Does public access to supplier Web sites make you uneasy? Are you subconsciously bracing for the day when the traditional sales structure in our industry mutates into something you don't recognize, or worse, excludes you? This supplier says change is inevitable - but not to worry. The fear of suppliers selling direct is palpable for distributors. But is it realistic, even as the Internet makes it easier and more commonplace?

Consider this scenario: A supplier adds thousands of salespeople or acquires a huge distributor with a powerful sales force. With one fell swoop, it changes the way the industry functions. Then, slowly, that supplier lands a big end-user account - or gets one big order from Coke. Then it gets a second order and quote requests; then small orders and more requests for items it doesn't stock.

'This is so easy!' says the supplier, who makes a higher margin by getting orders direct. Then sales start declining from all the supplier's loyal distributor customers. 'Don't they like us anymore?' asks the supplier, as reality slowly creeps in.

Old Fears Die Hard

You get the picture. But the truth is, there isn't going to be some mass movement of suppliers selling direct to the end-user because of some new or existing technology like the Internet. Direct mail and telemarketing are two direct-selling methods that have been available for decades, and they can accomplish pretty much the same thing as a Web site. Those who fear that the Internet creates a new, magical direct-selling channel for suppliers probably haven't thought through the logistics and details of it.

Of course, that's not to say some unethical, unscrupulous and visionless suppliers wouldn't solicit business from end-users. That's an unfortunate reality that will continue to endure. But suppliers just aren't set up to handle all of the questions, idea-generation, creativity and hand-holding necessary to work with customers en masse. Distributors are hard-working, independent salespeople who work with thousands of unrelated suppliers and are essential to the promotional products sales cycle.

Even today's fanciest supplier Web sites - or those yet to be developed tomorrow - cannot replace the voluminous issues that distributors handle while obtaining a sale - not to mention the personal contact with the buyer in the form of office visits, birthday gifts and more. Customers will always need a handshake and smile, and technology will only make that contact easier. And the use of technology in personal interaction will always influence the making of a sale in our industry. But it won't change the basic structure of the industry.

Fitting In

That said, where do suppliers fit into the overall marketing of the product? Are they supposed to just produce an order and otherwise pretend that they don't exist?

Consider the case of Dell and Compaq. Dell reinvented the way computers are purchased. Compaq later tried the direct model and failed. In this scenario you have one company selling direct and another working through the existing distribution chain. Similarly, in the promotional products industry, some suppliers could survive selling direct while others will always be more successful maintaining the current supplier/distributor/end-user structure.

Then there's Intel Corp. - a good example of a company that promotes to the end-buyer using a 'pull-marketing' strategy. It creates brand awareness by being proactive with sales and creates demand for its product by co-branding and marketing with computer manufacturers. Yet, Intel doesn't sell direct, making it a winning situation for all: Intel gets its brand awareness, computer manufacturers sell units and consumers get value and maintain their comfort level with the quality of the product.

Admittedly, this comparison is a bit different than promotional products because no one wants to buy an Intel Pentium chip as a key chain! However, this kind of pull-marketing strategy can, and does, happen in our demure little industry. BIC, Hanes and 3M, just to name a few, all have 'special market' divisions where brand awareness originated from the retail side of their business, and that recognition is essential to their success.

What's A Supplier To Do?

Promotional products suppliers may choose to promote their brand to buyers and advertisers - and many do. But this is in no way an insidious plot to undermine the distributor. It's a marketing strategy that will create brand awareness outside of our closed industry without disrupting the foundation on which the essential relationships between suppliers and distributors are built.

Where can we find other analogies in the world of marketing? How about the pork industry ('The Other White Meat'), the dairy industry ('Got Milk?') and DeBeers ('A Diamond Lasts Forever')? No one has been able to order a pork sandwich, a carton of milk or an engagement ring from a Web site, and certainly not from these companies directly.

From what can be deduced from other B2B markets and recent advances in technology, suppliers selling direct from their Web sites or soliciting business from end-users can't work. Although this is only one person's opinion, the only way this could happen via the scenario mentioned earlier - acquisitions on a major scale. However, be it one, two, three or 10 networks of distributor salespeople owned by a supplier/corporation, they still may never produce the level of sales required to sustain a supplier's business. Value and service are key, and if a supplier can create them - either for distributors or the end user - then everyone benefits. If we embrace change, reality will be the barometer of how our industry will evolve.

Whatever Will Be …

It's inevitable: There will be some major changes to the dynamics of the industry in the years to come. Several potential scenarios can be identified. Even if current industry practices neither encourage or discourage the following situations, they may simply evolve into being.

Let's take a look at the possibilities - both positive and negative:

1. This one's easy. The promotional products industry will continue to grow and evolve, but the distributor/supplier relationship will continue as it has always been.
2. Stronger distributor salespeople and companies will thrive in the new e-marketplace because they have invested and partnered with certain suppliers.
3. Application service providers (ASPs) like ASItransact will be the sole means to conduct business and be the main conduit for distributor-supplier interaction. (A slight variation would be that this would affect only the smaller industry players.)
4. Distributor salespeople may be able to leverage advanced supplier Web sites to place orders and let the supplier handle the complete order process. This way the independent salesperson can concentrate on adding more value to the sale and use the supplier Web site as their virtual office. The supplier will handle the order processing, billing, artwork and order fulfillment. There would be no need to go through a distributor office or ASP.
5. Distributor salespeople may be able to leverage advanced e-distributor Web sites to place orders and let them handle the complete order process. This way the independent salesperson can concentrate on adding more value to the sale and use their Web sites as their virtual office. The e-distributor will handle the customer service, order processing, billing, artwork and order fulfillment. Again, there would be no need to go through a distributor office or ASP.
6. Suppliers sell direct to end-users. Many of the promotional products industries throughout the world don't have the supplier/distributor/end-user model that we do in the United States.
7. Suppliers become less invisible in the sales cycle through the use of various technology platforms that will help create more supplier brand awareness with end-users. (Several U.S. distributors are encouraging this idea.)
8. Suppliers begin to market their products to end-users and brand themselves outside of the industry - but still won't sell direct.
9. Industry associations and networks will act as distributors.
10. Distributor bases, like ad agencies and promotion agencies, will increasingly work directly with suppliers, as some (appropriately) do now.

Time Will Tell

No one individual or company can facilitate or prevent any of the above scenarios, but we all have control of how we react, change and thrive. Life - and business - is full of surprises: There's no pat formula for success in either one. However, time has shown us that smart, innovative and service-oriented companies have what it takes to thrive and succeed both now and in the future.

Jeff Lederer is vice president of business development for Prime Resources Corporation .