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Promo Price Increases Loom Due to Importing Woes

Shipping challenges and rising raw material costs are poised to drive product price hikes, as COVID lockdowns threaten promo supply chains in China.

Call it a perfect storm.

A complex concoction that includes skyrocketing shipping container costs, rising raw material prices, reduced shipping capacity and log-jammed ports, much of it fallout from the COVID-19 pandemic, is creating an international sourcing nightmare for North American promotional products importers and fueling the potential for price increases on a gamut of products.

The challenges could intensify in the coming weeks as the calendar builds toward China’s Lunar New Year on Feb. 12 , and as authorities in Beijing re-institute strict societal lockdown measures in parts of the country to corral coronavirus spread amid a recent reemergence of new COVID cases.

“It’s been one thing after another,” said Jeffrey Nanus, president of Norwood, NJ-based hard goods promo supplier AAA Innovations.

Shipping Expenses Surge
Factories in China manufacture the majority of promo products sold in North America, with other countries outside the U.S. and Canada also producing many items for the market.

One of the biggest current challenges facing suppliers who import product, as well as distributors that source direct from overseas, is the availability of shipping containers to transport product from those international locales to domestic shores.

The containers are essential. They store items that are carried from China, or other countries, on ships to the U.S. and Canada. Only now, there’s a critical dearth of containers, and the scarcity is sending prices for available containers through the stratosphere.

“We have seen container costs rise 25% to 35%, depending on the lane and the carrier,” said Andrea Lara Routzahn (pictured), senior VP of portfolio and supplier management at Trevose, PA-based alphabroder, the second largest supplier in the promo industry.

It’s been worse for Nanus.  In recent months, AAA Innovations had been paying a contract rate of about $3,000 per container to ship from China to California and about $4,000 per container to ship from China to New York. Now, the supplier is paying $8,000 to $9,000 for California-bound containers and more than $10,000 for New York-bound ones.

“We’ve had quotes as high as $12,000 per container – that’s crazy,” Nanus said. “No one is honoring contract rates. It’s the first time in my 29 years in this business that I’ve seen anything like this.”

Routzahn said the competition for containers is fierce, resulting in locked-in contract rates being tossed aside and the containers going to those willing to pay elevated rates. Alphabroder has worked diligently to consistently identify the most affordable options via these “spot buy” transactions. Still, what some termed opportunism among container providers appears to be rampant, critics maintained. “Some carriers,” said Routzahn, “are offering a premium service to lock in rates which require customers to commit to monthly usage commitments whether they ship or not.”

A number of factors are causing the container shortage. A key one is that it’s taking longer for empty containers to be returned for refilling. For instance, the average turnaround time for containers returning to China was 100 days in December, up from the usual 60 or so days, according to the China Container Industry Association. The slow return is a consequence, in part, of it taking longer to deliver and unload containers, which has resulted from labor shortages and pandemic health-and-safety protocols that slow the process down.

“Containers are taking longer to unload at port of entry,” said Cheron Coleman, alphabroder’s VP of global supply chain. “Then they’re taking longer to get to their final consignee destinations due to domestic rail and long haul shortages, and they’re taking longer to unload at consignee warehouses due to warehouse labor issues. Finally, empty containers are taking longer to get back to the ports to head back to origin.”

Relatedly, it’s more difficult for importers to secure a spot for containers on a delivery ship.  As Nanus and other import experts explained, shippers shelved portions of their fleets in 2020 as demand plummeted amid the global economic crisis that the pandemic caused. Since then, demand has rebounded robustly, especially for goods made in and exported from China, which in November logged a record trade surplus of $75 billion. Still, shippers haven’t returned their fleets to pre-pandemic levels, which has put space on available ships at a premium, Nanus said.

“The growth in exports, combined with the reduction in ocean carrier capacity, has created a situation where there is simply not enough shipping capacity to meet demand,” said David Nicholson, president of New Kensington, PA-based Polyconcept North America, the fourth largest supplier in the promo industry.

