In animated discussions about the role of printed catalogs (or online, digital metaphors), there is something not being said about the fundamental difference between web search and print browsing. In a recent post by Polly on the Directly Speaking blog, a part of the Growth Strategies Group of Belardi/Ostroy, she posits the question “Can web merchandising do the same thing as a well-executed catalog”. I think the fair answer is “not yet.”
The holy grail of cataloging is to eventually and profitably achieve multi-buyer status with prospects (they are prospects for some logical reason). We do this by targeting those “likely to buy” and providing them with the information and exposure to products they most likely wanted as well as those they did not know they wanted. It’s kind of like why we read newspapers. We know we’re generally interested in politics, sports or whatever and turn to those sections of the paper. When we get to that page, we also learn about things we did not expect to see, i.e. related news … and we read it. When I was in the newspaper business we referred to this as “unexpected serendipitous connections“. Merchandising geniuses may not know it, but that’s what they are doing with a well executed catalog.
DMSI, owner of www.wards.com and other assets of Montgomery Wards (see post from April 2, 2008 “New Life for Montgomery Wards” http://thecatalogchroniclesblog.com/2008/04/02/new-life-for-montgomery-ward/#comments ) will be auctioned off August 5, 2008. Management has not commented on this. Most likely the state of the direct to consumer market, general state of the economy and competition from other online retailers has driven the nail into the proverbial coffin this time.
One of the more famous catalogs is the J. Peterman catalog.Nearly dead, Peterman got a boost from Seinfeld a few years ago (the famous J. Peterman coat appeared) and is now a vibrant niche catalog and multichannel retailer again.The catalog is famous for two reasons:1) The J. Peterman Coat (below).
The J. Peterman Coat
Classic horseman’s duster protects you, your rump, your saddle and your legs down to your ankles. Because it’s cut very long to do the job, it’s unintentionally very flattering. With or without a horse.
Although I live in horse country, I wear this coat for other reasons. Because they don’t make Duesenbergs anymore.
2)Copy writing that tells such a story in so few words that it makes you want to buy it, to become what the product portends!The copy is so good that middle school teacher Dena Harrison engages her students with writing assignments modeled on the J.Peterman catalog.See her talk about J. Peterman on YouTube.
J. Peterman also has a blog which builds on the mystique of this individual and the personality of the company, Petermanseye(http://www.petermanseye.com)Peterman’s goal is to build a marketplace for ideas. He says, “A place where we can educate, entertain and discuss with each other topics we find interesting. “ A man after my own heart.
The catalog news coming out of the Brookstone Q2 conference call today, July 25, 2008 is that the company will be reducing its second half, 2008 catalog circulation by roughly 5% compared to the second half, 2007 volume. My experience has been that if you increase circulation and sales don’t go up, that’s not the result you were looking for.
Besides reduced circulation, catalog cost reductions will take the form of a decrease in weight (trim and pages) and an increase in product density (pages). Looking backward, direct marketing revenue was down 3.8% on a circulation increase of 23% for the prior 13 weeks and up 9.7% on a circulation increase of 37% for the 26 week period, both ending June 28. This, along with a lower average catalog order value, similar to the decrease in retail store AOV, and The Sharper Image going-out-of-business events, especially in malls where the two stores competed, resulted in a Q2 loss of ($8.6 million) compared to Q2 2007 loss of ($6.4 million).
This is an organization based about 200 yards from my old digs in Palo Alto, CA – probably in the old Bank of America building just off University Avenue near the birthplace of Debbie Field’s little cookie bakery. It is a classic Silicon Valley start up but what makes it unique is that it is part of a larger entity, Tonic Generation, which poses the question “what if capitalism and social good can co-exist?” The “Board of Creators” of Tonic Generation includes among others scions of the Buffet family, son Peter and wife Jennifer, Donna Karan, and Chris Blackwell of Island Records.
How does GreenDimes work? Basically you register your email and snail mail address for free, $20 or $36. I registered for free – hey blogging without advertising does not pay much - and received my validation code by return email. I then logged in and was presented again with three options (Get $1 mailed to my home mail box, plant a tree, or get a subscription to Plenty, the hip trendy magazine for green living). I was then presented with “My Dashboard”, pre-filled with 9 mailer (large, national mailers ala Valassis or Publisher’s Clearing House) to which I could take an action and have my name removed from their list.
I moved on the “Add Catalog” tab. Begin typing in a catalog name and, voila, up pops a bunch of catalogs and direct marketers that have those letters in their names. For instance, “linen” brought up Anna’s Linens, Linens & Things, LinenSource, Scheur Linens and Schweitzer Linens. I get one; I like it; I have bought from them; I did nothing. The basic service is “self serve” and applies to one recipient only. If I want my wife and daughter to be taken off, I have to bump up to one of the pay services. Or if I want, the GreenDimes staff will do the work for me.
Is this a challenge to Catalog Choice or DMA’s efforts? I don’t think it is. What I do see is a brilliant idea to have consumerism redirected from “all about me” to “help the planet and people survive” and then I get solicited to buy a $45 T-shirt. What is ingenious about this is that the list of catalogs is being created by the users/consumers that type in the catalogs they “don’t want”. So if you’re a T-shirt cataloger, GreenDimes wants your customers and will get them for a $1 or by planting a tree.
I spotted a news item in the Wall Street Journal recently about Williams-Sonoma using zip code data to reduce catalog circulation. At first glance the idea is to use residential real estate and income data to predict the probability of prospects and reactivations buying from a catalog. This pricked my curiosity and lead me to listen to the webcast of the 8th Annual Oppenheimer Consumer Growth Conference held July 9th in which Pat Connelly, EVP and CMO for Williams-Sonoma explained the unique marketing strategy that justifies the company’s positive guidance to the investment community.
