Gone Too

I’ve been wanting to write this posting for more than six months, but was waiting for the right occasion – which occurred last week. More on that in a minute.

Do you remember the dot.com meltdown of 1997 to 2001?  During this time, many new online companies were founded and quickly failed, some in spectacular fashion. They spent money like there was no tomorrow, mostly on foolish extravagances.

I see a similar catalog meltdown coming, but with a specific sub-class of catalogs. There are about a dozen catalogs, mostly men’s, and all started since 2007, that are aimed at the urban logger, city-living rural camper, all-around country-loving upscale guy.  These catalogs include Rail Riders, Huckberry, United By Blue, Jonnie-O, along with several others.

The right occasion that occurred last week was the announcement by one of these catalogs – Ibex – that they were going out of business and closing down at the end of the month. I hate to admit this, but Ibex was not only located in Vermont, but located in the same small town as Datamann. However, despite several offers to work with them, they never sought our advice or assistance. They did not subscribe to this blog.

What made Ibex’s departure so predictable was clearly evident from looking at their website. First, they had nothing unique about their products. They were just one more company selling earth-toned wool underwear, sweatshirts and hoodies. Absolutely nothing special about the stuff, except that the company was located in Vermont, where they think pure thoughts while packing your order.

The true tip off to me that these guys would not last was the page on their website that listed the “dogs of Ibex”, and showed photos of all the dogs owned by people that worked there, and who brought said dogs to work. There is a no-so-complex algorithm which I developed that links the propensity for catalogs to go out of business with the number of dogs staff members bring to work.

So, another catalog gone. And we haven’t even gotten to Christmas. Usually the announcements of bankruptcy and business failure wait until after December 31, as catalogs hope that Santa and FedEx will somehow magically deliver a Christmas Miracle of sales at the last minute.

Dogs aside, there are two common traits among these upscale rural-wannabe catalogs. First, is a dearth of products. They usually have one product/page or worse, one per spread. They focus on the lifestyle nature of their product, instead of the virtues of the product as being something you would actually want. Look at the spread below from Huckberry’s Fall catalog and first, find the sweater, then find a reason to buy it.  Why do some companies make this so hard?

Or check out the spread below from United By Blue. There is ONE $12 pin on one page, and eight products on the facing page, with no product description, just product name and price.

Yes, I believe that catalogs don’t have to give lots of product detail in the catalog, and can use their websites to provide that. But this catalog gives you no reason to visit their website. This is another sign of the coming catalog meltdown – you can’t give a whole page to a $12 pin and expect to be around for too long. And yes, I understand that United By Blue has a social mission (you can read about it here), but in my opinion, that makes it all the more important to have an efficient catalog in order to fund that lofty mission.

The second common trait is their inclusion of really stupid hard goods. Almost every one of these catalogs sells an axe or multiple axes. Why is that stupid?

Both of my grandfathers had a “camp”, which in New England in the 1930s to the 1960s meant a little cabin in the woods on a small pond, with an outhouse. The only convenience that both had was electricity. My parents had a camp, as did my wife’s grandparents and parents. My brother inherited my parent’s camp, and my wife and I built our own – a small cabin in the woods. I mention all this to show my “camp” bona fide credentials. Both my wife and I have been going “to camp” for our entire lives. And the last thing in the world that I would buy for my camp is a $135 axe, not when a new chainsaw is only $300. And if you have ever split a cord of oak with an axe, you know there is no romance in it. It is not a transcendental experience. The smart campers get a log splitter.

The merchants for these catalogs live in la-la land. They are not trying to appeal to a camper, or real rural person. They are positioning their catalog to appeal to the wanna-be, whether it is a wanna-be camp goer, or wanna-be exercise hound. The problem with that is that being a wanna-be is always a short-lived fad. There is no loyalty to any wanna-be lifestyle for long.

