The title of todays post is a play on words from the show Lost which at this point has me totally confused and lost as to whether or not I even enjoying watching it at this stage.  The ceramic portion comes from excitement that the Promotional Double Wall Ceramic Tumbler has finally begun to show back up on the shelves of industry manufacturers.  It is still a bit of a puzzle as to why these particular tumblers took off in popularity.  Ceramic obvioiusly has the advantage of being a better insulator than less durable materials.  It also has the unfortunate property of being able to break easily  As a result most suppliers will only ship in specific and preset quantities with Hit Promo requiring seventy two piece increments.  This makes sense given the fact that they are packed in 72 piece lots and removing even a few of those pieces would weaken the structure that comprises the shipping container.  Whatever the issue these tumblers were gone in an instant from almost every manufacturer that made them and are only now beginning to return.  Shipping problems with these products getting out of Asia delayed restocking.  Afraid of a repeat performance later in the year we are seeing most of the big players bringing in stock approaching six figures in value which should relieve the shortages.   Hit Promo is leading the way by undercutting the others in ounce capacity which has allowed them to cut their cost and starting price point.

Now back to part two of this entry.  What is going on with Lost?  Tonight appeared to be one of those episodes where they had about twenty minutes of material for a forty minute show.  It brought back memories from the middle years of the show where we would watch and wonder why the show was moving so slowly.  Tonight had all the normal metaphors but very little substance.  I am sure when we are all watching it on the networks years from now on some weekend marathon it will make more sense but it has continued to waiver to the point of being almost difficult to watch.  With only a few episodes left let's hope it comes to a meaningful if not already predictable conclusion.

Please take a minute to read some of our earlier entries such as Keeping the Message Cool and the on topic insulating business growth with ceramics for additional reviews.  We will be adding multiple reviews of new products in the coming days.

That leaves three real possibilities all of which have their advantages.  First a business can elect to not advertise at all.  Obvioiusly this is not the ideal approach to gain market share.  A second option is simply to spend less.  The promotional products market is being dominated right now by products like the Fuzz from Leeds.  A couple of years ago nobody would have even taken a look at this product at the top firms.  They would easily have passed it over for more premium items.  Lint brushes are hardly the giveaway of choice for top executives but they will carry a logo and do it in an economical manner.   Along the same lines the lightbulb keychain has all of the virtues associated with LED type keychains which can provide an end user with safety at night but is affordable and will not be viewed as breaking the bank.    A final approach would be to replace an item used on a dialy basis such as the Leeds Double Wall Ceramic Tumbler which can be used in place of a regular coffee cup.  The advantage of this type of approach is that it serves two purposes, first it reduces the cost to the end user employee or client and actually helps to decrease the amount of trash and second although it is a premium item it does not carry the baggage a high end leather or desk gift might.

Meanwhile the imaginary world our politicians live in continues to provide evidence on a daily basis that the disconnect grows.  Treasury Secretary Geithner indicated on the Sunday talk shows that the economy is growing more rapidly than they expected.  Of course he glossed over the 10% unemployment rate, growing commercial real estate problem and also increasing fuel prices.  These are all factors that are going to continue to impact families and as a result will temper any recovery.  Instead we will be left with a recovery that has fits and starts much like we saw at the end of 2009.  In addition there appears to be no acknowledgement of the shift going on overseas.  Instead of shipping products to the USA we are finding factories overseas are either holding containers or are shipping products elsewhere to economies that are recovering more rapidly than we are domestically. 

To see more of the Leeds product line take a look at Leeds site.  They offer over two thousand promotional products and the number continues to grow each day.

The promotional products industry started decades ago from the concept that there was a market in the corporate arena for branded items.  For most of the last few decades that relationship involved three parties, the end user, the distributor and the supplier.   Distributors worked to open new accounts by traditional means of cold calling, knocking on doors and networking.  They relied on small groups of suppliers to provide product for them and the average distributor historically did well under $200,000 in sales.  Along came the associations to act as the de facto referees and central database for the industry.  All of these associations would require a membership fee and in turn provide the distributor access to information that would be difficult to obtain elsewhere such as catalogs, pricing, ratings information on the suppliers and credit services for the suppliers.  In short they provided a useful service and acted as a go-between greatly reducing acquisition costs for both sides of the aisle.   Distributors that did not have entire sourcing departments now had access to hoards of information they would not otherwise be able to gather and suppliers had a targeted and priceless mailing list. 

This all began to change in the late 1990's as major online distributors like Branders began to appear.  At the same time the use of the internet for sourcing products began to skyrocket circumventing the need for expensive membership services that often did little when subscribers needed them most.  Indeed most played a hands off role even in blatant abuses of the system such as suppliers stealing customers directly from distributors.  As suppliers began to ramp up their online product listings the ability to jump online and search for the needed product information began to trump the need for expensive and non-eco friendly catalogs.  Along came Sage which provided the same basic services as ASI but at a much lower price and the fight was on for the remaining market share.  Sadly what the increase in competition did was drive the desire to report success within each association.  However the PPAI annual survey has probably summed up the trends most appropriately.  Prior to 2000 the industry had experienced consistent and rapid growth.  After 2000 the industry has been contracting 50% of the time.  Sales are probably still being grossly overestimated as the few companies that reported publicly have taken a huge beating.  Several like Norwood and Broder Bros.  which occupies the number one spot in the industry for supplier size either threatened bankruptcy or have gone bankrupt.  Major suppliers such have Cyrk have also gone off the grid and are no longer in business.  Sales for 2008 were atrocious dropping at least 10% and most major suppliers are reporting 20-40% drops in 2009.  I am sure the major associations will spin it as just a slight drop but when two of the top 5 suppliers were in danger of or went bankrupt and most of the top 10 had significant staff layoffs the situation is grim.  Actual sales will likely be down more than 20% in the promotional products industry in 2009.  There will be more failures on both sides of the aisle as distributors collapse under the weight of shrinking credit and increasing delinquencies of customers.  Suppliers face the same concerns as distributors are increasingly stressed.   Although the data is rarely released it is obvious the credit departments of many suppliers are under strain trying to deal with collections.  In general the business credit reporting agencies report the average days beyond terms has extended to 10 up from 2 earlier in 2009.  That's a rapid descent and with credit availability scheduled to shrink in the trillions this year and next it will only get worse.