I listened to Mr. Connelly present at the ACCM Executive Summit two years ago and respect his marketing savvy. The marketing strategy he described is focused on efficiency, profitability and reduced cost during this difficult economic environment. First of all, there is the 1st mile/final mile element designed to reduce returns, replacements and damaged-in-shipment goods. This post will not go into detail on this aspect other than to say I know first hand that the damage to the customer experience caused by using wrong vendors, misplaced or non-existent quality control and high return rates will snuff out most all other gains in company growth.
The second marketing cost reduction strategy is what Mr. Connelly labeled “marketing optimization.” In lay terms this means they have figured out who will or will not buy, resulting in a 10-15% reduction in circulation in toto across their various brands. Using their database of 58 million households, each carrying up to 678 data elements, Williams-Sonoma is able to version smaller catalogs specific to the retail, internet and prospect segments. For instance, 30% of Pottery Barn’s catalogs are versioned. The two versions carry 108 and 172 pages, respectively. For Pottery Barn Kids, 25% of the catalogs are the smaller 80 page version, versus the “main” book carrying 124 pages.
Consequently, using data elements such as zip code-real estate dynamics (external) with retail-internet-prospect segmentation (internal) and profitability models for versioned sales forecasts, Williams-Sonoma is able to forecast a circulation reduction of 15%, a total page reduction of 20% and a significant reduction in returns, replacements and damaged goods – all in a deteriorated economic environment.
ATLANTA (AP) — “UPS Inc., the world’s largest shipping carrier, said Tuesday its profit fell nearly 21 percent in the second quarter despite a more than 6 percent increase in sales. …UPS is able to pass higher fuel costs on to customers as a fuel surcharge on shipments. However, the surcharge increases have not kept pace with rapidly rising fuel prices.“
Is this a veiled warning to its customers of a change on the horizon?. On July 7th UPS bumped its fuel surcharge up 1 point, from 8.5% to 9.5%. Remember, the UPS surcharge for ground service is “based on the National U.S. Average On Highway Diesel Fuel Prices reported by the U.S. Department of Energy for the month that is two months prior to the adjustment.” Therefore it is easy to calculate what the fuel surcharge should be in August 08 based on the June 08 average. The June 08 average was $4.677 per gallon for on highway diesel fuel.
At Least – But Less Than, Surcharge:
$4.38 – $4.46, 9.50%
$4.46 – $4.54, 9.75%
$4.54 – $4.62, 10.00%
What! The chart doesn’t go that high! UPS states “Fuel surcharges percentages and thresholds are subject to change without prior notice. If the Fuel Surcharge rises above 10.00% or there are changes to the thresholds, the above table will be updated.” Look for an updated chart in about two weeks. And don’t be surprised if UPS changes the basics of the table, such as faster application of surcharges based on national averages or a fundamental change in the surcharge structure in order to keep “pace with rapidly rising fuel prices.“
Which mail order catalog company was the first to include the internet as a sales channel? I don’t mean direct marketer or store front retailer to use the web; I mean pre-existing mail order cataloger to bring its catalog effort onto an internet platform. After a bit of research my best bet to is PC Mall in 1996. I am sure there are other guesses and I would love to have these added so send me your comments please.
PC Mall’s story is a classic California “founded-in-the-garage” tale. Established in 1987 by Sam and Frank Khalusi as Creative Computers, they sold Commodore’s AMIGA out of their garage by mail and then Apple computers in 1994. They added a 100 seat, 800# call center about this time. Remember the ubiquitous female customer service rep with the headset featured on every catalog cover?
The company went public in 1995 and in 1996 launched www.macmall.com and www.pcmall.com . With current sales at $1.2B, PC Mall ranks #73 in the Internet Retailer 500 and #27 in the MCM 100 for 2008. In large part PC Mall is growing ahead of the curve due to its on-going and unique re-seller relationship with Apple (iPods, iMacs, MacBook Air, Mac Pro.) And the CSR’s picture? It’s is still on the PC Mall catalog and website.
Montgomery Ward’s business plan in the early 19th century was dependent upon utilizing parcel post (est. 1913) to deliver packages directly to customers. While this strategy ultimately gave Sears the upper hand on the retail store front battle, it nonetheless left some monuments of the catalog industry in far flung parts of this country. Massive distribution centers in Chicago IL, Portland OR, Baltimore MD and Ft. Worth TX eventually were shuttered, but not destroyed. Watch the rebirth of the Ft. Worth center, first opened in 1928 – talk about great timing?
Recently I received the Orvis July Newsletter email. In my first podcast I talked about how Orvis is attempting to capture the “experience” of fly-fishing. Well, they’ve taken it one step further and launched The Orvis Channel on Hook.tv. giving full sway to a true multichannel marketing experience. Three other channels are deveoted to destinations, techniques and fish species.
So I wondered, what is Hook.tv? Remember that great scene in A River Runs Through It where in order to keep the big one on the line Brad Pitt rides the rapids? Well, the double for Mr. Pitt, John Dietsch, conceived the famous scene and Hook.tv. His venture is an interactive broadband TV channel connecting outfitters, guides and consumers with professional and user generated content along with news, information, products, travel tips, lodge booking, and e-commerce shopping opportunities.
The Orvis Channel markets books (Orvis Fly-Fishing Guide), Hot New Products, offers Product Reviews, Videos Clips of happy fly-fisherman, tips on fly-tying and links to fishing guides and professionals. Orvis has combined video, print, online to offer an enthusiast fly-fishing nirvana.
Do you think that such a multi-media-channel effort will have a positive ROI? Share your comments now.
