As exciting as it for reps to sell products from top retail brands, there are significant challenges that can’t be ignored. For one, says Nina Bloomstein Shatz of HALO, the margins on directly sourced products are often razor-thin because of the high price point. “We can absolutely source these items, but we’re making much less money,” she says. “We definitely take a hit.”

Before Spector & Co. (asi/88660) released its Ashbury line of bags inspired by retail brand Herschel, distributors’ only option to get the same look was to buy them at full price from Herschel and brand them themselves. “Herschel doesn’t want to sell through promo,” says Ann Baiden of Innovatex Solutions. “But buying them at full price really affects margins.”

Spector & Co.'s Ashbury line of bags 

Another related pair of obstacles is inconsistent inventory levels and quick trend turnover. Megan Erber of S&S Activewear says there’s sometimes not enough stock to meet large-quantity orders from brand names, since in retail, once the trend has waned (which can happen quickly with the speed of e-commerce and social media influence), the companies don’t make the styles available anymore. “You can buy things for a month or two at retail, and then it’s gone,” she says. “It’s about a three-month turnover. But this industry needs things to be available for a minimum of two years if it’s going to sell, so it’s first given time to gain traction and then it’s included in programs. And since brands may operate slightly differently from each other, it creates uncertainty for us.”

As much as the gap is narrowing between the two, promo will continue to “play second fiddle” to retail, says Jason Lucash, who manages product development for HUB Promotional Group and its eight brands. That typically means available inventory will go to retail first. “If a distributor orders 300 Bose headphones and a retail customer needs hundreds of the same, that inventory is going to retail,” he says. “All of a sudden, you don’t have the stock.”

Yet another challenge is brands’ resistance to allowing co-branding on their items when they’re used for a promotional application. Adam Kovar of ETS Express says they must relinquish some guideline control in order to thrive in this industry. “You need a certain level of trust between the retailer and supplier,” he says. “A retailer can’t micromanage what we imprint. They’re hesitant to let go and let us do what we need to do. They might not want co-branding because it’s not part of their messaging. That’s their choice, but they’re losing an opportunity.”

Beacon Promotions (asi/39250), part of HUB Promotional Group, offers Bose and JBL headphones to the industry. However, both brands have stipulated the headphones themselves can’t be imprinted with another logo, only the case they come in. “Co-branding often doesn’t jive with brand guidelines,” says Lucash, “When I was at Jansport, it was the same thing. No other imprints were allowed on the bag because it was all about the Jansport brand.”

Even if a brand does allow for co-branding, sometimes they require approval of the intended design before selling the items to the supplier. “If they don’t approve, they won’t sell the item to you,” says Baiden. “Retail doesn’t always make it easy for us.”