The partnership between distributors and suppliers is the foundation on which promo is built. The two work hand in hand to deliver high-quality branded merch and fill the end-buyers’ numerous needs on what are typically very tight timelines.
However, for the second consecutive year, fewer distributors have increased the number of suppliers they’ve worked with. The trend (which is especially pronounced among medium and larger distributors) shows that firms are either tightening or simply maintaining their vendor list. Why is that the case, and what qualities do distributors prize right now with pricing and much else in question?
Distributors who increased the number of suppliers they purchased from
(compared to the previous year)
Distributors have strong opinions on what they typically look for in their vendor partners. “I expect lots of communication, order accuracy, flexibility, accountability and on-time delivery,” says Renya Nelson, CEO of Brand Aid (asi/145193).
Jenn Klemm, brand consultant for Counselor Top 40 distributor Boundless (asi/143717), values response time and creativity. “We live in an urgent culture, and I need quick, accurate responses,” she says. “I need transparency and for vendors to do what they say they will.”
Kim Williams Stiller, account executive for Williams & Associates (asi/360450) who works in Lahaina, HI, emphasizes the importance of connecting with a human vs. dealing with call centers. When someone picks up the phone or checks on something for her, she makes note of it. “When I entered this business over 20 years ago, I had personal relationships with supplier reps. That's rare now and valued by me,” says Stiller. “I choose to do business with suppliers that respond to me and treat me like they value my business.”
On-Time (for Now)
The percentage of on-time orders reached its nadir in 2021, and while it didn’t increase last year, it certainly stabilized. “On-time orders have absolutely improved from the pandemic and supply chain crisis days,” says Mark McCormack of Identity Marketing Group (asi/229857). “Communication is a must in the supplier and distributor relationship. If the order isn’t going to make it on time, we need to know early to pivot to something that will. If this happens twice, we eliminate the vendor from our system. Simply put, time is always an issue.” However, as imports from China were temporarily put on hold due to severely high tariff rates, available inventory with suppliers may become a shell game once again like it was a few years ago, which could impact on-time delivery.
Percentage of On-Time Orders From Suppliers
“What we need from our suppliers right now is clear, proactive communication.”Renya Nelson, Brand Aid (asi/145193)
On the subject of increasing or decreasing the number of suppliers that Pinnacle Promotions (asi/295986) works with, CEO David Weintraub says it’s a loaded question. “We’ve decreased the number of vendors we work with overall but have increased the number of suppliers in our Preferred Vendor Program, the ones who get a majority of our business,” he says, noting that it helps streamline the process for customers in selecting products. Weintraub adds that the wave of mergers and consolidations in recent years have resulted in larger suppliers that can fill more roles, which makes it easier to work with them. “Adding suppliers to our Preferred Vendor Program,” he says, “allows for great payment terms and a better working relationship, and is easier than going out and looking for new suppliers.”
Klemm has reduced the number of main suppliers she works with in the past two years, primarily due to the massive acquisitions within the industry. “The market is flooded with too many vendors offering the same products,” she says, “and ‘everyone is doing everything’ in terms of offering an extensive variety of services.”
Not all distributors have narrowed their vendor list. Brand Aid has “dramatically increased” its number of vendors, says Nelson. “Because we aren’t in a bigger distributor network and we don’t belong to a buying group, it allows us to offer a massive range of products and not be limited in our product range.” Also, many key supplier reps that the distributor worked with were laid off during COVID, and once the suppliers ramped up staffing, Brand Aid was eager to rekindle relationships.
Mark McCormack, founder and CEO of Identity Marketing Group (asi/229857), encourages expanding your base for suppliers that offer the most unique products that support clients and their goals. He suspects one reason some distributors may have dropped their vendor count is they may be trying to keep credit in check with their existing base with whom they have terms. “We don’t have this issue as we’re current with our supplier list and make sure we have our payables in check,” he says.
A Turnaround That Lasts?
Five-day or less orders have rebounded since COVID as both the supply chain and supplier worker shortages have improved. “We love rush service and we are built to do it well,” says David Weintraub, CEO of Pinnacle Promotions (asi/295986). “The whole rush order process is getting easier if you use the right suppliers with the right technology and your internal systems are set up properly to manage the process.” If imports slow down and inventory becomes spotty once again (as it did during the post-pandemic supply chain crisis), expect rush orders to decline.
Percentage of Orders Requiring Five-Day or Less Turnaround
All that being said, it’s clear that as uncertainty reigns and tariffs cast pricing into question, distributors prize information from their suppliers and partnerships. “What we need from our suppliers right now is clear, proactive communication – specifically around how tariffs are being passed along in pricing and what their current inventory levels look like,” Nelson says. “Vague answers don’t cut it when we’re trying to manage client expectations and timelines.”
Weintraub says Pinnacle pre-ordered heavily and has a strong inventory position. “We’ve been looking to our suppliers to help us gauge where they think they will be with current stock over the next few months and have asked them to hold pricing on items they already have in stock for our program customers,” he says.
Distributors say they have realistic expectations. They know that price increases are inevitable and that all products can’t instantly be produced in the U.S. “The best way that suppliers can support me is to communicate,” says Stiller. “Be available, be proactive and be responsive. I don’t demand nor expect suppliers to hold prices. This is out of their control. Just communicate.”
Direct Impact
A greater number of distributors are sourcing products directly from overseas. Brand Aid CEO Renya Nelson said sourcing overseas “used to feel risky” but is now seamless, and has led the distributor to embrace the practice. “Communication has improved,” she says. “I’ve found so many factory partners that can meet our time zone demands, and shipping and turnaround time has dramatically improved.” Even with tariffs, the distributor isn’t looking to source less, but rather diversify its supply chain beyond China into Vietnam, India, Indonesia and Mexico. “We’re not cutting ties with China,” she says, “but we are expanding.”