PPAI Expo 2020

Every year, Promotional Products Association International (PPAI) puts on the industry’s premier event: The PPAI Expo. The five-day conference and tradeshow attracts 13,000 distributors from more than 4,000 companies and features more than 1,200 exhibiting companies showcasing tens of thousands of promotional products in nearly a million square feet of the Mandalay Bay Convention Center in Las Vegas. All told, more than 20,000 industry professionals gather each January to learn, network and expand their knowledge so they can grow their businesses in the new year.

In addition to the miles (literally!) of exhibits, education plays an important role at The PPAI Expo, and this year’s course lineup included a number of sessions on product safety to educate both suppliers and distributors on how to better address the issues through compliance programs. We had a chance to sit in on a few classes, and here’s what we learned.


Talking Tech & LI Batteries

With our lives becoming even more dependent on tech, it’s no surprise that promo buyers are continuing to shift spend toward branded merchandise within this category. In fact, tech products comprise 5.5% of the $24.7 billion promotional products industry, making it the fifth most popular category of branded merchandise behind wearables, drinkware, travel items and writing instruments.

Makes sense. Brands want recipients to keep and use their promotional products, so why not give tech that will be easily integrated into consumers’ daily lives.

To keep these powerful promo products going, lithium ion (LI) batteries are often the power source of choice. Why? Because they can pack a lot of energy into a small amount of space.

Thus, the popularity of LI-powered tech is growing significantly. In 2016, LI accounted for $22 billion of the $65 billion worldwide battery market. In 2025, it’s estimated LI battery sales will top more than $78 billion.

Much of this growth is with the portable power bank. But here’s where things get hot: The vast majority of power banks worldwide aren’t properly tested. In fact, according to UL’s Michael Sakamoto, there were 211,000 product recalls and 400 incidences due to fire in 2012-2017.

While these recalls were in the global power bank market, our industry can and has been impacted by recalls of power banks. Sure, we could simply avoid selling these kinds of risky products, but that’s really not the answer. Consumers want to use tech-based branded merchandise within their marketing campaigns, so it is our duty to make sure we can deliver ones that are safe.

With that in mind, how can we collectively as an industry deliver safe product, protect ourselves and our customers, and mitigate risk?

First, understand why these LI product failures typically happen. Internally, there can be misplaced or deficient insulation, misalignment of internal parts and/or contaminants, to name a few issues. Externally, there can be overcharging that leads to overheating. A high rate of discharge can also lead to short circuiting both internally and externally.

Third-party testing, of components as well as the unit as a whole, is an important step in identifying any problems. For example, a power cell may be safety tested; however, this doesn’t necessarily mean the device as a whole will operate safely. That is why you must look at everything. For documentation, UL 2056 is a good place to start.

Additionally, making sure you are properly insured is critical, as the courts evaluate if a company has done its due diligence in the design and manufacture or if there was negligence when an incident happens.

In the event an incident does occur, it is important to get the defective product back for forensic analysis. This will help determine what happened beyond what was examined in the certification process in order to keep the issue from continuing to occur in the future.

In a voluntary compliance market such as the promotional products industry, it is critical that processes are well defined and products are tested to minimize risk. Otherwise, not only are we in danger of losing an order or a customer, we are also in jeopardy of buyers shifting their marketing spend to other types of media because our industry as a whole doesn’t have proper control over its supply chain.


Understanding Prop 65

While Prop 65, officially known as the Safe Drinking Water and Toxic Enforcement Act of 1986, has been around for more than three decades, there is still confusion around it, especially for those new to the promotional products industry.

In a nutshell, Prop 65 is not a testing requirement; rather, it is a warning requirement regarding exposure (oral, inhalation, transdermal, hand-to-mouth) to a list of chemicals that may cause cancer, birth defects or other reproductive harm. Meaning, if the product you are selling will be delivered and/or used within California and it contains one of the chemicals on the list, then you must publish a warning to alert consumers so they can make an informed decision. This warning must be visible at the time of purchase (so on a website or catalog) as well as at exposure (on the product itself).

What continues to make Prop 65 challenging is that more and more chemicals are added to the list each year. In 1986 when the legislation was first passed, there were 30 chemicals listed. Today, there are more than 900.

