Why You Stink At Merchandising on the Web

This is a critical issue. Can you sell products online without aid of a catalog?

A few weeks ago, a reader sent me an email with this comment: “As an aside, I am somewhat at odds with you about digital.  So often customers will opt out of our emails or print catalogs with the comment – ‘I know what you carry.  If I want it, I will come to your website when I want it.’  But they don’t truly know what we carry.  In each catalog, 40% of our merchandise was not in our last catalog. Those who think they know what we sell are missing out on serendipitous discoveries.  The internet is great for directed search if you know what you are looking for.  But how do you search for something interesting for your aunt and her new housewarming gift when you have no idea what would really be something you haven’t seen before?”

The reader was referring to my previous comments that we need to make our websites stronger than our catalogs, because catalogs alone just aren’t going to cut it anymore. He echoed a similar comment from another reader who recently wrote “I have yet to meet a cataloger selling to the demographic that most do, that is selling things “nice” to have and not necessary to have, that can sell [a significant amount] of anything that is only on the site and is not shown in the catalog.  We have tried it many times.  The sales are just not material.  We have to promote it in the catalog.”

Both of these comments also tie back to my recent comment that just because something does not work with your catalog, doesn’t mean that it will not work for others.

So, let’s address this in parts.

First, we know it is possible to sell products online without aid of a catalog – just look at Amazon. Their sales of $136 billion are not just people buying stuff that they need – there is some browsing going on. A better example would be Build.com. They have a catalog (which gets a little better with every issue since I gave them a very critical catalog critique in this space a few years ago) which carries less than 1% of their product assortment. Their catalog is truly meant to get you to the site, where you’ll wander around looking for things for your home.

But both of these companies – and hundreds of other sites – have built their “brand” around being the source for “something”. In Amazon’s case, the “something” is everything.  For Build.com, it’s everything for home renovations. So, if you are a savvy consumer, and you get the Build.com catalog, you know it is just a sampling of what they have on-line.

But the challenges to this concept I receive are mostly from companies with gift or hard goods catalogs. They fail to realize that what is needed is a different approach to their website, not a different approach to their catalog. They will go to great lengths to be great catalogers – doing everything right from an “A Team” catalog perspective. They have a high percentage of new products. They are taking advantage of every postal discount they can. They are extremely efficient in cranking out each new catalog because they are unencumbered by any need to do anything different. They don’t want to do anything different. They believe their customers want that sense of “serendipitous discoveries”.

But what is really happening? I get so tired of saying this, but your great strategy of being efficient, regardless of the percentage of new products you have, is boring to the customer.

The first reader mentioned above, with the customers who say “I know what you have”, features a new and often very unusual product on the front cover of every catalog. I assume that upper management at this company thinks this is a great strategy as it gets the consumer to look inside, and to always be expecting something different. But the “overall theme” for the covers, and the overall pagination of the book itself is too repetitious – it has not changed, literally, in years. Yes, I understand the products change, but the “look” doesn’t change. They have put their customers to sleep. Their customers tell them they know what is in the catalog because in the customer’s mind, they do know. Of course, they don’t know specifically what is there, but they know this company sells “widgets” (I don’t want to use the actual product category, as I don’t want to identify this reader or catalog).

Further, the cataloger has given their customer NOTHING truly new to catch their attention.  In my opinion, it is a perfect example of catalog narcissism, because although the cataloger believes it changes all the time, the customer/consumer thinks that it never changes.

What does this have to do with selling products online that are not in the catalog? EVERYTHING. Here’s why: I think the problem with most catalogs is that they are lousy web merchants. When they first started selling online, the “web-only” products were the overstocks and lousy products that never sold in the catalog, so they stuck them on the web to clear out the inventory, where they sold no better. Thus, these catalogers have a basic sense that web-only products are dogs.

But, in the past few years, they have created web merchant positions. They usually assign “web merchandising” to a junior person, and give the person no support, no PPC funds, and would never think of putting new products on the web first. (I’ve had clients tell me they hold all new products to introduce in the catalog, so that the catalog is “special” to the customer.) Worse, due to internal organizational structures, I know that in some companies the catalog merchants can “steal” web-only merchandise, but it doesn’t work the other way around. Consequently, it becomes self-fulling that if you only keep the good stuff in the catalog, no one is going to think of going to your website to see what’s new, or if there is anything else. Old school thinking is killing most catalogs, and most of those old-school practitioners seem unaware that the front of the ship has slipped beneath the waves.

I love having Frank Oliver as a merchandise consultant now, someone I can turn to with just these sorts of questions. Frank of course agrees that catalogers need to see that extra web presentations can “fill out” the line of products, especially if you want to show category authority. A pedal-to-the-metal merchant like Frank sees web-only products as a huge testing lab. Products destined for the catalog always have a formal “vetting” process, which vary by cataloger, but tend to slow the introduction of new products, giving online-only companies an edge at introducing new products. On the web, a merchant like Frank can test 20 new products where as in the catalog he might have only tested 5.  “Yes, for most catalogers, web-only products do not sell in the volumes of on-page items, but there must be a “multiplier”. When I test 20 web-only products and pick the best five to run on-page next season, you start to build a “how much better” factor for on-page exposure. Small bets start to yield large returns in future catalog performance.”

What is the ultimate answer? We know products sell online without a catalog, it works for hundreds of companies. Can it work for “nice to have” products vs. “must have” products? Yes, if the consumer recognizes a reason to go to your website to see that bigger assortment. Think of it this way – your local supermarket puts an FSI is the weekly newspaper – you remember newspapers, right? It advertises what is on sale. Many shoppers plan their trip to the store with these specials in mind. But it is not a comprehensive list of everything in the store. They know when you get there you will browse and you will be influenced by endcap displays and POS merchandising. The FSI is just to get the customer to the store where the “discovery” takes place.

Most of you are never going to create that sense of discovery with your website, or give the customer a reason to go beyond your catalog. So, you are correct, in your case, the product has to be in the catalog to sell.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235