Build Your Business: Shop Talk

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March 27, 2018

When a large retailer arrived in Elmira, New York, in 2011, bought a local sporting goods company and left behind its affiliated decorator, Michael Maloney saw an opportunity.

“[The small sporting goods company] had [its] own small decorator in a back room in their warehouse,” he recalls. “When they got bought out, the big [retailer] didn’t care to buy the decorator.”

Maloney swooped in, bought the decoration component of the business and built Rainbow Lettering. He hit the ground running — along with his seven-employee team — fulfilling contract orders for sporting-goods suppliers, including the likes of BSN and Lids. The company offered only screen printing at the time but soon grew, adding more graphic artists and expanding capabilities.

Seven years later, the Rainbow Lettering roster includes 45 employees and services such as screen printing, embroidery, sublimation, heat-applied technologies, and custom sorting and bagging for e-commerce stores are offered.

Originally, Maloney envisioned the company becoming a large contract decorator, but it has evolved into a one-stop shop. “A couple of other things fell in our lap,” he says. “Customers just started walking in the door.”

Rainbow Lettering occasionally took direct-to-consumer orders, but when one particular client — a teachers’ association — asked if the team could create a custom web store, “business as usual” ceased to exist.

“We gave [the website] a shot and ended up with a lot of sales from it,” Maloney says. “I honestly thought maybe we just got lucky.”

The e-commerce experiment’s success inspired the team to keep exploring the web approach, which continued to be profitable and eventually led to a major shift in the company’s business model.

Winning on the Web
The business, which originally consisted of 99% contract work, now is comprised of a 50-50 mix of contract and direct-to-consumer work, with 60% of the direct-to-consumer orders being placed via custom e-commerce websites, according to Maloney.

Orders come via personalized, dedicated web stores, which Rainbow Lettering creates in conjunction with group representatives — typically team moms, coaches or captains. The platform takes the ordering burden off of these individuals, allowing them to direct group members to their custom online stores, where they can place orders within a designated time frame.

“You’re trying to provide as many products to as many people as you can in such a narrow window that paper forms and manual orders are completely archaic now,” Maloney says. “Customers want an Amazon-like experience.”

The company runs 75 web stores for the current winter sports season and anticipates operating as many as 100 this spring. While Rainbow Lettering works primarily in sports markets, it also has clients in corporate markets, which make up 20%-30% of its business.

“[Our corporate clients include] construction companies, insurance companies — any company that wants logoed product,” Maloney says. “People don’t want their employees wearing ‘willy-nilly’ stuff.”

Making it Personal
Rainbow Lettering offers a wide range of decorating capabilities, but heat-applied graphics have been key to a booming part of its business: personalization.

“We went from a very rudimentary heat press five or six years ago, to a polyurethane product maybe three or four years ago and it took on a life of its own,” Maloney says. “It’s very lightweight, it stretches, adheres well and is very durable.”

Rainbow Lettering uses the polyurethane rubber product to heat-apply names and numbers to performance apparel, which Maloney finds is much more efficient than adding these custom details via screen printing. Alternatively, for items like hoodies or quarter-zips, the company offers embroidered names and numbers on the sleeves.

The demand for customization is at an all-time high, with customers opting for personalized add-ons 75% of the time on orders where it’s offered, according to Maloney. “Look at the NBA,” he says. “Everyone’s got their name on their jerseys, right? That’s what kids want.”

Aside from providing pro-athlete-like style, Maloney says personalization also allows for easier product identification, which makes keeping track of apparel and accessories at sporting events easier.

A Well-Oiled Machine
According to Maloney, what really separates Rainbow Lettering from the competition is its ability to expeditiously turn finished product around.

“Most people who host a web store or e-commerce store order product from five, six, seven or eight different vendors that trickles in over a few weeks,” he says. “And then they might be missing product and they still have to produce, decorate, sort, bag and get it to a customer. Most people struggle to get all this done in four to five weeks.”

Rainbow Lettering, on the other hand, works with about 50 vendors and aims to get finished orders out the door in 10-12 business days. How? Maloney says the company’s vertical integration makes it all possible.

“Making a web store and taking orders is not hard,” he says. “Producing the web store, sorting it, bagging it and getting it back out the door — that’s hard. It looks gorgeous on the front end, but there are so many moving parts on the back end.”

Because the company is vertically integrated, it operates with everything under one roof — from e-commerce specialists to graphic artists, shipping and receiving, and buyers, as well as embroidery, screen printing, sublimation and heat-applied technologies.

“It’s hard for the left and right hands to know what each other is doing,” Maloney says. “But it’s easier to figure it out when you’re all under the same roof and you’re all singing from the same hymnal.”

Room for Improvement
Whatever Rainbow Lettering is doing, it’s working. In July 2017, the company completed a 3,200-square-foot addition to its facility to increase production and provide a better work environment.

“Our throughput is even better now,” Maloney says. “Everything we’re doing is better, as far as quality and production, mainly because with more space you get better equipment, better management, better everything.”

With the expanded space, Maloney hopes to provide customers with a more seamless experience.

“With [today’s customer] expectations, you’ve got to deliver,” he says. “We’ve gone through evolution after evolution of protocols and procedures. You figure it out as you go, but there are going to be a lot of growing pains. I’m speaking from experience, by the way.”