And that is why these catalogs will fail. They are not selling the customer’s dream – they are selling the catalog owner’s dream. Their coming failure lies in having no truly unique products. They are just another lifestyle catalog selling flannel lined khakis, all going after the same customer, and all prospecting to the same tiny pool of co-op supplied names, including me.

Unless these catalogs can truly differentiate their products with something unique, something hard-to-find, and something proprietary, they will, one by one, be the victims of a coming catalog meltdown that has nothing to do with Amazon or dying co-ops. It has to do with the “irrational exuberance” that led to their founding, and which will lead to their undoing.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

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Catalog Anxiety

Are you tired of the flood of articles boasting “five tips for beating Amazon this year”? If so, I’ve got a treat for you – something that will actually make a difference.

The past few weeks have been very interesting. At a time of year when most of you are rounding third and heading toward home plate with the end of another exhausting Christmas season, readers (just like you) have been sending me many comments, questions and observations. Mostly questions concerning what to do with their business.  And I sense there is a lot of anxiety out there.

One reader lamented that he just could not figure out how to comply with Kevin Hillstrom’s advice to load up on new buyers in September and October, and get them to make second purchases in November and December (his peak season), because his prospects just don’t purchase his kind of products prior to the peak season.

One reader complained that on Cyber Monday, he received five emails from Plow & Hearth (even calling it insane), but then acknowledged that his company had sent out three emails. Do you really think the consumer is drawing a distinction between companies that send 3 vs 5 emails?

Another reader sought advice on how to handle vendors that would not allow the mailer to sell their products on 3rd party marketplaces like Amazon, but those same vendors were all too happy to have the mailer advertise for them in their catalog, and theoretically drive traffic to Amazon anyway, where that vendor is selling under their own banner.

Another reader, who knows my dislike of the co-ops, shared that he had received mailings from at least five different catalogers using old decoy names of his (five+ years of no purchases, if ever).  He commented “I no longer track where they were initially seeded because I stopped seeing them mailed to years ago, but now I’m alarmed every time one shows up in my mail.”

One reader responded to my posting last week on the importance of new products over fancy ad/branding campaigns with this comment: “I received an email barrage of Black Friday deals, extended deadlines and truly desperate marketing attempts on Cyber Monday.  Your blog hit the nail on the head!  Mailers/ecommerce sites must have unique products, or die. Customers are not stupid, so merchants need to work harder or lose sales.”

To recap those calls and emails:

  • You find it tough to acquire new customers outside of your peak season;
  • You think it is insane that one mailer sent five emails in one day, but you sent three yourself;
  • Your product suppliers are selling their products on Amazon, but don’t allow you to do the same;
  • You have suspected for a while that the co-ops were dying, but now you have proof that they are padding their models with ancient names;
  • You realize that you have to have unique products to survive.

Of all these issues, I see the need for unique products to be the most important. Nothing – I repeat – nothing else can keep the wolves away. If you have unique products (that have quality, and meet your customer’s needs), then it will be almost impossible for anyone to knock you out. When the co-ops finally roll over and disappear, if you have unique products, new customers will still find you (albeit, maybe not with a catalog).

That brings me to the last letter from a reader, which came in last week. I share it with you because it raises an issue lost in today’s online environment, which is that not only do you have to have unique products, but you have to know how to position them, market them and sell them:

“We are looking for someone who can help us with product marketing – specifically, giving a selection of our products a clear identity/brand/name. We sell a lot of innovative and solution centric homewares but, and especially where we buy direct in Asia, we often don’t strengthen the products by marketing them well. We sell them well off the page with good copy and imagery that although maybe could be improved, does the job well.”

The reader then went onto give an example from a competitor’s catalog (which I’m not going to share to protect the innocent), that this reader felt did a great job of positioning the product with a strong product name (a name that enhanced its sale-ability), great benefits, and basically created a total “reason for buying the product from them”. He realized that the vendor supplying the product may have contributed to some of that positioning, but felt that the competitor’s catalog itself had discovered and developed a constant ability to position sometimes mundane products in such a way as to compel the customer to buy one.