Nicholson continued: “As a result, carriers are taking advantage by putting through price increases – with shippers desperate to get inventory replenished willing to pay just about anything to get their orders out.”

As Nicholson and others explained, there’s always a mad dash among importers to get product from China stateside before the Lunar New Year in February, which typically sees factories in China close for a couple weeks, with workers often traveling to see family.

This customary surge in market demand has exacerbated the challenges related to container and shipping capacity issues, and comes as some importers scramble more than usual ahead of the Lunar New Year, as they’re worried that COVID-related health-and-safety initiatives tied to the travel of factory workers could lengthen how long factories close and/or operate below peak capacity.

“We’ve heard that some factories could close earlier than normal for this time of year,” said Nanus, though he noted AAA Innovations’ factory partners are fully operational.

An alternative to ocean shipping is air freight. However, that’s a more expensive option – one that’s become even more so. “We’ve seen air freight more than triple,” said Nanus. “Normally, we’d be at about $3 per kilogram. We’ve paid up to $10.” He noted that, as of Wednesday, Jan. 13, the rates were in the neighborhood of $4.80 to $5. Even so, there’s volatility in the market, and rates are subject to increasing again.

Container availability and insufficient shipping capacity have caused promo products to arrive after expected in-hands dates and, in instances, miss the deadlines by which they were required by distributors’ end-clients. Nanus described a situation in which the shipping issues resulted in not being able to meet such a deadline for a distributor. AAA Innovations communicated the reasons, and the distributor called the end-client to explain.

“The end-client laughed and said that was the 12th call he’d gotten on the issue of product not making it in time from overseas,” Nanus said.

Suppliers said the freight woes could remain an issue throughout 2021, especially if demand intensifies amid societal re-openings, which business leaders are banking on as vaccinations potentially inoculate broad swaths of the population against COVID-19.

“There are simply not enough containers coming back to China, with import volumes lagging behind the export growth,” said Nicholson. “And, as the U.S. economy begins to recover mid-2021, things could get worse before they get better.”

Raw Material Costs Rising; Promo Product Prices Could Follow
Raw materials are another component of a product’s total cost that’s increasing for suppliers.

Nanus, for instance, noted that costs for the metals and woods necessary to make the products he sells have increased between 5% and 8%.  “With the rebound of oil prices and other raw materials, along with moves in the Chinese currency rate, we’re beginning to hear of pricing pressure from Chinese producers,” said Nicholson.

Things could get more complicated.

On Wednesday, Jan. 13 the U.S instituted a ban on all cotton from Xinjiang, as well as all products made with cotton from that region of China, because of extensively documented use of forced labor there.

Many in promo and the apparel/textile world believe the ban was made for the right moral/ethical reasons and are on board with it. Still, the ban stands to potentially drive up cotton prices.

Xinjiang produces about 20% of the world’s cotton and 84% of China’s supply, according to some estimates. China is the world’s third-largest cotton-producing nation, behind India and the United States. Removing Xinjiang from the cotton equation reduces the cotton supply available to U.S. apparel and textile companies, and their overseas factory partners, at a time when cotton prices were already rising.

Paltry crop yields, resulting from insufficient rain, are among the factors spurring a rise in the price of cotton. The Wall Street Journal reported that cotton prices recently rose to their highest level in nearly two years, noting that the most-active cotton futures contract was at a point up 55% from when prices bottomed out on April 1, 2020, amid the early days of the pandemic.

Ultimately, higher prices for cotton and other raw materials, combined with sharply steepened shipping costs, could drive price increases on promotional products that range from apparel to umbrellas and everything in between.

Given the increased shipping costs and the likelihood of buying price increases, there’s a high probability that suppliers will need to consider price increases at some point in 2021,” said Nicholson. “Obviously, there remains sensitivity to the fact that our industry is still in a period of recovery, so how aggressively suppliers pass along these costs will be a question. However, there’s little doubt suppliers will be facing a number of challenges regarding gross margins.”

