All posts tagged: #holidaygiftgiving

More Manufacturing Slowdowns as Chinese Factories Face Power Plant Shutdowns, Electricity Rationing

Chinese factories have been working hard to keep up with global demand as they recover from complete COVID-related shutdowns in China’s manufacturing sector, both earlier in the pandemic and more recently.

sixtwentysixMore Manufacturing Slowdowns as Chinese Factories Face Power Plant Shutdowns, Electricity Rationing
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Latest COVID Surge Hampering Factory Activity in Asia

The development spells more supply chain trouble for the North American promo products industry.  Manufacturing output is slowing in key production centers in Southeast Asia due to the rampant spread of COVID-19’s delta variant, making it more difficult and more expensive for western brands to get goods produced and shipped to North America.

The slowdown in activity has the potential to get worse in the weeks ahead in the wake of developments like stay-at-home orders issued by the government in Vietnam, a key country for the production of everything from apparel and shoes to upholstery.

The grim news comes as the global supply chain for virtually every industry is already in disarray due to COVID-caused complications.

The promotional products market is no exception.   Rising raw-material prices, congestion at ports, insufficient labor and domestic transport capacity, skyrocketing costs for shipping containers/ocean freight, unfavorable monetary exchange rates and more have resulted in promo experiencing inventory shortfalls, higher product prices, lower customer service levels, longer production times, shortages of important decorating materials like screen-printing ink, and delays in order delivery.

One thing driving up costs and making it harder and pricier to get promo goods manufactured is constraint on factories related to attempts to control outbreaks of the delta variant in Asia, where the vast majority of domestically sold promotional products are produced.

COVID clearly weighed on Southeast Asia factories in August, where manufacturing managers in Vietnam, Thailand, and the Philippines all reported deeper contractions in activity.

The IHS Markit purchasing managers’ index (PMI) for Vietnam dropped from 45.1 in July to 40.2 in August. It was the third straight month of declining activity and the lowest reading since April 2020. Readings above 50 denote expansion; below 50 signifies contraction. Vietnam produces more than 30% of the United States’ shoe imports and is second only to China when it comes to supplying the shoes and apparel that are imported to America.

 

 

Meanwhile, Thailand’s PMI retreated month-over-month from 48.7 to 48.3 – the seventh time in the last eight months that activity eroded. The Philippines recorded its lowest PMI in some 15 months, falling from moderate expansion territory in July (50.4) to contraction in August (46.4).

Indonesia’s PMI rose more than three percentage points month over month to 43.7 in August, and Malasyia’s inched up to 43.4, but that still means contraction was occurring in both countries, just not at as rapid a rate. Elsewhere, India bucked the trend, with IHS Markit data showing that manufacturing remained in expansion with a PMI of 52.3 in August. Still, India’s rate of expansion declined, having slipped from 55.3 in July.

Analysts say the fact that the overwhelming majority of people in these countries are unvaccinated is fueling the COVID outbreaks and thus impacting factories’ ability to function.

“Southeast Asia’s under-vaccinated economies have been fighting record levels of infections and deaths, including in Thailand, Malaysia and Vietnam,” Bloomberg reported. “Of 53 countries in Bloomberg’s latest Covid Resilience Ranking, the bottom five are all in Southeast Asia.”

In August, more than 80 apparel and footwear brands, including Nike, penned a letter to President Joe Biden pleading with his administration to donate vaccines to Vietnam. “The health of our industry is directly dependent on the health of Vietnam’s industry,” the letter said. 

The White House is reportedly providing an additional 1 million doses of the Pfizer vaccine to Vietnam, a rollout expected to start on Sept. 1/Sept. 2.

 

 

The official PMI for China, which has temporarily shuttered certain ports and implemented localized lockdowns in recent months in attempts to combat delta flare-ups, declined slightly from July (50.4) to August (50.1).

The reading indicated manufacturing expansion was still occurring in August, but there were headwinds. The new export orders sub-index declined to 46.7 in August from 47.7 in July. Furthermore, the Caixin Media and IHS Markit PMI for China showed that manufacturing there had fallen into contraction, with a tally of 49.2, the lowest level since February 2020 when societal shutdowns grounded production activity in China.

Manufacturing activity continued to expand in Japan, Taiwan and South Korea, but those countries experienced month over month PMI declines that indicated the expansion was slowing.

By Christopher Ruvo, PROMOGRAM 

sixtwentysixLatest COVID Surge Hampering Factory Activity in Asia
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The Story Behind The Supply Chain Trouble…

Global sourcing experts weigh in and provide strategies for navigating the disruption.

Below are highlights from the story by Christopher Ruvo

 

The supply chain disruption that’s affecting the promotional products industry and virtually the entire global sourcing network probably isn’t going to relent anytime soon.

Still, there are strategies and practices that suppliers, like other importers and product sellers, are implementing that will help mitigate issues to the extent possible.  That’s the message from global sourcing experts outside promo who work on supply chain issues.

“The supply chain crisis is one which is going to take a while to sort out, but there are many ways of doing so, and combining a number of techniques may help us to sort it out sooner rather than later,” says Teri Shern, co-founder of ConexBoxes, a provider of steel storage container solutions.

Relief in 2021 Is Unlikely

By now, most promo pros are familiar with the impact of supply chain upheaval on the industry. Fueled by issues tied to COVID-19 like societal shutdowns, labor shortages and a gigantic global bounce-back in demand for all manner of products following the economic lows experienced in the coronavirus’ early waves in 2020, the supply chain troubles have led to stock shortages, higher product prices, increased delivery/transport costs, longer production times and delays in delivery of orders, among other headaches.