Going back to last week’s posting (click here), I don’t believe that fancy ad and branding campaigns alone are enough to drive sales and acquire customers. You have to have the unique products to back that advertising up. However, even unique products still need to be sold.

Whose responsibility is this? Most people would think it is the responsibility of the copywriter and the creative team. I disagree. To me, it is the responsibility of the buyer, the merchant that said “this product is so good, it belongs in the catalog”.

That applies to high-end women’s apparel, or low-end home furnishings. Here’s why – the laws of buying have changed. The giant “marketplaces” (Amazon, Wayfair, Wal-Mart, eBay) carry everything, or at least, everything that is not unique to someone like you. As one reader said, “Customers are not stupid, so merchants need to work harder or lose sales.” That means that not only must you have the unique products, but you need to have the story in mind as to why your “little black dress” is the best one on the market.

It is tough – nay, sometimes impossible – to find or develop truly new, “break-through” products. Stop and think – when was the last time your catalog had a truly great “break-through” product, one that rocked the sales chart? In apparel, most of you just play around with new color palettes. In hard goods (like house wares), you slap your name on the product and think “Everyone is going to want one of these now because it has our logo, and is unique to us”.  But that is not breakthrough, nor is it unique – and you know it.

However, making incremental changes to existing products – making them better and different – can be as productive as that once-a-decade breakthrough product. Have a great Christmas stocking to hang by the chimney? Why not add solar powered LED lights that twinkle when the lights are out, so Santa can find it. (OK, so I just found this already exists on Amazon – but you get the idea. You need to innovate, and then sell the innovation).

To stand out, and compete against Amazon – yes, they are probably your biggest competitor no matter what you sell – you still have to sell. If you sell home furnishings, stop showing your products in neutral/sterile home settings that look like North Dakota in March, and which has no appeal at all. If you sell housewares, develop a name for the product beyond what the vendor calls it. It’s not a “comfortable pillow”, it’s “Sleeping Beauty’s Eternal Sleep” pillow. In B2B, it’s not a cart for the surgery room, it’s the “surgeon recommended, most versatile OR cart”.

I have mentioned many times in this blog that I have been driving for more than 40 years, and I’m on my sixth Ford F150. I hate to admit this, but in 1995, I was compelled to buy a new truck simply by an ad I saw in a magazine which featured a new F150 in a shade of green that I had to have. (I’m usually much more practical when it comes to deciding when to replace the current truck). When was the last time that you were so compelled by the imagery you saw in a catalog or on a website, that you bought something which you did not need at the time – that the story behind the product was so strong as to compel you to action? I’m going to bet it does not happen all that often – and that is what we have lost.

Here is the good news – you can compete against everyone out there, including the giant marketplaces. Going back to “old fashioned” direct marketing, that tells a story, sets a tone, creates a compelling argument/ reason / desire for making a purchase is all part of competing. If what you are doing now in terms of how you position product is not working, you must do something different.  Give it a try in 2018.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Hey Massimo, Welcome to The Outdoors

Bear with me today – I’m going to explain how a famous Italian designer has a lesson for all of us on Cyber Monday.

I’m going to let the media outlets report on Black Friday/Cyber Monday results. I know they will pound home the fact that billions of people shopped online with their phones and that mall traffic was down.   What did you expect? This is a trend that has been in place for several years, and only grows annually. It is never going to reverse.

How were your sales over the past 10 days? Perhaps the better question is – how were your profits over the past 10 days? Did you discount to such a degree that there is no margin left?

Here is a more important question if your results were not where you wanted them. What caused the softness in your sales? It wasn’t floods in Texas, hurricanes in Florida, fires in California, or warm weather along the east coast. It certainly wasn’t the economy, since the stock market continues to hover around record highs. It wasn’t postal delays, or too many catalogs in your co-mail pool. It wasn’t the fact that you only gave free shipping with a $50 purchase, when maybe you should have lowered it to $40. It wasn’t that you only sent five emails on Thanksgiving, when you sent six last year. No, it was none of those factors.

