A Year Without Trade Shows — Trouble or Progress?

OK — admit it, trade shows can be fun, allowing staff to travel to a distant city, connect — and reconnect — with peers, and dine out on the company. You are learning too — about competitors, about your customers and about trends — and some people even thrive on the deadlines and drama that the shows produce.

For decades, trade shows have been the primary medium for buyers and brands to meet each other. They act as a platform to elevate brand awareness, and a forum to connect with industry tastemakers. Each year numerous small suppliers and brands, particularly those in interior design and home furnishings travel, from afar with the hope that they will be discovered. 

At Nomadory, we decided to evaluate the trade show economics to determine if, in fact, trade shows are ‘worth it’.* Consider a trade show with 5,000 attendees.

The cost of attending the event is estimated at $35,000. This includes $20,000 for booth space, shipping, travel costs, entertainment, signage, transportation, and warehouse space, and $15,000 in staffing to set up the show, man the booth, following up on leads, and then closing the business after the show. A company with a 20×10 space in a prime location might expect to identify potential 100 leads a day. The follow-up from these leads then require time and energy to qualify the leads. Let’s assume that this may lead to 50 sales, or 1% of all attendees at the show. Therefore, at a total cost of $35,000, the total cost per lead of $116. Therefore, if your team attends 10 shows a year, your annual trade show budget is $350,000.

Assuming your gross margin target is 70%, then you need to make $1,000 per sale, or $500,000 to make these events revenue neutral. This also assumes that promoting expensive products or reaching decision makers with the capacity to buy in large lots to make these economics work. Said differently, based on the numbers above, if your average order size is less than $1,000, then you are losing money on the trade shows.

Scale this up or down — the basic economics remain the same. Go cheap and end up in the back corner in a 10×10 and your leads will drop and be lower quality. Glitz it up with rock star lighting and your cost per lead skyrockets along with the required revenue.

As the coronavirus spreads, travel bans continue, and social distancing becomes the new norm more and more fashion shows and trade shows are getting cancelled. The question we should be asking is, “was this reckoning that just got expedited?“ We believe so.

While for some this is a clear sign of trouble, we believe this is an opportunity. A chance to reimagine the future of trade for businesses. Maybe a digitally focused marketplace experience, personalized sourcing tours or simply listing all products on a centralized platform.

Perhaps with the bleeding retail, thousands of furloughs and suffering factories, brands will re-evaluate the relative value of trade shows with profits and truly focus at the heart of what makes every product — the people, the technique and the purpose.

Note: *These assumptions were borrowed from a few Google searches and industry experts in the B2B space.