On Monday, February 7, a press release was sent announcing the relaunch of DiscountPens.com, a site that sells customized promotional pens to end-users. Anyone is able to go to the site, select a pen, send in artwork and create a customized piece; in other words, it sells direct to the end-buyer or end-user. The following week, on Valentine’s Day, another press release was sent out announcing the launch of DiscountBags.com.
DiscountMugs is the parent company for both sites, and Amin Rahman is referenced as company president for each. Rahman is also the president of industry supplier Bel Promo.
Regarding the announcements, Rahman was unavailable for comment. However, a video on the company’s YouTube page addressed the relationship between Bel Promo and DiscountMugs. On the subject of a conflict of interest, Rahman says in the video that DiscountMugs.com existed prior to Bel Promo, and that the two companies target different audiences.
According to Alan Tabasky, vice president of Bel Promo and Hurricane Line, which merged with Bel Promo in January 2010, this is true. Tabasky insisted that while Bel Promo and DiscountMugs are both owned by Bel Inc., they are separate companies and operate independent of one another.
“I try to distance myself as much as I can,” he said. “Here at Bel Promo I have all my Hurricane Line customer service people and our Bel Promo customer service people. We have our own customer service department, our own art department, our own shipping department … everything is separate. Our accounting is separate, so there is no customer information in the database of anybody else’s.”
Despite being separate operations, one thing the companies have in common is product. Many of the items available on the discount sites are also available to the promotional products industry through Bel Promo. As an example, here is a mug available from DiscountMugs, item 7102, and here is a mug available from Bel Promo, item A7102.
Same image, same specs, even the same item number save for one letter. As of today, March 2, DiscountMugs offers item 7102 in white for $0.88 at 72 units. At the same price point, Bel Promo sells item A7102 in white for $1.59 (C), or $0.954 after discount.
Put simply, an end-buyer can purchase the mug for $0.88 cents, but it costs a distributor $0.95 cents.
Here is another example: item BP718 from DiscountPens versus item ABP718 from Bel Promo. At 500 pieces you see the DiscountPens item costs $0.35, while the same item at Bel Promo it $0.46 (C), or $0.276 for a distributor.
In this case, it is cheaper for a distributor to buy from Bel Promo than for an end-buyer to buy from DiscountPens.com, but it’s more expensive for that same end-buyer to purchase through a distributor at the proposed retail price of $0.46. If you were an end-buyer, and you saw one price at $0.35 and one at $0.46, what would you do?
When asked about the pricing, Tabasky admitted it was a problem. “We’ll get five or six phone calls like this a day, where a distributor will say ‘My customer found this product online at DiscountMugs, can you help me?'” he explained. Tabasky said Bel Promo will always try to work with the distributor, adjusting things from price to shipping, to help them get the sale.
Tabasky also said that DiscountMug’s pricing is unrelated to Bel Promo’s. “If DiscountMugs’ price is cheaper than Bel Promo’s, it’s just because they’re bowing to whatever pressures they have from their own competitors, which is not the regular distributor,” he explained. “They have their own online bargain guys, like BargainMugs.com and PENSRUS.com, and those are their competitors, not Halo/Lee Wayne.”
This brings up another topic that is at the heart of the matter: the prevalence of online-only, direct-selling promotional product sites. “If you took DiscountMugs right off the map, there’s another low-price leader popping up all the time,” Tabasky said. A quick Google search for “custom mug” nets over 9,000,000 results, any of which can be found by an end-buyer.
When asked how a distributor is supposed to compete with this, Tabasky said, “They really do have to offer the best service. Somebody online, the direct type of guys, they’re not built on service. They’re built on price. They don’t have people on the street, they don’t have the same type of advertising.”
Whether or not Bel Promo is in any way related to companies selling direct, the fact remains there are other companies selling directly to end-buyers, and many of them have no relationship or allegiance to our industry. What are your thoughts about companies selling direct? What are you doing to remain competitive in a rapidly changing industry?