Ballparking an “average” increase would be misleading, asserted Nanus, because actual rises could depend largely on both materials in a product and the product’s size. In his opinion, larger items stand to see more noticeable increases. That’s in part a result of the rising container costs. Consider, he said in a hypothetical scenario, that if you can fit thousands upon thousands of small items in a container, you can better spread the container cost increase over those items. But if you can only fit a few hundred items in the container, each particular item has to carry more of the container cost in its price tag.

“Because we’ve pre-sold goods at a certain price, we’ve already had to take it on the chin because our costs soared after the fact,” said Nanus. Looking ahead, “we are planning increases. It doesn’t mean we’re passing everything along, of course, but we have to account for some of the cost pressures we’re facing. Everyone is raising prices.”

China’s COVID Reemergence & Promo Supply Chains
In the winter of 2020, authorities in China implemented vast societal lockdown measures to counteract the spread of COVID-19. Those tight restrictions clamped down on factory activity, disrupting global supply chains, including those in the promotional products industry. Now, amid a new flare up of COVID in China, Beijing authorities have placed about 22 million people on lockdown, essentially ordering them to remain in their homes. Further emphasing the situation, on Friday, January 15, reports emerged that Chinese authorities were building a 3,000-unit quarantine facility to deal with a feared overflow of new COVID patients.

The move has awakened anxieties among some Western businesspeople who rely on Chinese production to power their industries here. They fear that factory productivity could again be impacted – and there’s at least some evidence those fears could be founded.

Certain promo suppliers tell Counselor that they’ve received communications from Chinese factory partners indicating that disruptions are in the cards. Suppliers have gotten letters that warn that delays in production and delivery could occur because of COVID-related issues. Those issues could include reduced staff, a potential result of mandated quarantining or actual coronavirus infections, as well as possible temporary factory closures ordered by governmental authorities.

Even so, not every supplier has received such warnings. Executives for such firms noted that their factory partners’ operations have not communicated any pending issues and have not experienced interruptions. “All our partners have integrated mandated COVID protections into their daily operations and are not experiencing any renewed difficulties,” said Routzahn.

Even if there are interruptions, some supplier executives believe that, given current evidence, there will not be a return to the major productivity-damming issues that Chinese factories faced in early 2020. “China’s response last spring and its ability to control the spread of new cases suggests the country should be well-positioned to weather this most recent increase,” said Nicholson.

It’s a prediction promo suppliers, distributors and decorators alike collectively hope will hold true. Nonetheless, the situation bears close watching in the age of COVID, which has made instability the norm and rapid adaptivity essential to business survival.

By Christopher Ruvo    From: PROMOGRAM 

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Notorious Markets – It’s That Time of The Year

It’s officially ‘Notorious Markets’ time again. Every year at this time the U.S. government, by way of the U.S. Trade Representative (USTR), publishes a list of sellers it identifies as being notorious markets. This notorious markets list identifies retailers and online sellers accused of selling counterfeits, as well as those accused of being involved in theft of intellectual property or piracy. For the second year in a row, ecommerce giant Amazon is crying foul for being featured on its notorious markets list and effectively blacklisted by the USTR.

With the years-long battle between the outgoing administration and Amazon CEO Jeff Bezos, it is no surprise that Amazon now claims the designation of five of the company’s foreign sites on the government’s “notorious markets” list in 2020 was little more than political gamesmanship. 

“Amazon has, and always will be, a trusted place to shop for authentic products. Including Amazon in this report is the continuation of a personal vendetta against Amazon, and nothing more than a desperate stunt in the final days of this administration. Amazon does more to fight counterfeiting than any other private entity we are aware of,” the company said in a release.

