The Ultimate Guide: Selecting The Perfect Partner to Manage Your Online Company Store

Selecting the ideal distributor to build and manage your online company store involves much more than just the product selection on your store. You need to identify your internal needs, understand how the promotional products industry works, and thoroughly vet potential distributors to manage your program. This comprehensive guide covers defining your goals, figuring out your pain points, identifying potential distributors, and evaluating various program types that will work for you. Key considerations include technology, flexibility, inventory management, cost structures, service and integration capabilities. By understanding and addressing these factors, you can make an educated choice and find the right partner to build and manage your online company store.

Definitions:

• Online Company Store: An online platform where a company offers branded merchandise, uniforms, and promotional products to employees, clients, and/or event planners.
• Distributor: A company or individual responsible for sourcing, decorating, and distributing promotional products and branded merchandise. There are over 28,000 distributors in the US.
• Brand Guidelines: Established protocols for logo usage, colors, and branding elements to ensure consistency across all products and marketing materials.
• ERP (Enterprise Resource Planning) System: Integrated software used by companies to manage day-to-day business activities such as accounting, procurement, project management, and supply chain operations.
• On-Demand Production: A model where products are decorated and produced only after an order is placed, eliminating the need for inventory storage. True on-demand production allows buyers to order items, select a logo with no minimum order quantity.
• Inventory: Pre-decorated swag items held in a warehouse by the distributor and offered on a company store for sale. The company is responsible to purchase any items that don’t sell on their store.
• Single Sign-On (SSO): An authentication process that allows a user to access multiple applications with one set of login credentials. Many online company stores integrate with the client to simplify login for its employees and share user data to optimize the buying process.
• Kitting Orders: The process of grouping individual items from multiple vendors into a single package for easy distribution to individuals.

Understanding Your Internal Company Store Needs

Before you can search for the perfect vendor, you need to define your needs and clearly understand why you need an online company store and what it will solve. Often, multiple departments within a company purchase apparel and swag from different distributors, leading to a lack of branding cohesion and higher prices. Centralizing purchasing with one vendor can protect your brand and standardize merchandise. The ultimate goal should be to bring all departments together and build one centralized platform. Once you align on your goals and needs, you can begin searching for the perfect company to build and manage your online store, ensuring consistent branding across your organization.

Define Your Goals:

• Why do you need a company store? What challenges will building a store solve for your company?
• Brand guidelines: Establish clear logo usage protocols for product decoration.
• Budget: Determine your annual spend for promotional products, uniforms, apparel, and print.
• Target audience: Who will be using the store (employees, clients, event planners)? What are they purchasing, and why?
• Which departments need to be included when building the store?
• Payment options: Identify preferred payment methods (budgets, cost centers, credit cards) for online transactions within the company store. What does your accounting department need in order to allocate the orders to the correct cost centers?
• Pain points: Analyze any issues with your existing store (selection, pricing, inventory, service, reporting). What is causing you to look for a new vendor?
• Dream store: Outline your ideal store’s functionality (What does it solve? How does it integrate? Do I need inventory?). What does your role look like with the perfect vendor?

Understanding the Promotional Products Industry

Distributor Landscape:

• The promotional products industry is a $26 billion market.
• Over 28,000 companies resell promotional products in the US.
• Distributor sizes range from individual salespeople to large corporations like Staples. Most companies invoice less than $1M per year.
• Franchise model: Many distributors operate under franchise-type models where they act independently but submit orders to the parent company to process. This model might not be the ideal one to build and manage your stores.
• Compensation structure: Most distributors are 100% commission, incentivized to maximize sales, not provide you with the best solution.
• Most distributor companies are built to write special orders. They broker the sale and never touch the products.
• There are 3rd parties selling online company store software to distributors.  It allows them to build good looking company stores for their clients. This is great for basic simple stores, however managing stores and fulfilling inventory is a very different business model than brokering large custom orders.
• Sourcing and production: All distributors source products from the same factories, so all distributors offer the same products. The factories decorate and drop ship the items, so the distributors typically never see or touch them. Distributors are brokers.
• Contract decorators: Apparel decoration is often outsourced to specialized companies who embroidery and screen print for distributors. These decorators typically will not run small orders because they are slow and expensive.

