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With Apple pulling out of Macworld and the increasing decline of attendance from both visitors and exhibitors, is this the beginning of an end to trade shows? Or could it simply be that the tried-and-true formula of trade shows for businesses is no longer viable?
I remember drooling over the 1999 SEGD award winning 45,000 sq. ft. Sony Playstation booth design by Mauk Design for the E3 event. The design I believe is still one of the best even 10 years later. It was groundbreaking, impactful, surprising, and delivered the message that Sony was its industry’s most innovative company.
Now, what about E3 today? To those that are unaware of E3, it used to be the ultimate video game conference. Think of it like the Saloni Milano for furniture industry or the Mercedez-Benz Fashion Week for the fashion industry. Gaming companies used to spend a ton, to debut titles, creating the most exciting buzz while gamers walk the floor with gleeful eyes, fighting to test out the latest games. Well for those who have attended the past few E3’s, most will say that they are highly disappointed and that the show is dying; with nothing innovative, nothing surprising, nothing new.
Don’t get me wrong. I love attending trade shows and have nothing against trade shows. We’ve made wonderful partnerships with clients, fans and peers through trade shows. In the last few years, my company has been fortunate to do as many as 8 shows per year; some local and some international. I’ve enjoyed them all. Some were worth the investment and time, and some were just disappointing misses. Certain shows still have the pizzazz, attracting record-breaking visitors and exhibitors alike. But most shows are your same old “trade show”. Of course, show management will always try to convince or sell you that they are “THE” show to do. After all it’s a business. But despite economic down turn and low turn outs, booth fees keep increasing and now range from $40.00- $70.00 per sq.ft!!
Now with the recent Apple stunt, I have to pause for a moment and try to understand why. Maybe trade shows are NOT dying, but the way in which business is done today has changed. And the conventional ways of doing business no longer apply. With Web 2.0, most new product announcements are now done on the Internet/ blogs. With consumers increasing their demands on transparencies, buyers are now forced to do their research in advance way before attending a show and may not even attend because of that.
Either way, the most important thing is to accept the fact that time has changed. The conventional trade show formula may have worked for many businesses 10 or 20 years ago but main street has evolved. There is no one right method, but without exploring new ideas we may fall behind times in tackling the ever changing demanding consumers.
 The Brand Bubble It all started with a leisurely afternoon reading of my favorite magazines; FORTUNE. Flipping through the pages, reading about businesses, ventures, fashion moguls, hedge fund gurus, and then suddenly, this September 1st 2008 issue on page 75 got me, how do I put it… “disturbed”.
It was an article on Prada. It talked about how Prada unlike many fashion labels, is still very much family owned, and that it desperately needed to go publicly listed in order to compete, expand and pay down debt. Here I go reading how this company’s net profit had risen 66% to $187 million in 2007, sales had grown 17% to $2.5 billion, and how it is worth billions. Then suddenly, on the last page of this long 5-page article, it stated that the Prada family is responsible for the $956 million debt – mostly accrued through numerous failed acquisition sprees…
Now, as a consumer and an entrepreneur, I started asking myself, how does this work? How can a company be in this much debt, still have increasing net profits, but need to go publicly listed to get money from investors to pay off debt and expand? Am I missing something?
Then off I go, embarking on this mission, picking the brains of every MBA person I meet, colleagues, engineers, entrepreneurs, and still no one really knows how to explain this to me. Most answers I got were that “Prada is a BRAND”, or “It’s called goodwill Mel.”
But with the whole Wall Street melt-down alongside failed CMBS (commercial mortgage-backed securities), it made me question if the same “model” or “rule” had been applied there as well? Making us believe that something is worth MORE than it actually is? Where stock prices are driven high based on intangible values and future earnings based on these “fake” securities and “assets”.
Then, one smart creative VP, told me about this book called “The Brand Bubble”, by John Gerzema and Ed Lebar. (I knew somehow, someone out there would be able to point me to the right direction!!)
Within the first chapter, it had answered most of my questions, about branding, intangible values, future earnings. I do not wish to give away the content of the book, and I highly recommend this to anyone building a business or helping others in branding & marketing. This book basically explains how brands that are built on trust, reassurance and simplification of choice are no longer positioned for long-term success.
The Brand Bubble is a must read. Also check out their wonderful blog.