While the notorious markets report from the USTR has no real legal muscle, it is used as leverage, with the hope of inducing more countries and companies to embrace better enforcement of both online and brick and mortar markets. Forty online sites or companies, as well as markets in 17 countries, ranging from Argentina to Vietnam, are on the 2020 list.

“The Office of the United States Trade Representative highlights certain online and physical markets because they exemplify global counterfeiting and piracy concerns and because the scale of infringing activity in these markets can cause significant harm to U.S. intellectual property (IP) owners, consumers, and the economy,” the USTR states.

So, what does this mean for those of us in the promotional products industry? What does all this mean to you and your client, like the one you might suspect may be shopping your prices against those found online, and possibly buying fakes? I’m certain that you’ve talked with them about the dangers of buying on price alone, as well as the impact of counterfeits on both the economy, as well as potentially on your clients’ brand reputation. That said, I believe that this is an important conversation to revisit with those clients, and with all clients, on an annual basis. 

Even if your market is just around the region instead of around the world, the impact of counterfeits on the market as a whole on both suppliers and distributors can be great. Here are the basics of what I suggest you make it a point now, as a new year begins, to discuss with your clients:

  • Losing sales from undercutting prices affects everyone — make it a point not to play in that arena. 
  • Counterfeits can cause severe damage to the reputations of authentic brands, many of whom might well be your clients. 
  • There can be major fallout from dealing with counterfeit brands, including potential legal ramifications, as well as the risk of potential injuries or even death.
  • Long-term term trust is built between clients and their vendor partners over the long term. Engaging in the practice of promoting or selling counterfeit goods can have a significant impact on that trust.
  • It costs time and money to fight fakes, including the cost of product recalls that are a very real possibility. There’s also expert PR assistance brought in to deal with the reputational bad publicity that is an inherent part of recalls. The risk is, most definitely, not worth the prospective gain.

These are important strategic considerations for brands and, as their trusted promotional products vendor partners, it is incumbent upon all of us to help guide them to making smart decisions and protecting their companies. “Brands have never been more vulnerable to the issues of online counterfeiting, piracy, and distribution fraud” said Red Points CEO Laura UrQuizu. In fact, Red Points is working with businesses worldwide to protect their assets across online distribution channels by using artificial intelligence and machine learning to help detect and remove counterfeits.

Finally, a “counterfeits don’t really hurt anybody” attitude is not going to cut it. The International Chamber of Commerce estimates that the global economic value of counterfeiting and piracy could reach $4.2 trillion by 2022, and put more than 5 million legitimate jobs at risk over that same time period. The ICC adds that there are serious unintended and damaging effects counterfeiting causes, like exploiting child labor and increased pollution. It’s both the unregulated manufacturing, and the large quantities of counterfeits seized by law enforcement that are often destroyed by incineration. You can position yourself as part of the solution, for yourself and for your clients, by pointing them towards responsibly-sourced products that are both good for the environment and safe for end-users.

Jeff Jacobs has been an expert in building brands and brand stewardship for 40 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. Connect with Jeff on TwitterLinkedInInstagram, or read his latest musings on food, travel and social media on his personal blog jeffreypjacobs.com.

From Promo Corner By: Jeff Jacobs, The Brand Protector, 1/25/2021

sixtwentysixNotorious Markets – It’s That Time of The Year
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Lady Gaga Launched Branded Oreos to Promote Her Latest Record and People Are Going Nuts

What is it about promotional Oreos that just makes everyone go … dare we say … Gaga? (You’ll laugh in a second.)

First it was Supreme dropping branded Oreos. Those sold out (and popped up on resale sites for stupid money) immediately, which is no surprise for Supreme.

Now Lady Gaga, a titan of promotional marketing herself, created branded “Chromatica” Oreos, and guess what? Those are impossible to find, too.

Some of the first Gaga Oreos were given to fans through an online scavenger hunt on Twitter.

We love a good scavenger hunt. There need to be more of those online these days.