Finding Potential Distributors

• Utilize search engines with relevant keywords like “swag,” “uniforms,” “Online Company Stores” or “on-demand stores” to find companies specializing in company stores. Consider industry-specific terms if applicable.
• Does your distributor need to be local?

Website Evaluation:

• Analyze distributor websites to assess their focus on company stores (core competency vs. basic offering). Look for details like:
  • Focus on company stores: Is it a primary service or a secondary offering?
  • Store page details: Does the page offer in-depth information on company store functionality or a generic overview?
  • Product focus vs. program focus: Does the website prioritize selling products or comprehensive company store management programs?
  • Franchise affiliation: Identify franchised companies, where program management might be centralized. These companies run limited programs.

Identifying Distributors that Specialize in Running Online Company Stores

• Most distributors claim the ability to run company stores and they are right. Any distributor can rent software and build an online store. However, many lack the necessary infrastructure for effective management, particularly for high-volume stores. Most offer the service, so they don’t lose your business, but it is not their core competency.
• Software: Readily available store-building software allows most distributors to create basic stores that look professional. Most don’t fully integrate with their accounting platforms, and they are manually rekeying orders into their system. This is a good question to ask when researching companies.
• Challenges with small orders: Small, frequent orders are often unprofitable for distributors without proper systems to handle them within the company store.
• Inventory: Many distributors rely on inventory-based models, potentially leading to minimum order requirements or inventory within your company store. Be sure to understand their policy and buyback requirements.
• On-demand production is the current buzz. There are a few companies that fully embrace and have built technology, in-house decoration and infrastructure to run on-demand production with no minimums. This allows a large selection of products and logos with no risks. These companies are dedicated to running online company stores and should be considered when researching companies.

Understanding the Different Types of Online Company Stores

Depending on your requirements, you may need one or several of these company store options. Many companies need multiple stores to support their initiatives.

1. Traditional Inventory Program:
   • Most common type of program with pre-decorated items stocked by the distributor. All of your items are on a shelf, ready to ship.
   • Advantages: Fast shipping times.
   • Disadvantages: Inventory liability, limited selection, slow addition of new items.
2. On-Demand Program:
   • Less common due to infrastructure and technology required to run on-demand decoration.
   • Offers a vast selection of items decorated upon order, eliminating inventory risk.
   • Advantages: No inventory liability, no minimums, large selection, multi-logo support.
   • Disadvantages: Potentially longer production times (3-8 days).
3. Bulk Buy Store:
   • Ideal for group or event purchases with minimum order quantities. These orders are produced by the factory after the order is placed and meets the minimums.
   • Advantages: Cost-effective for bulk purchases.
   • Disadvantages: Minimum orders and potentially longer lead times.
4. Print Program:
   • Provides branded print materials like business cards, letterhead, and flyers.
   • Can be integrated with the company store or offered as a standalone platform.
   • Advantages: Centralized ordering and branding for all print materials. Brand control.
   • Disadvantages: May require separate approval workflows for print items.
5. Hybrid Program:
   • Combines on-demand, inventory, bulk buy, and print programs for a comprehensive solution in one store.
   • Offers a full selection while minimizing inventory liability for frequently purchased items.
   • Get the best of each type of program, all in one.
6. Pop-Up Shop or Event Store:
   • Temporary stores for specific events like holidays or annual uniform refreshes.
   • Easy to give buyers a choice of items without inventory liability.
   • Advantages: Easy setup, ideal for short-term needs.
7. Service Awards Program:
   • Separate platform rewarding employees with non-logoed brand-name merchandise.
   • Often offered by specialized companies outside of the promotional products space.
   • Some distributors provide this alongside the company store.

