online.
How's a small or independent distributor supposed to compete with those guys? It's a question we hear a lot, especially as those large distributors grab more and more of the market share.
Bill Petrie, president of PromoCorner, has a simple answer: Don't even try.
In a packed education session at the PPAI Expo on Monday, Petrie explained the deceptively simple strategy. You're not going to be Amazon, he says. And you're not going to be 4imprint. So stop trying to be them. Learn what they do well—and learn from it—but try to beat them by providing the things they can't.
That starts with saying "no" to small orders—cocktail napkins, family reunion T-shirts and the like. Online distributors are a place for buying, not browsing, Petrie says. People go to them with a specific product in mind, buy it and move on. And those online competitors have blind spots. They don't know local market conditions—trends, demand, resources—and they certainly don't know your clients' marketing goals or challenges. They have loads of data on those things, sure, but they don't have the hands-on, real-time knowledge a local distributor does.
That's where small distributors have an edge. Large online distributors' biggest strength is also their biggest weakness: They sell product. Let them do it, Petrie says. Provide more than just product. Get to know clients on a more intimate level. And, above all, provide a level of customer experience that Amazon and other online sellers can't even touch. "What you can provide is a blended experience that centers around an individual customer's wants and needs," Petrie says.
And, the irony is, small distributors can do that by borrowing a few strategies from Amazon. In his presentation, Petrie outlined four:
1. Understand your customers' data (and use it). Amazon's recommendation engine generates 35 percent of its revenue, Petrie says. Are you recommending things to customers? He suggested complementary products, and packaging that provides a retail feel. He also advised looking into customers' past purchases to identify why they bought a product and what they might need in the future. "Make it easy for your customers to buy stuff," Petrie says.
2. Think recurring revenue. A huge portion of Amazon's revenue is Prime subscriptions, and while distributors can't necessarily replicate that, they can find recurring revenue in other places. Petrie suggested subscription boxes or other similar merchandise programs outside of the typical company stores. Do it with purpose, he says—for example, create different boxes for different audiences your client wants to target—and offer a discount for repeat buying under the program.
3. Experiment. Amazon and other large companies fail more times than they succeed. But sometimes those failures lead to massive breakthroughs. Measure results and don't be afraid to fail, Petrie says. Change things up. He suggested trying something new once a quarter—your prospecting methods, your marketing approach, even your business's branding. It might even be as simple as using new suppliers once in awhile.
4. Secret shop your business. You might think you offer great customer experience, but your customers might have very different ideas. Petrie advised recruiting a friend or family member to go through your buying process and provide feedback on the experience, to better see your buyer's perspective.
"Be a customer service company that sells promotional products," Petrie says. "Not a promotional products company that has good customer service."