GABE GOTAY
Welcome to Promo Perspectives, a podcast presented by SAGE dedicated to giving promotional product suppliers and distributors tips, tricks, and insights to help grow their businesses. I’m Gabe Gotay, senior marketing coordinator here at SAGE, and today I’m presenting part two of my interview with Brad Gooch from Ideal Incentive and how he has built a great business using SAGE Store Solutions. If you haven’t listened to part one yet, make sure you go and listen to that wherever you get your podcasts.
BRAD GOOCH
Yeah, those are two big ones. So, the real-time inventory, when SAGE came out with that, I don’t know if it was about this time last year or if it was the year before, might be losing track of time, but that was a game-changer for sure. We’ve been having to do it, but, you know, on our end, it created a lot of work for us. So now, having that be part of the store is a big deal. And so, you know, we’re still running our reports, we’re still giving our suggestions, we’re still identifying the kind of peak points of a program. Excuse me. So, when we feel that a lifespan of that particular product has kind of plateaued, we try to catch it as close to that point as possible. The last thing we want to do is say, “Okay, order another 144,” and it’s been dipping for the past two reorders, and now we’re sitting on inventory. That is a misconception that we want $20 bills sitting on the shelf. We don’t. We want this turning just as much as a client does. And so, having that feature in SAGE is huge.
Oh, the evil stepsister, shipping. So, it is a challenge. And, you know, I say that the first one to figure out the algorithm for shipping is going to be eating fruit on their yacht, wiping their mouths using $100 bills as napkins. It’s going to be a very wealthy individual that figures that out for this industry. So, it just boils down to dimensions, open space dimensions, and, you know, assigning that to each product and then using a form of arithmetic to add those items and then adding a percentage to know what your open space is. That’s a lot of kind of mumbo jumbo, but it all ends up just being a math problem.
And so, now I know if I want to take one of these and one of these and put it in a box this size, it will tell me exactly how many boxes I’ll need in order to do that. But it doesn’t exist. It doesn’t exist right now. And so, that is a very, very common question, pain point, frustration for the distributor, as it should. So, what’s the solution? You say, “Okay, so what do you do?” Well, you have, I guess, a couple of different options.
The best way for us is to build the client once we know exactly what that amount is. And so, we don’t like to undercharge people, we don’t like to overcharge people. And so, if they are willing to subsidize the program, the cost for their employees by taking care of the shipping, any client that’s willing to do that, that program has a far greater likelihood of being a success. Because we know, again, the Amazon effect, that a $14 item with $6 in shipping is far more expensive than a $20 item with free shipping. You know, the human brain, it’s like, “Oh, free shipping.” They see the word and they think that $20 is less than 14 plus 6. And so, on top of that, it is just the infinite number of possibilities when you have all of these items to choose from. How many of this item? How many of that item? Where is it going to go? What’s the method? It’s, uh, there are a lot of moving pieces.
So, once we, as humans, know what that amount is, accumulate that, whether that’s billing them at the end of the week, at the end of the month, sometimes even at the end of a quarter, and then have it be what our cost is, and then it’s fair, fair to everyone. For clients that don’t want to do that, then we hit one of two kinds of thresholds. The first one is trying to factor how much that shipping is going to be. You know, there’s a lot of work that goes into that and determining what those products are, where is it coming from? You know, the crystal ball, where are we going to be shipping it to? Who knows? And so, attaching percentages to it, it’s not going to be accurate. It will never be accurate that way, but you could try to get close. And you could end it there. And then you could say, “Okay, let’s see where we were at the end of that period, where we, you know, plus or minus.”
The second threshold is once you get to that point, if you want to work that into your agreement and say, “Okay, your client will be either charged or credited for whatever that difference is.” That’s the only other way to get it accurate. But, um, it’s a lot of work. It’s a pain. And, um, and it’s, yeah, it’s something that we don’t, we do, but we don’t really like to do it.
So, until someone comes up with a program that can actually figure out dimensional weight or dimensional space that translates into accurate points of box size, box weight, box value, box destination, box method, you know, those things. And it’s, I don’t know, to me, it sounds so much more difficult than it should be. It’s like I can see how it’s supposed to work, but I’m not the, you know, I’m not the magician behind the curtain that does that stuff. So, until that happens, our suggestion is to build the client.
