The total cost of bad merch

The total cost of bad merch

The £6 t-shirt costs more than the £18 t-shirt. The £35 hoodie costs more than the £85 hoodie. Most procurement spreadsheets show the opposite, because the line item on a purchase order is the unit price, and the rest of the cost lives in places nobody is looking.

This is a working accounting of where the rest of the cost lives, written from the perspective of a People Ops or procurement lead with a real budget and a real boss to defend the budget against.

The unit price is roughly a quarter of the total cost

A typical bad merch order at scale (200 units, mixed apparel and accessories, four supplier coordination) has a total landed cost roughly four times the headline unit price. The components, in order of size:

1. Unit price and shipping. What the spreadsheet shows.
2. Ops time. The People Ops or procurement team's hours spent specifying, ordering, receiving, sorting, and dispatching.
3. Re packaging. When the supplier ships in trade packaging that does not match the brand, an internal team unwraps and re wraps.
4. Rework and returns. Sizing errors, print errors, fabric defects.
5. Brand cost. The reputation hit of a new starter receiving a kit that misrepresents the brand.
6. Storage and write off. Stock that arrives, sits in a corner of the office, and is eventually thrown out.

The cheap supplier wins on line 1 and loses on lines 2 to 6.

Ops time is the line item you do not see

A typical People Ops lead at a 200 person company spends two to three hours per order coordinating a single merch supplier. With four suppliers in play (apparel, stationery, drinkware, bags), that becomes eight to twelve hours per order before a single garment reaches a desk.

At a fully loaded People Ops cost of £40 to £50 per hour, four supplier coordination on a quarterly order programme costs £1,600 to £2,400 per year before any of the merch arrives.

Switch the same programme to a single supplier with a workspace, a CSV upload for recipient addresses, and one approval flow. Ops time drops to roughly thirty minutes per order. The annual saving in ops time alone, on a quarterly programme, sits at £1,400 to £2,200.

We built a calculator at normamade.com/roi-calculator that lets you put your own numbers in. The math is published in plain TypeScript so the procurement team can audit it.

Re packaging is a real cost

When the supplier ships your apparel in a poly bag stamped with a Hong Kong return address, and the recipient is meant to receive it on day one as their welcome kit, the kit has to be opened, the apparel removed, the original packaging discarded, and the items repacked into something brand appropriate.

That work costs time, branded packaging, and the labour to do it. At twenty minutes per kit and £40 to £50 per hour, repacking a 47 unit welcome kit run costs £700 to £900 once.

A supplier that ships in brand appropriate packaging in the first place saves that cost on every order. The unit price on the supplier's apparel can be 30 to 50 percent higher and the total cost is still lower.

Rework and returns

Bad merch goes wrong in three places: sizing, print quality, and fabric integrity.

Sizing errors happen when the supplier's spec sheet does not match the garment that arrives. The fix is a return and re order, or worse, a write off when the wrong size has already been distributed.

Print quality errors happen when the supplier's pre production proof does not match the production run. Colour drift, registration misalignment, ink coverage failure. The fix is a reprint and a return, plus the cost of the original (now waste) garments.

Fabric integrity errors are the worst, because they show up after the kit has been distributed. A tee that pulls out of shape after the third wash, a hoodie that pills visibly across the chest in two months, a notebook with binding that splits after the second use. The fix is a brand level apology and, in most cases, a free replacement.

A 5 percent rework rate on a 200 unit programme costs ten units, plus the brand level cost of the apology. At £18 per tee plus reprint plus expedited shipping, that one rework run can cost £400 to £600. The cheaper unit price evaporates.

Brand cost is the line item nobody calculates

When a new starter opens a welcome kit and the tee is thin, the hoodie is misshapen, and the notebook cover is creased, the kit is doing the opposite of its job. The kit was meant to communicate "this is a company that cares about the details and is happy you joined". It now communicates "this is a company that cuts corners on the things you can see and probably cuts corners on the things you cannot".

That cost does not appear on any invoice. It shows up later, in slower onboarding, lower employee net promoter, and a higher turnover rate on the cohort that received the bad kit. The data on this is patchy because most companies do not measure it. The data that does exist suggests that a poor first day kit reduces six month retention by one to three percentage points.

For a 50 person hire cohort at a £80,000 average loaded cost, a one percentage point retention hit costs £40,000 in additional hiring. The kit cost £18,000 to do badly and "saved" £6,000 versus doing it well.

Storage and write off

Bad merch tends to come with minimums. The minimum is set by the supplier's production economics, not by the buyer's need. A 50 person company that needs 50 welcome kits ends up with 150 kits in a cupboard because the minimum was 200 and the price break happened at 250.

Those extra units sit. Some are used over the next twelve months. Some are donated. Some are written off when the brand colour shifts or the logo changes. The write off cost is the full unit cost plus the storage cost plus the disposal cost.

On demand fulfilment, where the order is for exactly the number of recipients, removes this cost entirely.

The accurate total cost calculation

Replace the unit price with a total landed cost calculation. The components and their typical scale for a 200 unit B2B merch order:

• Unit price plus shipping: £6 to £30 per unit, depending on the SKU.
• Ops time: £8 to £12 per order.
• Re packaging: £2 to £4 per unit when needed.
• Rework and returns: 3 to 8 percent of order value.
• Brand cost: hard to quantify, but real and non zero.
• Storage and write off: 10 to 25 percent of over ordered units.

Run that math on a 200 unit programme at a £6 per tee supplier and a £18 per tee supplier. The cheap programme tends to come in at £45 to £60 per kit fully landed. The well chosen programme comes in at £55 to £75 fully landed, with a meaningfully better outcome on every non price dimension.

Bad merch saves the procurement team a number on the spreadsheet. It does not save the company any money. It costs more than the alternative on every measure the spreadsheet does not contain.

The cheapest unit price is rarely the cheapest decision.