A fan wrote in asking what is the expected lead time when buyers place orders at trade shows. Our answer is that it depends on what type of products and the logistics of your fulfillment; if your products are Build-to-order (BTO) or Make-to-order (MTO), or if you already have a warehouse of stocked products ready to ship. To find out more wikipedia has a great description on order fulfillment.
We also understand that the gift industry is very different from the fashion industry. At gift shows, most products are EVERYDAY products. Which means, retailers would generally want them in 2 weeks. If you sell seasonal products, ie, holiday items, some would say deliver 2 months before the holiday season starts. That allows you more time to accumulate your orders. Nonetheless, retailers would sometimes wait up to 6 weeks especially after a trade show knowing that most vendors will be extremely busy stocking and shipping orders. Anything longer than 6 weeks, we find that retailers may forget that they have even placed an order!
If your products are MTO, you will have more time to produce them since retailers know they are getting limited edition, unique items, customized for them. If your products are stocked, be prepared to ship immediately. Nonetheless, most retailers have their own ship dates and cancel dates. If you cannot meet their requirements most will reject your shipment even if it’s only a day late!
As for the fashion industry, we are not too familiar, since it’s not our field, but from trade shows we’ve attended and friends that we know, we believe they usually sell 2-3 seasons ahead. Vendors take orders based on scheduled deadlines set by their own factories. They will tell retailers that all orders have to be placed by a certain date if not they won’t be able to get the collection at all. This way the designer can give the factory a set number of pieces to produce. They also advise retailers of the approximate delivery dates. It all depends on how strict the vendors are with their own factories. In addition, since most clothing factories are based overseas, there are a lot of quality control issues, import and export regulations that usually result in longer lead time.
Before you continue reading this article, let me warn you that Joe and I have a biased opinion on working with sales reps and agents. This is because we have worked with super amazing people and really unethical crappy people. So the experiences that we share here with you come from both sides.
Firstly, there are 2 types of reps. One is an independent rep, that goes door-to-door to get your sales. They usually cover a smaller area/region because, after all, it’s only ONE person. They usually do NOT do trade shows or have a showroom for that matter. They may once in a while throw a trunk show or exhibit at a trade show, if they have enough lines to contribute and cover their trade show expenses. Independent reps if you find good ones, are a really hardworking bunch. They travel consistently, actively calling buyers, chasing down clients for money for you, and all they get is a puny little commission, which we will talk about some more in a bit.
The other is a rep group. A rep group usually has around 15-40 reps working for them to cover larger territories, hence bringing in more clients when they have shows at their showroom. Their showrooms are usually at the Gift Mart in corresponding cities, i.e. The Market Center in SF, The LA Gift Mart in LA, The Chicago Mart, etc. Your line is showcased all year round. They will usually have shows at their showroom during the gift shows and sometimes they also participate in the gift show itself by having a booth to maximize their presence. Sometimes the independent reps belong to these larger rep groups.
Most of these reps are commission only basis. Which is great for startups with no resource to hire a sales team. If you have done a trade show before, you will probably have been approached by reps. Questions you should ask before deciding; how many lines do they carry? What kind of accounts do they have? Who are they carrying? What kind of shows do they do? If they have a showroom, how big is the showroom? How often do they have shows there? Do they attend and exhibit at gift shows as well? How many reps do they have? And ask for references! Call up some of their lines and see if they like them. The first rule of thumb is to join a rep that carries lines that are at par with your price points and your clientele. You want to be in good company.
And of course, the bottom line is what is their commission rate and how much will they be charging you for their showroom fees. And if they do participate in trade shows, how much is your participation fee? The gift industry rep commissions range from 15% – 20%, with fashion industry 10%. Showroom fees range from $50 per month up to $200 per month. That is in addition to the sales commission. Most reps do not get paid their commissions until you get paid by the buyer. Hence, some will go all out to be your debt collector when needed.
Now, here is the dilemma. You then ask yourself, can I afford to lose up to 20% off my wholesale pricing, and pay for showroom fees? (Read our article on how to price items.) SALES are #1 to any product/manufacturing business. Having sales reps is just one of your MANY sales strategies. Be it you doing trade shows on your own, hiring your own sales team, or having your family/ friends help you, or doing e-commerce. It may sound costly but you also have to weigh in that sometimes reps can get you into accounts that you may have missed at trade shows. Reps may follow up with stores more consistently than you can. They can get you the exposure you can’t achieve through trade shows or press.
