Contract Embroidery getting the squeeze!

I took over my mother’s one part-time employee business in 1994 and jumped into the contract embroidery business head first. I borrowed money from my parents to buy a $100K industrial barudan embroidery machine and started making calls.  The business grew quickly and we expanded.  I thought i was a genius or a dynamo sales-guy at least; i wasn’t.  I just took a chance and it worked out at that time in that industry.  What i didn’t realize was machine companies would come out with cheap machines in the years to come and eliminate the barrier to entry i thought was me being smart.  Like most businesses, barriers drop and that’s a fact of life.  We became more efficient to stave it off and started selling online direct to acquire our own customers but i grew up as a contract embroiderer and wanted to continue in that business.

Unfortunately, cheap machinery was not our only problem.  Manufacturers of brands like Charles River, Antigua, Ash city, etc started offering embroidery in-house and overseas turn-arounds reduced to 90 days so all big orders were done before they were shipped from china.  Lastly, the final two large blank (no embroidery or screenprint) distributors have not stepped up in any meaningful way to protect the decorators that add value to their product.  Without a logo embroidered or screenprinted on that garment, its worth virtually nothing.  Add in all these factors and it seems clear to me that contract embroidery as we knew it is getting squeezed out of the market.  There’s no path to creating a sustainable venture.  You have to win every order over pennies while the distributor salespeople and SanMar/Broder eat up most of the profit.  This is not complaining; if i were in their shoes, i would do the same thing.  Problem is: when we’re gone they’ll lose a lot of business and besides having an exclusive brand agreement with Nike or Adidas, they won’t be any different then the small players.  If they try to decorate in-house, the majority of their customer base (small decorators) will go to another vendor.  The true sales guys will likely order from a one-invoice supplier or begin to decorate in-house and kill the small decorators that are town-based an rely on walk in traffic versus going out and selling.

So, in conclusion I am sad to see the dead end road for contract embroidery without support from the large blank distributors but want to point out that letting contract decorators die will be detrimental to their business long term.  They are the geniuses today i was in 1994 and will soon be the non-genius i am today unless something changes quick.

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