What Is a Promotional Products Distributor — And Do You Still Need One at Scale?

The promotional products industry runs on a model most buyers never fully examine. Understanding it takes about five minutes — and at large volumes, those five minutes are worth real money.

What a Promotional Products Distributor Actually Is

A promotional products distributor is a sales and sourcing organization. They are not a manufacturer. They do not own factories, run presses, or operate embroidery machines. What they do is sit between buyers (corporations, agencies, nonprofits) and manufacturers, handling the commercial relationship on both ends.

Distributors typically work through industry groups like PPAI (Promotional Products Association International) or ASI (Advertising Specialty Institute), which give them access to supplier pricing tiers and product catalogs. When you place an order with a distributor, they source the product from a manufacturer, mark it up, and resell it to you.

This is not inherently a bad model. It exists because it solves real problems. But it is important to understand exactly what the model is before you decide whether it’s right for your situation.

What Distributors Provide

At their best, distributors offer a genuine bundle of services:

Sourcing and product selection. A distributor can pull from hundreds of suppliers across categories — apparel, hard goods, drinkware, bags, tech accessories — and present a curated set of options for a campaign. For buyers who don’t have the time or category knowledge to evaluate suppliers directly, this is a real service.

Order coordination. Distributors manage timelines, communicate with factories, handle artwork submissions, and chase production updates. For buyers without dedicated procurement resources, this coordination has value.

Small-order flexibility. Manufacturers with high minimum order quantities don’t deal directly with buyers who need 250 polos. Distributors aggregate demand across many clients, which allows them to place smaller orders with suppliers. If you’re buying 300 units once a year, a distributor may be your only practical option.

Variety on a single PO. If a campaign requires shirts, hats, bags, and a custom notebook — sourced from four different factories — a distributor can consolidate that into a single invoice and manage the logistics. For complex mixed-product programs, this consolidation has value.

Compliance and accountability. Established distributors carry liability insurance, can provide compliance documentation, and serve as a single point of accountability if something goes wrong.

What Distributors Charge

This is where the math matters. Distributor margins on decorated apparel typically run 40–60% above the factory price, sometimes higher on smaller orders or rush programs. This margin covers their sales staff, account management, platform overhead, and profit.

On a $5.00 factory cost item, you might pay $7.50–$8.00 through a distributor. On a $3.00 decoration cost, the landed price through distribution might be $4.50–$5.00. Across a 1,000-unit order, the difference is noticeable. Across a 100,000-unit order, it becomes a significant line item in someone’s budget.

When Distributors Add Genuine Value

There are real scenarios where using a distributor is the right call:

• Small or irregular order volumes — under 5,000–10,000 units, or orders placed once or twice a year with no predictable cadence
• Mixed product categories — campaigns requiring many product types sourced from different manufacturers
• Limited internal procurement capacity — buyers who don’t have staff to manage factory relationships, approve pre-production samples, or run quality audits
• Speed with no existing relationship — a distributor with an established supplier relationship can sometimes move faster than a buyer starting a new factory relationship from scratch
• Occasional buyers — organizations that order branded merchandise infrequently and don’t justify building direct sourcing infrastructure

When Distributors Stop Making Sense

The distributor value proposition erodes as volume increases. Consider what happens at 100,000+ units:

Coordination complexity decreases. At scale, you’re ordering one product category in high volume — not fifty products from fifty factories. The coordination work shrinks.

Direct factory access opens up. US-based manufacturers with minimum order thresholds are willing to work directly with buyers at 100,000 units. The “access” a distributor provides is no longer a barrier.

The margin cost becomes real. A 40% markup on a $300,000 factory order is $120,000. That money pays for a distributor’s sales commission and overhead — none of which adds manufacturing quality or delivery speed.

Buyers have procurement resources. Organizations placing 100,000-unit orders typically have procurement teams, legal review, and vendor management capacity. The services a distributor provides — order management, compliance documentation, timeline tracking — are things in-house staff can handle.

Consistency matters more. At scale, you want a locked-down spec with a single manufacturer who knows your brand standards, not a distributor who re-sources your order from a different factory each cycle.

The Math Changes at Scale

There’s a version of this where distributors remain useful even at large volumes — if they’re providing genuine value beyond margin (proprietary supplier relationships, category expertise, meaningful compliance oversight). But buyers should be clear-eyed about what they’re paying for.

At 100,000+ units of a single decorated product category, with a procurement team in place and recurring volume to offer, going direct to a US manufacturer is almost always the better economic decision. The distributor margin becomes a cost center, not a service fee.

The right question isn’t “should I use a distributor?” It’s “what am I getting for that margin, and is it worth it at this volume?”

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Merch Factory Direct is a US-based screen print and embroidery manufacturer for orders of 100,000+ units. For a deeper look at the economics, see why large buyers skip the promo distributor, or request a direct quote.