Leveraging The Resale Opportunity Of Promotional Products
While most businesses recognize the value of promotional products for marketing and
building their brands, promotional products create an opportunity for retail businesses as well in the form of resale products. In many cases, promotional products are essentially identical to their retail counterparts. In fact, many manufacturers have both retail and promotional product lines of comparable products.
While large department, warehouse and discount stores purchase products in a large volume to enable them to buy direct from manufacturers, smaller and medium size retailers as well as those looking for customized products have more limited options. Promotional products can provide these retailers with both a large array of product choices with relatively limited minimum order quantities as well as the opportunity to customize products to further distinguish them from competitors.
Here are some tips to help leverage promotional products for resale whether it is in a gift shop, retail store or on-line retailer.
Buying Products for Resale
Anyone can buy promotional products. In most cases, products can be customized with logos or as blank goods. Some products sold by promotional product distributors can only be sold as blank goods based on agreements with the manufacturer of the product. This is primarily the case with certain high-end products and brand name merchandise (e.g. Bose, etc.). Similarly, there are a few suppliers who may only sell products that are imprinted. Likewise, the level of customization (product color, etc.) can be limited based on supplier and license requirements.
When products are purchased for resale, businesses can avoid paying sales tax at the time of purchase from a distributor if they have a resale certificate. The resale certificate is available through your State Board of Equalization. You will need to provide the distributor with a copy of the resale certificate to be exempt from paying sale tax on your orders. For more information, be sure to contact your state tax board or accountant for specific requirements.
Pricing & Profit Margins
Because promotional products are sold in bulk, there can be ample opportunity for a reasonable profit margin when reselling these products especially at larger quantities. Of course, the amount that you can mark a product up will vary based on several factors such the product itself, the quantity you are buying, the level of customization and your competitors prices. Nonetheless, for many products, there can be ample profit margins even when competing against larger retailers. For example, at the time of this writing, a major discount retailer's website is advertising a 25 ounce stainless steel water bottle for $19.99. The same style
stainless steel water bottle can be purchased through a promotional product distributor for $7.99 for as few as 50 bottles or $5.00 for 500 bottles.
Tip #1: Because Promotional Products are priced based on quantity purchased, retailers should ask their distributors what the price points are for any product being considered. If you are planning to purchase 100 ceramic coffee cups at $3 each but there is a price break at a quantity of 144 for $2, it makes sense to buy more cups than you originally planned.
Tip #2: Ensure you consider the cost of shipping. Often, a promotional product distributor will have multiple suppliers for any given product. The costs of shipping can off-set savings from a more distant supplier. Do not pay 50 cents extra per item in shipping to save 25 cents in product cost by using a distant supplier!
Order and Inventory Quantities
While promo products are sold in bulk quantities, there are often relatively low minimum order quantities. Retailers can benefit from these lower minimums as the basis of testing out new product offerings, offering a larger variety of options (colors, etc.) for any given product, as well as offering an expanded selection of products.
Retailers, especially smaller businesses, should consider purchasing lower initial order quantities even at the slightly higher prices in order to assess customer interest and sales potential. Follow up with larger order quantities for products based on demonstrated sales potential. Take a similar approach when introducing new colors or expanded product offerings. Note that when reordering the exact same imprint on the same products, there is typically no additional set up charge so the only incremental cost of this approach is the higher unit cost of the lower order quantities. This approach, however, will limit risks associated with carrying a larger inventory of a slower moving product.
Tip #3: Ask your distributor if you can purchase an assortment of colors for your initial order to assess both the product and various colors. While such assortments are not offered by all suppliers or on all products, some suppliers will even allow you to choose specific colors for the assortment.
Artwork & Customization
Customize the products with unique artwork to further distinguish the products from your competitors. Consumers are increasingly purchasing products based on the imprinted designs or messages incorporated on the product. Trendy, eye-catching graphics as well as inspirational, humorous or motivational messages can make an average product very unique and appealing.
Retailers have long embraced this concept when it comes to products like T-shirts and caps, but have often neglected to consider the potential for other apparel and non-apparel products. More recently, many retailers are recognizing the potential with expanded offerings using screen printed designs on polo shirts and fleece. Some are even introducing designs on outerwear like windshirts, rain jackets and coats.
Do not just focus on apparel; look at opportunities to incorporate custom designs on other products as well. While most promotional products offer some level of customization, the extent varies from product to product. Stainless Steel, Aluminum and BPA-Free Plastic Water Bottles are especially customizable with a near-360 degree imprint areas which can be screened with eye catching artwork and messages. There are an increasing number of totes which can be customized with full-color artwork as well.
Tip #4: Consider using mixed media designs incorporating unique
screen print techniques, appliqus,
laser etching and/or
embroidery.
Tip #5: Newer businesses should proceed cautiously with applying your own logo on products for resale. While products featuring a company's logo are great for promotions and branding, businesses will often need to develop a more loyal following from clientele in order to sell customers products with their logo. There are some exceptions to this rule: businesses with an especially eye catching logo as well as certain businesses such as bars and restaurants which more quickly develop such followings.
Brand Your Products
Help build your brand with each sale. There are a variety of ways to further build your brand even without prominently displaying your company's logo on each shirt or product. How often have we seen people look at other people's tags to see who made a shirt? Consider having custom apparel tags made and sewn into your resale garments. In particular, those garments which you have customized with your own designs should include garment tags to remind the wearer where the garment came from.
A major supplier of promotional sports bottles just introduced a great line of branding options for customers ranging from customized hang tags to business card and book mark inserts which can be designed to mirror the design on the bottles. These tags can be particularly useful when products are given as gifts to ensure that the recipient has insight as to where the product was purchased.
Finally, consider
custom packaging. Packages can make quite an impression; remember the cow pattern boxes of a major personal computer manufacturer? While most brick and mortar retailers have their logo imprinted on shopping bags, many on-line retailers overlook the opportunity to further their brand with packaging. If budgets are tight, consider something as simple as logo stickers to apply to packages. Then pursue customized primary and secondary packaging as budgets improve. For high end businesses, look at furthering your high end brand image with logo embossed stickers, logo imprinted tissue paper or logo imprinted ribbon.
Tip #6: Make the package part of your product to further distinguish the product from your competitor's and build your brand. Many products have customized package options designed specifically for that product. Just as the perceived value of jewelry is enhanced by a nice jewelry box, the same is true of other products. For example, there is some great triangular, flat, square and tube shaped pen boxes available. In many cases, a high quality package will be retained and reused (e.g. as a keepsake box, etc.) for years to come.
by: BNoticed
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