In the era of the digital revolution, speed and flexibility are two decisive factors of competitiveness. New technologies revolutionise the work processes and accelerate the day-to-day business enormously, suppliers like Amazon, who are forcing their way onto the market are setting new benchmarks and the buzzword “Industry 4.0” is also whirring around the promotional products industry. eppi magazine asked what the specialists, wholesalers, full-stockists and agencies had to say on the subject.
When the Internet and mobile communications marched into everyday life and the business world just under 20 years ago, it was considered to be an incredible novelty being reachable around the clock all of a sudden. Many people considered the first rudimentary websites that went online in the promotional products industry at the turn of the century, to be a dangerous threat for the existing industry structures. Today, one can only laugh about this, but the effects of the digitalisation in the second half of the 2010s are even more allembracing and revolutionary than anyone had imagined at the beginning of the century. “We are a mobile society that works, lives and gains information in real-time all over the globe, armed with just a smartphone in one’s hand,” stated Marcus Schulz, Executive Director of the Hamburg-based promotional products agency, Giffits, that has been focusing on eCommerce since its foundation in 1998 and is thus one of the industry’s online pioneers. “This means that over the past years we have become independent from the classic information procurement channels. This 24/7 reachability has marched into our industry and will further increase the pressure.” The digital natives, who have grown up on the web, have namely long since taken up decision- making positions within the economy. The buying behaviour is thus not only changing in private households, but also in the Procurement and Marketing Departments.
“More and more customers transact their business electronically,” commented Meinhard Mombauer, Managing Director of the German import company, LM Accessoires. “So, it was important to take measures to be geared up for the new era at an early stage.” “Today, the customers want to make their purchases in the online shop fast and convently, but they also want to be advised immediately and competently by the Customer Service on the telephone – and of course receive the ordered goods the very next day,” reported Stefan Schenk, Managing Director of the textile wholesalers, L-Shop-Team. “New digital developments become matter of course for many people incredibly quickly. That is why it is immensely important to keep up-to-date with state-of-the-art technology in order to be able to continue operating the goods management, online shop and CRM structures optimally. This is a very big challenge.”
After all, one has to orientate oneself on benchmarks that are set by the biggest: Online giants such as Amazon push innovations, create standards and carry the trends onto the market. “The infrastructures predetermined by the big retailers are reaching all industries including the promotional products sector,” said Schulz. “Practically all branches of industry worldwide are undergoing digital transformation and with them also the promotional products distributors, producers or importers.” “Of course, firms like Amazon were and still are the absolute pioneers as far as the logistics and digital infrastructure is concerned,” added Schenk. “In this connection the bar has been raised very high and has forced all other companies to invest too. The competition is here and one has to accept this challenge.”
This challenge is veritably being faced – indeed in some cases at a very fast pace and successfully. Many big industry players have logistical structures that are on a par with those of other sectors in all aspects. Such structures enable for instance good and fast delivery. The Dutch importer PF Concept has already been offering an express delivery service since 2013 under the brand name SureShip™: Products from the company’s Bullet collection are customised with a one-colour imprint and delivered within 24 hours. “Speed has become a huge theme over the past years,” Ralf Oster, CEO of PF Concept, commented. “We have pushed this theme ourselves too with our SureShip™ service, however we are observing: Not everyone wants or needs his product imprinted within 24 hours. Two to three day including the individualisation is the standard for our customers today. We achieve this consistently and that is a good competitive advantage.”
The German manufacturer and importer, elasto, also offers a fast service called Express Print, Managing Director, Marcus Sperber, explained: “Around 150 products from our line-up can be delivered per Express Print: The customer orders the product online, uploads his logo and receives the finished goods with 48 hours. This service is not used on a big scale to-date, however, the customers do indeed expect much faster delivery than a few years ago.” Whether express or “standard” – the in the meantime obligatory fast delivery times demand immense flexibility as well as smooth, to a high extent automated and closely monitored processes. “Goods from stock have to be sent to the customising partner the same day they are ordered, since in the meantime the printer often already gets his machines set up,” explained Kai Gminder, Managing Director of the textile specialists, Daiber, that belongs to the JCK Group. “This is only possible if the data exchange with the customer works smoothly. Good customers, who place orders regularly, are connected to our XML interface, which is rather a tricky task because there is no generally valid standard.”