Vetting Your Options

When vetting online store companies, it’s important to tailor your approach based on your requirements and company size. Providing a detailed summary of your company, purchasing volume, requirements, and how the store will be used will help you receive more accurate responses. Here are a few methods to vet potential vendors:

Before you start vetting vendors, make sure you understand the industry, your program requirements, and how to write an effective RFP or RFI. Poorly written RFPs with broad or irrelevant questions are not helpful in finding the right vendor and might lead to selecting a company based on the lowest price rather than the best services and solutions. Remember, vendors are evaluating you as much as you are evaluating them.

Questions to Ask Potential Distributors

1. Number of Stores Managed:
   • Determine the number of stores they manage to gauge their experience with company store management. Ask for links to current stores to review their work.
2. Annual Store Volume:
   • Assess if your volume fits into their model. Some companies excel at managing smaller stores but may struggle with a $1M program. Conversely, some companies only handle programs larger than $1M.
3. Store Hosting Platform:
   • Understand how the store integrates with their accounting system for seamless, fast order processing and invoicing. Many companies rent software depending on your requirements. If they rent, they might not be focused on running larger company stores.
4. Decoration Infrastructure:
   • Inquire if they have in-house decoration capabilities or if they outsource this function.
5. Inventory Management:
   • Check if they have their own warehouse or if they outsource fulfillment. This impacts control over inventory, costs and fulfillment speed.
6. Development Team:
   • Ask about their in-house development resources for customization and merchandising of the company store platform.
7. Onboarding Process:
   • Understand their team’s ability to build and launch your store. Do they have a structured team and process in place?
8. ERP System Integration:
   • Determine if their company store platform can connect with your existing enterprise resource planning (ERP) system.
9. Single Sign-On (SSO) or Punchout:
   • Check if they offer Single Sign-On (SSO) or Punchout capabilities to streamline user access and data integration.
10. References:
    • Obtain references and talk to them about everything from the setup process to the platform capabilities, customer service, inventory management, logo quality, and product quality.

Cost Considerations:

• Is there a minimum annual volume requirement?
• Store setup and hosting costs: Investigate all associated fees beyond the initial setup for your company store. There are many hidden costs that you figure out later (handling, credit card up-charge, hosting, warehousing, fulfillment charges, etc.).
• Product limitations: Understand any restrictions on the number of products, additional item fees, and logo upload costs within the company store.
• Shipping costs: Analyze their shipping costs. Can you ship on your account at no charge? Many companies make shipping a profit center.

Product Costs

Product pricing is important, but it’s not the only factor to consider when selecting a distributor. Many companies may lure you with cheap product pricing to win your business, but they often make up for it in other areas. Be cautious about the lowest price vendors.

All distributors purchase from the same vendors at almost the same costs. Everyone needs to be profitable, so if one company is significantly cheaper, question why. Remember, you get what you pay for.

If you are going to have distributors price products for comparison, follow these guidelines:

• Be Specific: Clearly define what is being priced. For example, when pricing a T-shirt:
  • Item Number: Provide a specific shirt style. Remember, sizes over 2XL usually cost more.
  • Color: Specify a color, as some colors may cost more than others.
  • Logos: List the number of colors in each design/logo. More colors typically mean higher costs for some decoration types.
  • Decoration Locations: Indicate how many locations on the shirt will be decorated.
  • Decoration Type: Specify whether it’s screen print or embroidery.
  • Quantity: Indicate the quantity of shirts.
  • Order Type: Clarify if the pricing is for a special order where all items ship together or for individual items on the store.
  • Inventory Model: Consider whether the pricing is for on-demand production or if you need to purchase and store inventory. Remember, owning inventory means dealing with potentially unsold stock.

Unit price is only part of the story. To get a true comparison, understand the full picture, including fulfillment, handling, and warehouse charges. Your goal is to compare apples to apples, not apples to oranges. Be detailed in defining the products to price for a fair comparison.

