Our vocabulary has changed, hasn’t it? PPE, ventilators, lockdowns, tracing, flattening the curve and more are part of the new world. COVID-19 and the actions taken around the country are affecting everyone, including those of us who live in the decoration and promotional products markets. The most obvious effects are those on the pace of business and the financial impact of a sudden drop off in sales. Much has been written about that.
I invite you to think about something else that you may not have realized yet. I had been giving much thought over the past year to where we have been headed as an industry. What I have been seeing is the confluence of two major forces:
- First, the “Amazonization” of our industry, where we see customer expectations driven higher and higher by one-day delivery and high quality. Consumers want it now and they want it perfect and they want it cheap. Immediate gratification has become the norm.
- Second, the impact of major investments in large scale web decorated order fulfillment operations. These companies have the resources to develop the systems to meet the current customer expectations.
When I entered the decoration industry in 2000, a typical order averaged 100 or more pieces and standard turn time was 3 weeks. In 2019, orders averaged more like 26 pieces and five days turn time. Of course, we have customers that ship rush embroidery orders in 6 hours and one client ships most multi-decorated orders in 24 hours and the rest in 48.
Thus, we have been projecting that by 2024 the industry standard would be to ship one day after garments arrive, with an average 10 pieces per order. As orders and turn time shrinks, the average revenue per order will drop and velocity will increase. Business will become orders of magnitude more difficult to manage. Any shops who are not harnessing the full benefit of technology to accelerate and standardize their workflow will not be able to compete.
I believe that the COVID-19 impact will be to make 2020 the year the industry moves to one day turn and 10 piece orders.
Why? Competition! We have a customer who told me last week that some of his competitors have shown up at his shop saying they closed their businesses for good. They were asking for work. They were running small shops and were totally old school, with either manual operations or simple decorated business systems. They were forced to close partly due to the fact that they could not operate remotely. My customer has seen a drop in business, but he survived because his entire front office could work electronically from home, using camera phones and computers.
Monday we will come off lockdown in South Carolina. I wonder how many shops here will either not re-open or have to close in the coming months. Even optimists expect business to take a while to recover. Do you think buyers won’t take advantage of you? The survivors will be those companies who can adapt and win out in a very rough market.
Normally, I don’t plug EmbTrak in our blog. But the situation is serious and you need to use the best to win. In all sincerity, we have built EmbTrak to allow shops of all sizes to compete against anyone, anywhere with any system. We started in the embroidery shops of large companies like Cutter & Buck and TaylorMade and Chef Works where we perfected tools to support these industrial size operations. We brought those tools downmarket to support general decorators. We are continuing to add features necessary to support the full range of business functions for the general decorator. And through June 2021, we are offering very competitive pricing.
Please give me a call today to learn more. It will be one of the smartest moves you ever made.