Like every other facet of the promo industry, it’s easy to look at the uptick of distributor order values and margins and attribute them to the industry’s recovery, in particular the full return of events and client marketing budgets. But two other factors had a significant bearing on the monetary value of orders. First, inflation and rising costs in tandem drove prices up, which distributors passed along to customers. And second, clients continued to opt for higher-quality items, which carry a heftier price tag. For example, average order values increased by 10% last year at Pinnacle Promotions (asi/295986) even as order volume decreased by 5%. “The main contributing factor,” says Lee Becknell, senior digital marketing manager, “was that sales transitioned away from higher order volume of lower priced items to higher price point items, as well as an increase in kitting projects.” Pinnacle and some other distributors report the economy this year is pushing clients back to lower-priced items, which could drive down order values. Even still, retail and premium products are finding a home, and the floor for order values will remain higher than it was pre-2022.
Hover over the bar charts to see more detailed State of the Industry statistics.
of distributors reported “Remaining profitable under pressure to cut prices” as their most difficult business challenge – second only to “Increasing the size of my customer base.”
DISTRIBUTOR AVERAGE VALUE OF ORDERS
Average order values reached their highest mark since 2019 but still lag behind average supplier order value ($1,566). Why are distributor order values less even with traditional mark-up? The main reason is that while all supplier orders counted in our SOI survey go through distributors, some distributor orders aren't placed through suppliers, but rather go through other entities like decorators. Those orders aren't counted and bring down the average order value.
Average gross profit margins for distributors reached 36% in 2022 – the second consecutive year that margins improved and the highest mark since 2019. Margins peaked in 2018 at 36.5%.
U.S. INFLATION RATE
(U.S. Labor Department)
The median number of orders for distributors – an improvement of 14 over 2021 but short of the record set in 2019 (350 orders).
“Retail brands have a high perceived value, and clients are gifting items that people both want and value. Less is more nowadays.”David Kennealey, Brandhero Promotions
(asi/202900)
4 Methods for Juicing Order Values
Making more money per project doesn’t have to be a fantasy. There are several smart ways to get clients to pay up and have them walk away even happier.
1Buy More Now & Save
A discount is a powerful incentive to buyers. But what if they’re not interested in the products right now? Shift their mindset and have them start thinking about the future. “Often we suggest to clients to add additional quantities to their projects for future use, taking advantage of price breaks,” says Lee Bicknell of Pinnacle Promotions (asi/295986). Britney Berndt, Queen Bee & CEO of Brand Buzzz (asi/145326), echoes the sentiment. “I make an effort to upsell product options and offer better price breaks for higher quantities,” she says, “to make bigger sales while still maintaining profit.”
2Bundle Products Together
A simple-but-deadly-effective strategy? “Suggest items that pair well with the items they want to purchase,” says David Kennealey, owner of BrandHero Promotions, which is a part of Geiger (asi/202900). “It’s the old ‘do you want fries with that?’ strategy.” Caps and T-shirts as well as food gifts and tumblers are natural pairings that make for a stronger giveaway and a beefier bottom line. And even if customers don’t opt for an additional item, you’ve planted the seed in their minds, which could pay off with a future order.
3Lean Into Packaging & Fulfillment
Liquid Screen Design (asi/254663) saw a major jump in order values last year. While higher-end items with a purpose certainly had an effect, the company has recorded huge growth since the pandemic through packaging and fulfillment. Says owner Bryan Goltzman, “There’s no better question before a sale is finished to bump the value than ‘How would you like that packaged?’ or ‘Would you like us to send those out for you?’” It offers high margins and a premium look, and “provides our clients with something that they can’t get from everywhere,” Goltzman adds.
4Find the Right Clients
Clients who opt for the cheapest products and shop on price won’t fill your coffers. Be intentional with the clients you do business with. Berndt has managed to find big clients who not only have high order volumes, but buy at elevated price points. How did she find them? “They came to me via existing relationships and referrals,” says Berndt, who expects to increase her average order values by over $1,000 this year. “Networking, caring about people and providing great customer service go a long way.”