But, anyway, the Oreos were still available in normal stores, whether you participated in the challenge or not.

According to Buzzfeed, however, supplies were limited, probably due to the fact that people have been buying them up like they’re worth their weight in gold.

Come to think of it, after what happened with the Supreme Oreos, maybe they will be worth something.

People are already selling them on eBay for about $15-$25 per pack. That’s obviously quite an upcharge for a pack of cookies.

This is now two Oreo co-brand efforts that people have lost their minds over. You know what this means: Oreo can just keep this train rolling with other brands, and know that they’ll sell all of their supply almost instantly.

By Brendan Menapace, Promo Marketing Magazine, February 2, 2021

sixtwentysixLady Gaga Launched Branded Oreos to Promote Her Latest Record and People Are Going Nuts
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A Gift Still Worth Giving

The end of this year may be unlike anything we’ve seen before, but don’t give in! It’s more important than ever to show employees and customers that they’re appreciated.

Year-end celebrations are meant to commemorate all the good times and successes of the past year. But clearly no one’s in a mood to celebrate all that’s happened in 2020. “We’re traumatized,” says a chief strategy officer for marketing, sourcing and compliance at a Top 40 distributor in Los Angeles. “We’ve been through a lot. We haven’t been connected, we haven’t been together.”

The fourth-quarter gifting season has always been promo’s time to shine. Distributors and suppliers could count on the rush of end-of-year orders to lock in a successful, profitable year. This year? There’s only uncertainty. Of course, there’s the looming specter of prolonged shutdowns that have crippled business for months.

But what will those year-end celebrations look like – if there are any at all? Without in-person events, how will companies recognize and show their appreciation to hardworking employees and customers who weathered There are ways to do it, say distributors and suppliers, and it’s important that gifting and recognition still take place, especially this year. Yes, customers’ budgets have been slashed, so distributors will need to tap into their creativity, sourcing connections and long-term relationships with suppliers to help end-buyers find solutions challenging situations this year and stuck by them? Promo can help companies connect their employees and prepare for 2021

Two Little Words: ‘Thank You’

With health and business challenges and slim budgets, who feels like celebrating? While it’s sure to be scaled back and more conservative than previous years, gift-giving this year will play a critical role in acknowledging, recognizing and thanking people. If 2020 taught us one thing, it’s that we’re more than employees or clients; we’re people, with real human concerns. A little gift to say thank you goes a long way.

A director of national accounts at a Top 40 distributor in Sterling, IL is starting to help clients with appreciation gifts for their employees. “They worked through the pandemic, took pay cuts and went on furlough, while staying loyal and often doing things outside their job description to help keep the business going,” he says. “Recognition and retention will be big topics this year.”

In years past, high-end awards for star employees and donors dominated the Q4 gift scene. This year, without in-person events, recognition and thank-you gifts will be smaller and more utilitarian, much of it drop-shipped to private homes as custom kits or “parties in a box.”

“Trophies are really for recognition in front of peers,” says Rena Ashfeld, vice president of sales at Webb Company, Eagan, MN. “We’re not going to see ceremonies, cocktail parties or dinners, but people will appreciate high-value, useful items at many different price points.”

It’s definitely going to be a different feel from past fourth quarters. But it’s also an opportunity for end-buyers to comfort their recipients and let them know they’re there for them and appreciate their hard work.

“We’re going to need the human dynamic,” says Greg Armstrong, vice president of sales at Evans Manufacturing in Garden Grove, CA. “Gifts need to be impactful, thoughtful and utilitarian, with high perceived value. Don’t give out something like clocks that will just sit on a mantle, and recognize that companies might not be able to afford name-brand wireless speakers for everyone.”

Marketing budgets may be slashed significantly, but it’s up to distributors to make sure clients know how important it is to reach out to their employees and customers with gifts that can serve them at this difficult time. “We’re not going to have parties, but it’s still very important that companies send out something to their people,” says Abergel. “Promo connects people.”

