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.

Persistence cuts both ways

I think my most valued and yet most flawed attribute is being persistent.  When i was a kid I played backyard sports long after anyone wanted to if i was losing.  I would often compete well past dark just so i could try to win and if not, at least the other person or team would quit.  I carried that attribute into work and did well persisting to win/beat the competition or fight until others would quit.  That worked well in our contract embroidery business in the 90’s, it worked well when i was selling online stores and it worked well starting and building our online direct business.

Unfortunately, my persistence has also crippled my ability to grow beyond a certain level because of past business success. As i have told our blank apparel distributors in the past few weeks, I still wanted to provide contract embroidery as it was my original business.  After years of trying to sell to promotional product distributors outside our area (we even ran tours for new owners at a well known franchise), i did finally give up at least selling and moved on to a technology solution for online stores.  I went after large non-profits and had a few large programs running orders just-in-time.  Problem was we still provided contract embroidery and protected these customers by not selling to their customers (except one because of family). This limited our ability to grow and have a staff big enough to sell and support big online store programs.  Next, we started selling direct online primarily focused on small business customers……but when we ran into any customer that may be a target of our contract customers, we backed off and didn’t sell to them.  I even referred a friend’s company to a contract customer as a more appropriate fit so we could eliminate any conflict of interest.  Then when contract orders became too complicated to manage manually and financially, we proposed and built a sophisticated online ordering system for Promotional Product Distributors and blank apparel distributors but we couldn’t get the PPDs to change and the suppliers were either technically challenged, were crippled by fear that change would hurt their business or too inept to even get that far.

So, this ‘not letting go’ attitude has clouded my judgment for years.  I don’t want to lose and figured I’d just keep playing the game long enough for someone to quit or give in.  I have learned my lesson and am finally (at age 43) ready to move on.  I was always a ‘late bloomer’ and hopefully this is finally my awakening.  We are giving up on our Embroidery Contract Manager application that was too smart for most people to understand.  We’ll leave it on the shelf for now….. cause you never know? (old habits die hard!) and focus on attacking a business where there’s no need for a partner…..