Furthermore, there’s a goldmine of money to be made by attorneys and their bounty hunters who privately enforce the regulation and are making a career out of finding violators.

What kind of cash are we talking? In 2018, there were 829 settlements for a total of $35 million. Of that, $27 million (77%) went to attorneys for their fees and costs. No chump change here.

Let’s look at a common order of 500 mugs. At a fine of $2,500 per incident per day (i.e. $2,500 per mug), that’s $1.25 million per day in penalties if you’re found in violation. That adds up quite quickly.

How can you mitigate this risk? While the following isn’t a comprehensive guide, these tips will give you a place to start.

For suppliers, clearly it’s not reasonable to test for 900+ chemicals for every SKU you offer. Rather, know what chemicals are in each product and do testing if the chemical is on the OEHHA list. Working with a certified toxicologist to review products and determine appropriate warning language is also helpful.

From the distributor point of view, confirm with the end buyer whether the product will be distributed in California then work closely with the supplier to determine what, if any, listed chemicals are in the product. If there are listed chemicals present, make sure all warning requirements are met, communicate the warning requirements to the customer and train your team so they can correctly answer any questions.

For more information, visit the California Office of Environmental Health Hazard Assessment (OEHHA).


Starting A Compliance Program

When you look at all the aspects of product safety, corporate social responsibility and environmental stewardship, it can be more than a bit overwhelming. So how do you start a compliance program?

First, you must prioritize risk. You can’t do everything at once, so look at the items you sell in high volume and/or in known risky categories and begin there.

Next, think about ways to minimize your supply base (suppliers funnel manufacturing to fewer factories and distributors buy from fewer suppliers) to those who are doing the testing and can provide the documentation you need to make the best purchasing decisions.

From there, your compliance program can take a number of directions based on how you define what the minimum safety standard is for you. Some considerations:

Testing: Make sure any labs you work with are certified for CPSC testing. All major U.S.-based labs are, but this isn’t the case for all Chinese-based labs. And since most testing occurs in China to ensure products are compliant before transport, you want to confirm the proper testing is being done. Furthermore, understand that a single test report measures that particular point in time. You need a series of tests in order to spot trends.

Customer Agreements: When you enter into customer and/or supplier agreements, you must make sure the standards required by the customer align with what is being manufactured. In other words, confirm that you are actually buying the product you’re selling.

Recalls: Suppliers aren’t the only ones who need recall procedures. Distributors also need a recall process, as each party has due diligence in a recall proceeding.

Legal Advice: Attorneys aren’t cheap, but the most expensive attorney in terms of hourly rate may end up being the most economical in the long run. If you work with attorneys that are experienced in product safety issues, they can more quickly answer questions and resolve issues based on that experience. Attorneys with less experience and a more affordable rate may seem ok, but it will take them longer (and thus cost you more) if they have to research every issue you present. Never mind the cost of possibly getting it wrong!


Implementing What Was Learned

PPAI has done a nice job of including product safety-based education to The Expo lineup, but there’s one thing they didn’t discuss: You don’t have to go it alone.

Sure, you can take all of the resources PPAI has to offer and build a compliance program from the ground up. It is totally doable.

But if you’re looking for a turnkey solution, it does exist for both suppliers and distributors right here at QCA.

The Supplier Accreditation Program is based on a gap-analysis methodology validated by third-party audits. We work with suppliers to help them fully document their manufacturing compliance program policies, procedures and processes; demonstrate consistent implementation of those elements in a series of third-party audits; and implement corrective actions to the extent necessary to address deficiencies that may be noted in those audits. Find out more here.

Distributors currently have two participation options. The first is becoming a QCA Distributor Advocate, whereby they complete an assessment around product safety, product quality and social accountability then submit supporting documentation that is reviewed by the QCA Compliance Committee for confirmation. Get all the details here.

From there, distributors can complete the Distributor Certification Program, where they fully document their compliance program policies, procedures and processes; demonstrate the effectiveness of the program in a third-party audit of their headquarters; and address any deficiencies noted in those audits. Learn more here.

Through these programs, suppliers and distributors can strengthen their relationship within the supply chain, which results in better solutions to customer compliance requirements as well as greater protection for the value of their brands.

No reinvention of the wheel necessary. The programs are already in place. All that’s missing is you.