No Place Like Home

As reopening plans were made, implemented and then rolled back in some states this summer, people slowly realized that a return to normalcy was going to take a long time. For many, homes were their safe havens in the midst of the storm.

While $100 trophies and name-brand wireless speakers may be off the table this year, companies can still show appreciation with gifts for home use, usually at affordable price points. “We’re now working, playing and overall living at home more,” says a distributor in Maple, ON. “It’s up to distributors to present unique ideas that might not have been typical options in the past but are totally relevant now.”

Despite fears of slashed marketing budgets, food gift supplier Maple Ridge Farms in Mosinee, WI, is up 50% year-over-year, because of remote work, a lack of dining out and a few smaller reopening celebrations. President Tom Riordan says they’re fulfilling more orders for cheese and sausage packages than he can ever remember. He expects dining in and family sharing of food gifts to remain popular through the fourth quarter, and smaller items will be used as teasers for virtual parties and year-end meetings.

“Almost all of our customers think their Q4 business from 2019 will repeat,” says Riordan, anticipating repeat business this holiday season but with smaller orders. “Over the past 10 years, there’s been a shift from sending items to residences to sending them to offices for workers to share. That will flip big time this year.”

Now, people want a change of scenery after months of stay-at-home orders, but aren’t yet ready to board flights. That means more road trip and camping items will soon be in demand. “People want to be safe, but they want to get out of the house,” says Abergel. “Items won’t be at the same price points as previous years, but we’ll take the same care with it.”

Another option: “Experience” gift bundles that give recipients a taste of a destination without having to leave the couch. Was a client’s incentive trip to Puerto Rico canceled this year? Put together a kitted box with personal care items, fun sunglasses, barware, towel and tote. It’s not the same as actually going, but it’ll get attendees pumped for the 2021 event.

Think home exercise apparel and equipment and cooking accessories, for starters. Starline in Grand Island, NY has a wide array of kitchen tools, such as bowls, tongs, spatulas, serving spoons and bamboo cutting boards. “This is the year of cooking and dining in,” says Brian Porter, Starline’s senior vice president of sales and marketing. “We’ve seen steady order increases week-over-week.” He says other “universal use” items, like tech accessories, are great for sharing with significant others and kids.

Workers Near & Far

When employees were first told to go home and set up shop in their dining rooms, no one knew exactly how long it would be before seeing their co-workers in person again. Now, it seems it might not be before the end of the year, and maybe not until Q1 2021. That means employees will continue to need work-from-home items, even if they’re on newly implemented flexible home/office schedules.

Sheng Kuo, principal at KLM Promo Products in West Covina, CA, says good quality branded headsets would be appreciated for virtual meetings, especially if the ones recipients have been using look worse for wear after more than six months of near-daily use. He says companies are also looking for desk items like wireless device chargers with UV sterilizing cases.

For those venturing out of the house more often as restrictions lift, consider stylus pens for transaction screens and ATMs, no-touch tools and bag holders to avoid contact with floors.

Ahead of virtual year-end events, companies can distribute gifts to employees in the office and drop-ship them to those still working remotely. “It adds a personal touch and promotes team spirit,” says Kuo.

For companies with a little more to spend, custom sales specialist Eleanor Turner of Cufflinks Inc. (asi/47838) says cufflinks, ties and scarves are ideal for virtual holiday parties and then as permanent wardrobe pieces for virtual sales calls. “All of our items are used from the waist up,” she says. “There’s a novelty to them and they’re personal items the team can use. They bring comfort and remind everyone that we’re all in this together.”

Meanwhile, welcoming back employees to shared workspaces is slowly starting and is expected to continue ramping up for the rest of 2020 and into 2021. Q4 gifts can help prepare everyone for the transition.