 

New fiascos for promo are emerging too, with apparel decorators now reporting shortages of key materials like screen-printing ink.

 

The big question in promo – and in all industries affected by the upheaval – is when will things get better?

Supply chain professionals believe troubles will persist into 2022 and potentially beyond.  “There’s a lot of fundamental restructuring going on as a result of the pandemic-induced demand shifts and geopolitics that we are probably 12 to 18 months away from being in a new steady state,” says Aaron Alpeter, founder of Izba Consulting, a supply chain consulting, outsourcing and technology firm.

Similarly, Patrick Penfield believes it will be at least the end of 2022 before global supply chains can settle into something like a new normalized stability.

“You have the delta variant causing issues for supply chains now and you could have intermittent disruptions like that throughout next year,” says Penfield, a professor of practice in supply chain management and director of executive education at the Syracuse University Whitman School. “Those interruptions make it difficult for supply chains that are already overwhelmed to catch up.”

The problems could intensify in the fourth quarter, according to sourcing pros.

As just one example of how that might look, retailers could be scrambling to get products that were produced overseas out of shipping containers that have been delayed in delivery/unloading and into their distribution centers and then onto shelves. That could lump considerable extra weight on already overstressed domestic transport providers – a pressure that ripples throughout markets, including the promotional products industry, contributing to backlogs and delivery delays.

“Getting timely deliveries will be a challenge,” Penfield predicts. Transport services are likely to be more expensive too, given planned surcharges from carriers like FedEx and the Postal Service.

 

Speaking broadly about the global supply chain, some sourcing pros think there’ll be bellwethers to look for that signal the return of stability and relative normality.

“Right now, the secondary market for parts is very hot, which only happens when there’s a supply imbalance and poor planning on a macro level,” shares Alpeter. “You’ll know that we’re in a new steady state when the arbitrage opportunity for parts and components begins to evaporate.”

Even when that happens, though, prices for things like air and ocean freight may remain well above their pre-pandemic costs – a potential reality that could mean higher product prices in promo and other industries are here to stay as such expenses factor into what promo suppliers are obligated to charge per product to remain viable.

“I think you’ll see prices for air and ocean stabilize, but they could stay elevated long term,” Alpeter says. “Going back to 2018 – I don’t see that happening.”

Best Practices

There’s no magic spell to cast to cure the supply chain ills. Even so, there are things companies that import and ship product can do to cut paths through the jungle of complications. Penfield recommends working closely with freight forwarders to maximize supply chain efficiency. “They can help you minimize your costs,” Penfield says. “They can also provide advice on things like which ports to use given conditions. You have to engage with them to leverage their expertise.”

Another smart tactic for suppliers would be to beef up inventory levels, ordering in advance and carrying more stock than would normally be the case. Leading proactive promo suppliers like Polyconcept North America, Gemline and others have already been executing this strategy for months. “You want to have enough inventory to protect against disruption,” Penfield says.

 

As companies build inventory, they should do so strategically, stocking up on best-selling SKUs rather than wasting time, expense and precious cargo space on items that generate relatively marginal sales. “It’s a good time to look at what’s selling and what’s not selling and make decisions accordingly,” Penfield says.

The strategizing should also include proactive planning and making potentially difficult purchasing decisions based on marketplace realities, supply chain constraints and costs.

Alpeter gives an example. He’s working with a brand whose factory has said that it will only be able to support a portion of the requested amount with the current component commitments it has from vendors. The factory feels it can produce a higher portion of the requested amount but would need to increase the bill of materials dramatically to secure components on the secondary market.

“By evaluating this in advance in the summer, the brand can evaluate the trade-off between reduced sales and lower margin, as well as come up with a broader business plan, as opposed to having things hit all at the same time and potentially making emotional and unsound business decisions,” Alpeter says.

Meanwhile, Penfield and others say that reducing the amount of packaging used to ship product from overseas is a smart way to get greater quantities of products to domestic shores faster. “Shipping full container loads can help immensely,” he says.

Longer term, promo suppliers should be working to automate processes to reduce reliance on labor. More automation makes companies less susceptible to labor shortages that can slow down production and fulfillment when there’s simply not enough staff. Suppliers in promo are making steps in this regard.

They’re also executing another long-term improvement strategy recommended by global sourcing experts, and that’s diversifying the countries and regions from which they source products, which makes supply chains more resilient and less vulnerable to disruptions that can come from natural disasters, COVID shutdowns, labor strikes, and societal unrest that may occur in any one area and cripple operations at key factories.

Penfield notes that geographic sourcing diversification will include companies increasingly looking to source closer to home, such as within their own hemisphere. More could – and should – look for domestic sourcing options where possible too, advice that promo distributors could also take. “Look locally and find domestic providers at least as an alternative,” Penfield says.

“While the current supply chain challenges are severe, they’re also about exposing inefficiencies in different areas,” says Mario Veraldo, a 25-year veteran of the global shipping and logistics business who is CEO of MTM Logix, a supply chain and logistics company. “So, while there is no silver bullet answer to the disruption, you can start improving things now by focusing on specific areas that feed into the supply chain.”

Source: PROMOGRAM on

 

sixtwentysixThe Story Behind The Supply Chain Trouble…
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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

sixtwentysixA Gift Still Worth Giving
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