Oh, I guess, you know, one other way is if you want to build some of it into the product, still build a client for the actual cost. And, you know, in essence, the employee is paying for some of that shipping, and it does subsidize some of that actual cost to our client. Some like the idea, and some think that’s not being as straightforward with their employees. So, you know, we say, “You make the rules, we’ll enforce them.” So, that’s the shipping element. It is an ongoing challenge.
GABE GOTAY
In one of his earlier responses, while discussing the cost of shipping, Brad alluded to the importance of passing along the costs of your time and services to the customer. I asked him to elaborate on the importance of that.
BRAD GOOCH
Absolutely imperative. The product, is the product, is the product. And anyone that doesn’t think that time is the most valuable element in life, you know, isn’t doing themselves or anyone else justice. And if you don’t charge for your time, then you can’t complain when someone else doesn’t respect it. And so, it’s not about the if, it’s about the how.
And, you know, every client is different. Some like to see itemized charges, some like it to be built in. I mean, I’m a big fan of accountability. So, whether it’s a web store or an order itself, I enjoy listing art fees. It’s kind of a polite way of telling the client that they’re going to pay more when they provide garbage artwork. I like showing manufacturer rush fees, even if we’re not getting charged the costs. Maybe next time they’ll prioritize sending the order within the timeline that was communicated versus, you know, rushing home to watch the next episode of Yellowstone.
You know, it is, um, but, you know, at the end of the day, when it comes down to the web stores, time is everything, and opportunity cost is massive. So, when you talk about, “Okay, what needs to be, what needs to be taken into consideration here?” You know, of course, I mean, the natural setup and artwork and so forth, that goes without mentioning. But, you know, they say, “Okay,” and let’s just go into the premise that we’re going to keep 10 products of 20 different items within each product on the shelf for them, just so some of these examples will kind of align.
You’ve got warehousing space. You know, the space costs money. When the items come in, what are we doing? We, as human beings, are inspecting this. You would be shocked at how many times an item has come in. Actually, just happened on a monster order where, I don’t remember the percentage, but it was a certain number of bags, the Bel Log was printed upside down. We’ve had items where, in golf balls, where the, you know, the 18th box down was an entirely different company’s logo. You know, crazy, crazy stuff has happened over the years. So, we have to inspect that, and that is time and that’s money. Now it’s in our building. What do we have to do? We’ve got to insure this stuff. So, we have insurance. So, if our building goes up in flames or if there’s a flood or if there’s a, you know, whatever it, that is a current cost that we have to, you know, reimburse that client or replenish that inventory.
So, that’s an element. And so, you know, what else is involved? You’ve got program management, which is a term that we use a lot. So, it’s what’s involved with that. You know, it’s not just, you know, creating the store. It’s those meetings, you know, in advance of determining, you know, what we’re going to do and how to explain it, the tutorials, and so forth, creating account credits, coupon codes. It’s all time. And then the reporting, you know, how we are, you know, dissecting that information and making recommendations. And how I said before about, you know, catching that item before it flattens out too much and saying, “Okay, yes, this item has still been moving, but at a slower pace. It’s time to refresh.” And there’s a lot of value in that. That saves us from having more $20 bills sitting on the shelf.
The inventory control, yes, the SAGE stores do that for us, which is huge. But there’s not always, it’s not always a product that’s on the store. It could be custom packaging, it could be greeting cards, it could be tissue, it could be a lot of things that aren’t, you know, actually an inventory item on the store. You have the shelf life of the item. You have to work that into your equation, and that’s got to be a conversation. And then it’s also got to be, you have to talk about that with the supplier. You know, what are the conditions that it needs to be under, and what is the, you know, if you’re within those parameters of those conditions, what is the shelf life of this item? Is there a custom URL? Not a lot, but it’s still a cost.
Then you get into payments. You have the methods, you have the cost of taking credit cards, you have their payment history in and of itself. You have chargebacks, you have the, like, are we dealing with our main contact? So, if there is a challenge that surfaces, are we dealing with our main contact, or are we going to have to deal with the other, you know, how many ever other employees to handle their issue directly?
Shipping materials, outer boxes, bubble wrap, whatnot. You have fulfillment materials, custom boxes, the tissue, the ribbon, greeting cards, and so forth. And then, you know, you have to address the return policy. You know, so we have very specific language surrounding that. And ultimately, it’s kind of just setting those guidelines that, at the end of the day, you know, I don’t have any use for an item with our client’s logo on it.