Webb Company has been doing more kitting than ever before. “Kitting is our go-to moving forward,” says Ashfeld. “It’s interactive and tangible.” The supplier is putting together bundles of PPE and promo customized to each client’s needs. “We’re including no-touch keys and drinkware,” she says. “We’re also combining tech accessories with personal care products like lip balm and sanitizer. We’ve made things easier by offering a black gift box with an in-house printed label. It’s got a subscription box feel and it makes people happy. And then we can drop-ship to homes.”

Clients can also help returning employees maintain a healthy distance by giving them personalized items, which not only adds an appreciated touch to the piece, but also mitigates accidental sharing.

Personalization is normally used with about 10% of orders at Starline, says Porter. It’s now about 50%. “They’re looking for personalized coolers in particular,” says Porter. “Employees won’t be able to commune in breakrooms, so this helps avoid gathering and use of the fridge. Then they can still bring their lunch and eat healthy because they’re not going to the fast food place down the street. Plus, with temperature checks at the door, leaving for lunch and coming back will be a pain.”

An appreciation gift will have even more impact this year if there’s a built-in health and safety aspect. “We can help people feel safe coming back to work,” says Silseth. “Whether it’s PPE or showing them how valuable their role is, there are opportunities we can propose to clients to help them with comforting their people.”

Q4 Challenges Compounded

With a flurry of orders and clients coming to distributors late in the game, the fourth quarter is traditionally a trying one, particularly when it comes to inventory levels. This year, the quarter will have its own unique challenges.

To start, many end-buyers will have a hybrid of in-office and remote gift recipients. To meet demand, promo companies will have to be nimble to offer clients the smoothest gift experience possible. Drop-shipping, for example, is a must-have this year. “Say a company has 600 remote workers,” says Armstrong. “How do you get gifts to them? They can’t all stop by on December 23 to pick them up. That would be chaotic, so you deliver them to people’s doorsteps.”

Many factories are now offering extended services in drop-shipping, kitting, warehousing and curbside pick-up. “We’ve always offered these things, but it was mostly for our larger national clients,” says President & CEO Sam Singh. “Now, everyone needs them. In Q4, we’ll be ramping them up to offer a frictionless experience.”

Keep lead-times in mind as well. This year, the persistent problem of COVID-related supply chain disruption complicates an already busy gift season known for fluctuating inventory levels. Riordan at Maple Ridge Farms said they had to expedite a few meat orders because of facility closing concerns, and lead-times on gift towers lengthened considerably recently after the cardboard supplier was shut down for several weeks. “Disruption could also spike prices, sometimes between 25% and 30%,” he says. “Clients should be ordering twice as early.”

But arguably, the most daunting challenge will be reduction in client budgets. End-buyers say they just don’t have the money to give out gifts this year. Distributors should be sensitive to financial challenges while also offering to help clients get creative with fewer dollars at their disposal.

Singh says two kinds of spend will dominate Q4 sales: Higher-end products for a smaller group of recipients (what he calls a “narrow and deep strategy”), and higher volumes of lower-priced items to get them into more people’s hands and keep their brands top-of-mind. Think pens, ceramic mugs and water bottles, he says. Clients might still be thinking in terms of $100 gifts. Tell them $10 to $15 will still get them something worth giving, says Abergel, even if it’s just drinkware, a blanket or comfy socks with a card or note.

Don’t forget to use available budget from canceled end-of-year parties. “Our national sales meeting isn’t happening,” Porter adds. “The $50-$60 in overhead for each attendee is going to Q4 promo for our people.”

Ashfeld says she’s quoted a variety of gift bundles from $15 net (a vacuum tumbler with candy inside) to $50 net. “I’d say the sweet spot for gifts this year is in the $10 to $30 range, including the products, imprint and packaging,” says Armstrong. “Companies aren’t going to do $50 to $100 a person.”