Processes, processes, processes
The ordering process is thereby just one of many processes that have to be controlled, which is why a highly-developed corporate software is essential – particularly if the company has a wide line-up of products. The L-Shop-Team, whose collection comprises of almost 100 brands, has around 40,000 m² of storage space, on which on average around 9.7 million items are stocked. “The degree of automation of our warehouse logistics has increased over the past years,” reported Schenk. “Sorting, conveying and automation technologies are implemented that are controlled by IT systems. Barcodes enable the automatic transfer of information to the IT system and thus the fast processing in the warehouse and in all of our systems, but they also enable consignment tracking, delivery announcements per e-mail or SMS and much more. The logistics chain is virtually transparent. IT is becoming more and more important in this connection: All EDV systems have to be perfectly aligned with each other so that Procurement, Sales, Accounting and the warehouse can do their job without complications.” Furthermore, the IT systems of wholesalers and resellers have to communicate with those of their supplier partners in order to cover the entire supply chain: “Several big online distributors are among our top 10 customers and they are directly connected to our ERP system,” reported Oster. “In this way their industry customers can keep an eye on the delivery process directly and in real-time.”
However, EDV systems not only help provide the best possible performance in the actual status, but also to better foresee future developments. This is why LM Accessoires “is currently investing in a new ERP system, which among other things makes the customer processes more transparent and the alignment to the needs of the customers more plannable,” as Mombauer explained. Those companies that invest in a new software solution, certainly can’t afford to rest on their laurels, because the further development of the systems is an ongoing process – Sperber: “In our company four programmers are purely occupied with the task of optimising the ERP system. It is of little or no use for us to invest in new software solutions every few years, because we don’t just wind up our order processes via our system, but indeed the entire production. This involves a high level of complexity that a standard programme cannot achieve.”
That is an overview of the background architecture, which secures that the cogs mesh perfectly. Then, there is also the user interface – which has to be on the pulse of time regarding the user experience: “Warehouse stocks, intuitive ordering tools, configurators, ad hoc price enquiries and tracking are obligatory, further additional features have to be constantly redeveloped and made available,” stated Gminder. “The online shop and CRM are a huge project that we are investing an enormous amount of money in across the group – also and primarily because nothing stands still.” Schenk confirmed: “A well-functioning online shop is indispensable. Even if the customers order by telephone, they frequently inform themselves online about items, stocks and delivery times. After purchasing goods in the online shop, the customer expects to receive an order confirmation per e-mail as well as the information as to when the goods will arrive. Basically, the customers want the same digital comfort that they are used to from the B2C sector, among others search and filter functions in order to provide a structure to vague ideas. Many customers also use tablets and smartphones when purchasing, that means the shop has to be viewable on mobile end devices too.” “The B2B customers wants an uncomplicated purchasing experience – just like the B2C customer,” added Oster. “Hence we try to make our digital infrastructure as simple as possible to diminish the customer’s fears about complex processes. The customer should ‘sail through’ the order process and not have the feeling he has to communicate backwards and forwards a dozen times.”
Putting on the pressure
That sounds easier than it is – after all we are talking about complex orders in the promotionalproducts industry, at the latest when it comes down to the customisation, which has to be highquality, perfectly positioned and CI-compatible. Software solutions also enable the simplification and acceleration of the processes here too in the meantime: Image files can be reproduced with a high accuracy in detail for product illustrations so that advertising imprints can be represented in almost original quality. Thus, on request, an eProof can replace the time-consuming dispatch of samples. So, Schulz believes: “The purely digital approval will replace sample dispatch and sample proofs sooner or later.” Many customers have already dispensed with approving a product sample that they can hold in their hands in favour of a considerably accelerated process: “The approval via eProof is a standard process at our company and we are very quick here,” stated Oster. “We send out a digital approval within four hours for 95% of all of our artwork.” Digital approvals are also becoming “more and more standard for projects that are wound up in the Far East,” Mombauer reported. However, digital visualisation lacks the haptic elements as well as the ability to take the smallest deviations into consideration, which is why Sperber meant: “eProofs will become standard for advance visualisations and small volumes, but not for significant approvals for major projects – here the decision-makers want to be able to hold the product in their hands.” Gminder added: “There are indeed already fantastic solutions that are very well technologically advanced. In the textile area, however, there can always be slight deviations in the fabric consistency or colour, no batch is 100% the same as another. That is why an eProof can’t give a guarantee.”