So, there has to be a commitment there that if, you know, if they don’t, I don’t know, like it or want it any longer, whatever, that our client, our client being the company itself, is taking ownership of that. Because without it being defective, we’re not taking it back. So, there’s a lot. There’s a lot that goes into that. It’s taking a lot of time, it’s your expertise, it’s your knowledge. It’s like you can’t go to a doctor, you can’t go to an attorney, you can’t go to an accountant without them charging you. They have earned the right to charge you for their knowledge and experience and expertise, just as we do.
GABE GOTAY
Ideal Incentive focuses mostly on B2B clients. I asked Brad to explain the “why” behind that and also maybe some of the challenges associated with being a B2C distributor while trying to sell and operate SAGE stores.
BRAD GOOCH
Yes, we are, I would say, closer to exclusively B2B than primarily B2B. And the reasons are: bigger dollars, higher margins, better referrals, more repeat business. We have done some B2C in the past. We used to do some work with schools, like a school district was fine where we were doing uniforms for, you know, like 18 schools within the district as a whole. But then we were also doing some work for an individual school or a sports team, and that, we, I don’t know, 10-foot pole, 100-foot pole, we don’t really get close to that anymore. We don’t have any interest in that. And the reason is, it’s just so very high maintenance. Instead of dealing with, you know, our corporate contact who, we’ll say, is purchasing for the hundreds behind them, it’s the opposite. We’re dealing with, you know, Billy’s dad and Susie’s mom. And, you know, Billy’s dad was in Vegas, and now he wants the jacket even though the ordering period ended last week. And Susie’s mom, she wants to exchange the sweatshirt because Susie spent all summer having, you know, McNugget Mondays at McDonald’s, and it needs a bigger size. You know, it’s just no thank you. It is just too high maintenance. And the scale just isn’t there. So, as far as, you know, any distributors that are B2C, it’s, you know, bless you, keep on keeping on. We don’t want that. But, you know, if you found a way to do that successfully, that’s great. But, you know, can they transition from B2C to B2B? Can they? Yes. Should they? Yes. I mean, really, it will be a lot easier. If you can deal with B2C, B2B will be, I’m going to say, a cakewalk, but it will be a much smoother ride if you’re able to keep people happy on the consumer side of it. They’d probably be pretty successful on the business side.
GABE GOTAY
Finally, I asked Brad if he had any parting thoughts for the audience.
BRAD GOOCH
I think the biggest thing is not to undersell yourself and to recognize your own worth. And that, you know, we all have, in this industry, we all have a responsibility for that. So, PPAI, SAGE, the supplier, the distributor, there is a chain that works. And the only time that chain gets broken is when anyone along the way thinks that price is most important. And when that happens, then that chain gets broken. And it’s not necessary. And so, realize your worth. Stand up for yourself. And I’m saying that to all of them. It’s like, you know, some of the suppliers, it’s like, “This is a great product. Why are you charging $12 for this thing? You should be charging, like, $22 for this thing. The market will bear significantly more.” And so, price, I’m not saying it’s not a factor, but I would say, on average, for us, if we had to say, and we’ve had to do this with clients in the very beginning when we’re working with a client, saying, “Okay, tell me what is most important to you? Getting it to your event on time?” Which, you know, these are kind of rhetorical, right? “And it’s the quality of the product, the safety of the product. It’s not going to, you know, blow up in the briefcase,” or, you know, all these things. And then you get to price, you know, and so forth. And it makes them kind of realize, “Oh, okay, yeah, like these other things are more important.” And, you know, if the budget simply isn’t there, then, you know, then we can come up with another set of groupings that you can look at. But it’s not a matter of taking this $25 item and making it $19. You bastardize the product, the industry, and so forth. So, stand up for yourself, for the products, for the industry. We can all make money doing this, and the market is there for it.
GABE GOTAY
I want to thank Brad again for coming on the show and sharing his perspectives with us. He really values the collaboration and sharing of ideas between distributors to help grow the industry overall. I hope those of you listening or watching got some good ideas on how to help expand or streamline your businesses and sell more promo using SAGE stores. Thank you so much for listening to this episode of Promo Perspectives, and we’ll see you at the next one.