And of course the downside of having reps would be you also having to pay them commissions on sales you bring in yourself. Most rep agreements are territorial based. Which means, if you do a trade show in NY, your Midwest reps will get commissions on sales from stores in the Midwest, that you have landed yourself at the show, even though you have just spent $10k doing a show. On top of that, you may question, why am I paying for showroom fees just to be cramped in with all the other lines. How come my reps aren’t bringing in as much sales as I thought they would? How come this buyer whom would normally spend $2k with me at a show, now ordering through my rep only order $90.00? Why am I cutting my reps all these commissions for work I have done entirely myself?
On the rep side, you have to also understand the agent’s point of view. First, if they carry ONLY your line, they would make pennies. A 15% of a $500 order only gives them $75, but it takes them days or even weeks to set up the appointment, phone calls after phone calls, and then finally when the buyer agrees, your rep lugs all your samples to the store, deal with the buyer, who may or may NOT be a nice buyer, spend up to 4 hours literally trying to convince or “begging” them to buy your line, to have faith in your products. What about cab OR gas money to get to the store, parking. And all that for $75?
This is why reps must carry so many lines!
And when you pay for fees to participate at a show, your rep is doing the setup, the networking, the mail outs, the shipping costs to the show, the booth fees, electricity, everything for a small fee.
Over the years, we have seen frustrations from all parties involved. We have always appreciated our reps. When things have not worked out, we’ve parted ways acknowledging that we can no longer benefit each other. Both parties agreed that the bottom line is for all of us to make money. We have also come to understand that WE are our best sales reps. You cannot depend solely on your reps to bring in sales for you. In reverse, if you do depend on them too much, you may find it hard to break free when you finally need to. You have to have many other sales strategies lined up as each yields different results. Your strategies have to be in line with your brand and goals. Do you want to be in thousands of stores? Or do you want to be in a selected few that represents your brand the way you envision? Is your target mass-market or high end?
I once read that it’s not about the quantity of stores that you get into. It’s about the quality of orders and the type of stores. It’s about your short and long term goals. If your end goal is to be in Le Bon Marché in Paris, or Liberty in UK or Bergdorf in NY, you don’t need your reps to get you there. You need YOU.
Some of us may start by visiting store to store or what we call road sales. It’s a great way to meet the store owners in person and get personal attention. Sometimes, store owners are welcoming and sometimes not. You have to also understand, they get a gazillion emails, phone calls and mailers every day. So if they do not jump up and welcome you with a big hug, it’s for a reason. Or at least try to think of the logical reasons first before jumping into the “oh all the stores are so nasty” comment.
Second route is a tradeshow. A tradeshow is set up just for that purpose. Makers show off their goods, buyers buy. Press people come to check out new goods to feature and trade show organizers make money by packing the venue. It is as simple as that. We as a company decided to bypass the first route and go straight into the tradeshow route.
After you do your road sales and trade shows what other options do you have? Plenty. You can have a more intimate “trunk show.” You can even double up with another maker/ designer. This can add some variety, choices, and cocktails for your busy buyers. When two designers combine their mailing lists, the result is more press, more buyers and more sales. This is of course theoretically speaking. It only works if both designers have equal amount of fan base and are at the same level. If not you will see little benefit from the joint venture. Also the more designers you have included in your trunk show, the individual cost goes down. But be sure not to get your own brand lost in a see of names. You must find that happy medium of saving money while still attracting buyers to the event.
Another idea is to look at magazines. This is after you’ve gotten into all the stores you want to get into and you are seeking the “new and hip” stores. Lucky Magazine, Domino and In Style all have great nationwide listings. They usually feature editorials on the owners as well, so it’s a great way to get to know their style and taste.
And of course blogs. We know for a FACT that blogs work for both the buyers as well as the designers/makers. Many buyers have contacted us in the past simply because we were mentioned or featured in a blog. We have found new retailers, specifically international leads from being featured in a blog.
So what do you do after you’ve compiled your list? You go all out, non-stop to make the cold calling, mail out your linesheets, eblasts, and email like crazy to show off your beautiful designs. PROMOTE, SELL, MARKET!
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