It’s been an unforgettable year, but for all the wrong reasons. Now, it’s up to distributors and their supplier partners to help clients end the year on a positive note with an affordable token of gratitude. “Showing appreciation is at an all-time premium right now,” says Armstrong. “Companies need to say to their employees and clients: ‘Thank you for enduring and sticking by us.’”

The right gift at the right price not only recognizes employees and clients after a long, difficult year, but also boosts morale for the next. “Gifts will keep everyone connected and ready for 2021,” says Abergel. “We’re all going to have to start building business up again and getting back on track.”


TARGET DEMOGRAPHIC: HOMEBODIES – Stay-at-Home Order
With restaurants and bars either closed, takeout-only or at reduced capacity, 2020 has become the year of cooking at home. Think kitchen items with high perceived value, such as cutting boards, utensils, spatulas, spice racks, and even bowls and strainers. Send an eco-friendly message with items made of sustainable bamboo. And look to food gift suppliers for meat and cheese packages that would pair perfectly with cheese boards, or for sweet items that make for an excellent after-dinner treat for the family.
TARGET DEMOGRAPHIC: HOMEBODIES – A Little R&R
Weekends used to be filled with personal care appointments and trips to the movie theater, but now people are staying close to home and watching streaming services. Movie-themed food gifts will be appreciated among end-users, along with spa items like bath salts, slippers and soft robes. Whether it’s a DIY face mask or movie night with the whole family, soft blankets are an ideal addition for the colder winter months. They can also double as a little extra warmth for the home office. For those planning to have small, distanced get-togethers at home to celebrate the end of 2020, think wine marker sets to help guests avoid accidental sharing.
TARGET DEMOGRAPHIC: VIRTUAL WORKERS – Going and Staying Virtual
We’re not out of the woods yet. Many companies plan to keep employees safe by prohibiting company air travel and asking everyone to continue in their remote setups for the foreseeable future, perhaps even into 2021. That means they’ll need accessories, particularly “waist-up” ones, for virtual meetings and client calls. Consider a custom tie, pocket square and cufflinks as a sophisticated set. They’ll make a nice impression on video calls and will continue to be used when in-person meetings start back up. Custom cufflinks – like these depicting the famous Japanese woodblock print “The Great Wave Off Kanagawa” – would be ideal gifts for patrons who continued supporting museums and endowments this year.
TARGET DEMOGRAPHIC: HYBRID WORKFORCES – Out & About Again
Items that encourage good health practices – whether while running errands or spending time in the workplace again – will be appreciated by recipients in Q4. Consider branded masks and sanitizer bundled with hard goods, and don’t forget no-touch keys for opening doors. Styluses are ideal for transaction terminals, ATMs and gas tanks, and a UV sterilizer case keeps devices clean during the day. Health and safety items say the giver cares about the recipient’s wellbeing, appreciates them and wants them to stay healthy for the long-haul.
TARGET DEMOGRAPHIC: HYBRID WORKFORCES – Sharing (at Home) Is Caring
Even with some workers heading back to the office, the days of sharing food gifts in the conference room are still a long way off. Consider smaller individual edible gifts (like candy bundled with a hard good or PPE) for desks and shipped to remote workers, as well as larger gift towers ideal for drop-shipping, to be taken home and shared with family members. Even if most or all employees are back in the office, close gatherings with shared refreshments still aren’t in the cards yet. Consider including a note with the gift encouraging everyone to take their food home to share in one household.
TARGET DEMOGRAPHIC: VIRTUAL WORKERS – Home Technology
Those continuing virtual work have been putting their devices and tech accessories through their paces since March. Some are most likely starting to wear out with heavy use (especially when shared with the kids). Consider fresh tech accessories that will keep workers connected from their home offices into the new year, like power banks, charging cases, web cam covers, speakers, headsets for video calls and earbuds. This wireless pair comes with a convenient charging case and cable, so users can easily make and take calls, and listen to music or podcasts without bothering roommates and family members.

Reprinted From ASI Central News, By Sara Lavenduski

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