Watch Out For:

• Bait and Switch: Some companies may price items at their cost to win the bid, but when you go to buy them, they claim they aren’t available and substitute them with higher-margin items.
• Cost-Plus Models: Cost is a relative term and must be defined clearly. It could include product and decoration costs or extend to warehouse fees, credit card fees, handling, and other charges.

Your objective is to find a transparent and honest partner. If a vendor’s pricing is in line with the average, you can be more comfortable with their pricing model.

Ultimately, you want your vendor to make money and be successful so they can provide great service and be a true partner. Look for a win-win partnership that will last for years, rather than just the lowest price.

As mentioned, all distributors purchase from the same factories, so everyone will offer the same swag. The products themselves don’t determine which distributor you select to run your program. You are looking for the people, experience, approach, solutions, and service when selecting your vendor, not products. Understanding their philosophy on inventory is a crucial differentiator between companies. This will determine how your store functions, the quantity and type of items that can be added to your store and your investment in the program.

Inventory Program

If your distributor manages your program the traditional way, they will work with you very carefully on product selection and limit what can be added. All items will be decorated and stored in a warehouse, and you are financially responsible for all unsold items. This method is the easiest way for companies to run and manage company store inventory.

• Product Selection: Smaller due to the cost of carrying inventory. Your store volume will determine the quantity of items that can be included in your store.
• Selecting Products: Must be precise since there’s little room for error.
• Adding New Products: Dependent on selling older items first.
• Apparel Inventory: Limited due to the cost of stocking various sizes.
  • Example: Offering 5 polos at $30 in 2 colors for both men and women can result in approximately $30,000 in inventory liability.
  • See this calculator to determine your current inventory liability.
• Advantages: Quick shipping if items are in stock.
  • Suitable for programs with limited use and fewer options.
  • Ideal for swag-focused programs rather than apparel.

On-Demand Program

This growing method requires a company with the technology and infrastructure to handle on-demand production. Only a few companies specialize in this today. It offers a robust selection of brands, styles, colors, and logo options without pre-decorated items, minimizing risks and liability.

• Selection: Unlimited options for apparel, bags, hats, and some swag with no minimums.
• Flexibility: Ability to try new items and offer seasonal options without risk.
• Multiple Logos: Can add various logos to any item without minimums.
• Advantages: Numerous, with today’s technology eliminating the need for stocking apparel inventory.
  • Suitable for company stores with employees across multiple departments needing swag and apparel for different purposes.
  • Ideal for providing a great selection with no liability.

By carefully considering these factors and understanding the differences between inventory and on-demand programs, you can make an informed decision that aligns with your company’s needs and goals.

Reporting Features

• Access to real-time reports: Inquire about available reports and ease of access.
• Custom report options: Determine if customization is offered and if so, any associated charges.
• Inventory and cost visibility: Ensure you can track current inventory levels and associated costs.

Inventory Management

• Inventory liability: This is a crucial consideration to avoid getting stuck with unsold items. Be sure to understand the details and buyback requirements. Typically you own all of the inventory in your store if it doesn’t sell.
• Inventory ownership: Clarify who owns the inventory and the purchase process for unsold items.
• Excess inventory: This can be a business retention strategy for many companies. If you have so much decorated inventory at the end of your contract, you can’t afford to leave and your only option is to extend the contract, even if you don’t like the vendor.

Invoicing

• Roll-ups: Determine if the distributor offers consolidated billing for multiple orders within a timeframe.
• Payment methods: Understand store payment options (credit card, points, cost centers, GL codes, PO, gift cards, etc.) and any associated fees.
• Data collection: Can they collect information about the buyers through SSO and push it to your invoice?
• Push to your accounting system: Inquire about their ability to electronically transmit invoices directly to your accounting software.