Regardless of whether one trusts an eProof or not – in the meantime the actual individualisation is also carried out in a fraction of the time it used to take: “Modern embroidery machines for example are Wi-Fi compatible,” explained Gminder. “That means one can start the corresponding embroidery programme from everywhere and control the embroidery process centrally. This also applies for digital printing, which is meanwhile an interesting alternative in the textile sector.” And not only here: One can quite rightly claim that digital printing has revolutionised printing techniques. “We assume that the classic printing methods such as pad and screenprinting will more or less be completely replaced by digital printing in the future,” stated Schulz.
The advance of digital printing techniques is not only due to their versatility, speed and flexibility, but primarily because even the smallest volumes can be customised immediately without set-up costs via digital printing – keyword: On-demand personalisation. A growth market according to many industry insiders. There are already numerous examples of mass customisation campaigns, where the brands give their customers the opportunity at the POS or online to upload their own designs and order an individual promotional product. Here dozens of players as well as logistics and production steps interlock, represented on a user interface that is only visible to the customer, controlled by a single digital process – a process that is generally categorised under the key phrase “Industry 4.0.”.
“There will soon be something similar to what suppliers such as Vistaprint offer for private customers in our industry too,” Sperber is certain. “We have to consider how to develop compatible solutions not only for our trading partners and their customers, but also for the target groups of the promoting companies.” Schenk confirmed: “On-demand production will play an important role in future. A diversified service has to be offered more readily to the customer on one platform: Select textiles, offer promotional products, providing the customer with tools for the customisation of textiles. These simply have to be implementable and easily comprehensible as well as offering real added value. This, of course, also includes aspects like web-toprint for marketing materials, shirt designers or augmented reality.”
Competition from the retail trade
A further mammoth challenge for the industry – which however has to be addressed non the least because the pioneers from the retail market are already on the advance in the business customer sector. Amazon has been operating its B2B portal, Amazon Business, since 2015, Vistaprint, Zazzle, CafePress or CustomInk are also already offering promotional products on a small scale in addition to their core products, to mention but a few examples.”
Amazon & co. are showing us where the journey is headed and are setting the benchmarks. We have to take this as an example and find feasible ways to take on the battle,” said Mombauer. “The advance of these suppliers onto the promotional products market is inevitable, it means serious competition, has to be watched carefully and action is called for.” “Around three years ago I myself said a promotional product Amazon was inconceivable. I now know that this statement was naïve. Today I say: There is going to be a promotional product Amazon, indeed much faster than most of us can imagine,” estimated Schulz, who also thinks this could bring about opportunities: “Each new market participant is initially interesting. Why is he entering the promotional products market? What know-how is he bringing with him? Which techniques does he implement? If Amazon and Vistaprint find the promotional products market to be lucrative, then it will definitely help further professionalise the market.”
Not only where the retail giants set benchmarks, but in the area of one’s own core competences – such as import and compliance, production depth and expertise in the development of highly-individual custom-made designs. “Some orders are so complex that they require an intensive amount of consultation. How can one cover that online?” asked Gminder and Mombauer continued: “There will always be the need for personal advice, however attractive the Internet may be.” Indeed companies that have entered the sector from other areas are already noticing that many of the processes they have learnt in the retail industry cannot be applied 1:1 on the promotional products market: “The anonymous online business works for mass-produced goods, but not for new developments, custom-made designs, high-quality product categories or import know-how. Some online providers from the retail sector that already operate on the mass market are trying to push forward onto the medium price segment, but they will come across difficulties here,” explained Oster. “Personal advice is still indispensable and absolutely unreplaceable. Our business is a people’s business, trust and personal contacts are important and I hope it stays that way.”
So not only the promotional products players are faced with challenges, but also the retailers who want to conquer the market for haptic advertising. A point in time that one might look back at in twenty years’ time with a smirk.
// Till Barth
photos: Mischa Delbrouck, © WA Media (2); Thinkstock (1)