Promotional Products Face Changes, Challenges

Promotional products suppliers and distributors have been able to ride corporate buyers’ profits to an average 1.3% annual growth rate in the last five years through 2019, reaching $17 billion in U.S. revenues this year, per IBISWorld market research. But a number of challenges, requiring innovative solutions, lie ahead. Continuation of the tariffs imposed in the U.S.-China trade war are likely to have a direct impact on the promotional products market, where the vast majority of products come from China, creating rising product prices and uncertainty. One of the options that some companies are already taking is a shift to sourcing from countries outside of China, such as Vietnam, per the Advertising Specialty Institute (ASI). Meanwhile, the promotional products market is facing competitive challenges from the entry of big online competitors such as Amazon. Market execs have told ASI that they believe the e-commerce power threatens to potentially cut out suppliers and distributors by positioning itself as the lowest-cost provider from a product and freight perspective. Their worries include Amazon opting to partner with only select suppliers and distributors; selling direct through its platform; and/or using its search presence for rankings that create winners and losers, and force up advertising expenses for all. Finally, the potential of an economic slowdown or even recession has some nervous. ASI recently interviewed 10 leading suppliers and distributors in the promotional products market for their visions on handling such challenges over the next 5-10 years. The good news is that all foresaw continued growth, albeit with increasing consolidation and online dominance. Among their predictions is that technology will be a key driver of every aspect of how buyers select and purchase products, of fulfillment and delivery, and of customer service through the order life cycle. Second, e-commerce will be the standard, benefiting big online players that provide fast, accessible solutions and inexpensive drop-shipping for some clients, as well as a suite of features to meet the complex needs of other more sophisticated clients. In that expanded digital environment, data management and analytics will loom large, tracking orders in production, materials used, items ordered, customer profiles and contacts, etc. Up against Amazon, personalized customer experience will be key to making an e-commerce presence into a true online buying experience. Competition will also drive the growth of creative promotional agencies that are not price-focused but seek to help clients build brand name. For more on leadership predictions, see our website blog post at https://www.acculist.com/promotional-products-market-faces-new-challenges/