Contracts

• Ask for a Contract Early: Request a copy of the contract early in the evaluation process. Reading the contract can provide significant insights into the vendor’s terms and conditions.
• Contract Term: Determine the term of the contract. A 3-year term is standard, especially for inventory programs.
• Penalties for Breaking the Contract: Understand the penalties for breaking the contract if the vendor isn’t performing as expected. This can protect you from unforeseen costs if you need to terminate the agreement.
• Charges and Fees: Be aware of all charges. Hidden fees can be common, so ensure all potential fees are listed in the contract for clarity.
• Inventory Considerations: Inventory is a critical part of the contract. Understand your responsibilities and the terms related to decorated inventory that doesn’t sell.
  • Purchase Responsibilities: Clarify when you are required to purchase unsold inventory.
  • Sale of Unsold Inventory: Confirm if the vendor will put unsold inventory on sale to move it.
  • Purchase Price: Negotiate and understand the price at which you must purchase unsold inventory. Do you get a discount from the list price on the store?
  • Approval of Inventory: You must approve all inventory and quantities before they are added to the store or reordered.
• Impact on Vendor Changes: Recognize that inventory can lock you into a vendor, as you may need to purchase all remaining inventory before switching to a new vendor. This can be a significant cost and surprise if you are not on top of it. Inventory is a great way for distributors to keep you as a client, because you can’t afford to leave, so you must resign a multi-year contract.

Understanding these aspects will help you make an informed decision and avoid potential pitfalls in your vendor relationship.

Important Online Company Store Features

When shopping for a vendor and store platform, there are many features on the market that you should be aware of. Not all of them will pertain to your specific program, but you should be educated on what is possible and the advantages of each.

• On-Demand vs. Inventory Model: Determine whether products will be in stock, produced on demand, or a hybrid model. Understand the inventory commitment if choosing an inventory model. Set a cap on total inventory and clarify ownership and purchase responsibilities for unsold items.
• Technology: Investigate the distributor’s technology platform. Check if they own or rent the platform and how customizable it is to your requirements. Ensure it offers all the features needed for a successful program. For key features, ask for a demo and don’t assume they understand exactly what you need.
• Product and Brand Offering: Explore potential limitations due to vendor-specific store platforms. Some factories build stores for distributors, but you can only buy their brands.
• SSO (Single Sign-On): Provides a streamlined user login experience for secure access.
• Live Inventory: Real-time stock visibility for accurate product availability.
• Multi-Language: Cater to a diverse workforce with multilingual store functionality.
• Gift Notes at Checkout: Allow for personalized gift messages for customer orders.
• Building Kits as Products: Offer pre-configured product bundles for purchase in the store.
• Points/Budgets: Implement reward programs or spending limitations for users.
• User and Order Approval: Establish approval workflows for purchases.
• Monthly/Weekly Billing: Consolidated billing with detailed reports for easy accounting integration.
• Bulk Shipping: Combine shipping for multiple orders packaged individually but shipped together to reduce shipping costs.
• Warehousing Capabilities: Determine whether warehousing is on-site or off-site and if it is contracted or company-run.
• Customer Service: Evaluate their customer service procedures and response times.
• Quality Control: Determine who inspects your merchandise (distributor or third-party decorator).
• Custom Graphics and Design Capabilities: Assess their ability to create custom artwork for your store.

Evaluating your Current Online Company Store

Have you ever wondered how your current online company store stacks up against other stores? You are in luck because we built an Online Company Store Assessment Tool that will provide a comprehensive report with insights and suggestions for working with your current vendor or finding a new one. Take the 8-minute assessment to receive a detailed evaluation of your current program with suggestions for improvement. If you want to discuss your results or seek advice, feel free to reach out, even if we’re not the right fit for your company. We want you to be armed with knowledge so you can find the right solution for your program.

Conclusion

By carefully considering these factors, you can confidently identify the right distributor to manage your online company stores. Remember, product costs are just one aspect of the equation. Evaluating the entire program, including service quality, technology, inventory management, and overall integration capabilities, is crucial.

This document aims to equip you with the knowledge to ask the right questions and avoid common pitfalls when selecting a vendor. Be diligent: request demos, seek references, and thoroughly research potential partners. Investing time upfront to find the right vendor will pay off, saving you time, money, and many headaches in the long run.