Have Just the Rules Changed? Is it a Whole New Game?
Over the past couple of decades, several industries have been rocked to their core. Some are nearly extinct. Others are permanently changed: booksellers, the record industry, the office supply industry, travel agencies. What is happening now to the promotional products industry? Have the rules changed, or is this a whole new and different game?
Think about the travel agency industry. Back in 1990, there were many locally owned and operated travel agencies providing their owner-operators and employee agents with a great lifestyle and a generally decent income. In 2010, the travel agency industry is alive and well and strong. Not only did the rules change, the game is entirely different. In 2009, there were over 60 travel agencies doing more than $100 million in annual sales. However, the independently owned, mom-and-pop travel agency is now hard to find. The third largest travel agency has never had a brick and mortar business and it had sales in 2008 of over $21 billion. (As a point of comparison, the entire promotional products industry sales are estimated at around $16 billion.) Expedia started as an internal department at Microsoft in 1996 and was spun off to TicketMaster and now operates a fairly large conglomerate of travel-related websites.
The Internet was a game changer for the travel agency industry. Shortly after Expedia came into existence, the travel suppliers—led by the airlines, but including hotels and auto rentals—began lowering and capping commissions. Commissions were cut from 10% to 8% in 1997, to 5% in 1999 and then eliminated completely in 2002. Travel agents had to play the new game which meant:
- Retire or find a new way to make money;
- Charge for their services, knowledge and expertise;
- Find niches and specialties and differentiate;
- Merge, be acquired or become part of a larger organization.
Can it happen to the promotional products industry? Is it happening now? For those of us who are strictly selling "stuff": yes, it can. If the first option of retiring or finding a new line of work isn't appealing or achievable, and you're not ready for option 4, what can you do?