If your sales are soft, and you are missing plan, there is only one reason – your customers don’t like your merchandise, or they can find the same stuff elsewhere at a location where they would rather shop.

In every speech I give, I always include this one slide:

60% of the success of any catalog mailing is related to the merchandise; 20% to circulation; 10% to creative, and 10% to customer service.

This is not a new maxim. Having the right merchandise for your customers has always been the driving factor behind sales, and ultimately, a successful catalog/website and now mobile site. But, if you count the hours that your collective staff spent on this year’s holiday catalog, you will always find that the majority of hours/time was not spent on merchandise development, procurement, or analysis. And that is why your sales are soft – you are not spending enough time developing and finding new products that are unique to you.

Which brings me to Massimo Vignelli.  If you have never heard of him, he was a famous designer, known for developing the signage in the New York City subway system, and the consistent design for brochures and maps at all US national parks, monuments and historical sites administered by the National Parks Service.

When I was the catalog marketing guy at Brookstone in the early 1990s, we had a Vice President of Marketing that was only with us for 9 months. This guy knew everyone in NYC advertising circles, including Massimo, who he hired to design Brookstone a new corporate image.

Massimo did what he was hired to do, and gave Brookstone a new logo, new corporate colors, and overall new look for our retail stores. The VP of Marketing held a meeting for all corporate staff to present the new “look”, which included new store signage, uniforms for the store staff (actually, just an apron), new boxes/packaging for all products, and even new gift wrap paper for pre-wrapped products. The VP wore one of the aprons during the meeting as he showed off all the new designs. And, he explained that this “timeless” design would last for the next 50 years at Brookstone.

But here was the problem – no one had asked him to hire Massimo Vignelli. And Massimo had sought no input from anyone at Brookstone. So, his final “concept” was to have a utilitarian brown background with red type (it was actually Pantone Warm Red). The reaction among the headquarters staff during that meeting was priceless. You could see everyone separately mouthing the words “This is ugly”.  Our CFO got up and walked out.

Over the next few months, we spent a small fortune having all our vendors switch their packaging and all of the inserts inside the packaging to match the new design. We changed all our stationary, business cards, and shopping bags in the stores. Then we discovered that a single piece of tan and red stationary is one thing, but a whole store with craft paper signage with dull red type looks like absolute …..

You get the point. The whole campaign was gone within two years, not because it looked bad, but because it did nothing to improve sales. In an item driven business like Brookstone, constant evolution of products was more important than having a consistent corporate image.

I was reminded of Massimo and Pantone Warm Red this week when I received a sweater which I had ordered from LL Bean. It has been hard to miss LL Bean’s “Be an Outsider” (get it – Bean = Be an) ad campaign this fall. The plastic shipping bag with my sweater even had the “Be an Outsider” message printed on it.

Accolades to Bean’s ad agency for carrying the “outsider” message everywhere. It was on TV, in the catalog, on the internet, and yes, outbound packaging. Plus, it was a cute theme.

But regardless of how well executed it was, I doubt it will do anything to move the needle for LL Bean. In a competitive sales environment, product innovation and exclusivity are what moves the needle, not constantly reinforcing a branding image. Oh, I know that every ad agency and creative director will disagree with that opinion. But the proof will be whether you still see the “Be an outsider” messaging in two years.

I returned the sweater that I got. It was similar to one I already had, but the “new” version was advertised as having a flannel lining (as I get older, I get cold easily). I returned it because the flannel lining was paper thin. That’s not product innovation, but product dissatisfaction.  It is clear that the 60%, 20%, 10% and 10% rule was ignored this year at LL Bean. However, I only have one credit card in my wallet, a Visa card from LL Bean, and I have faith that they will get it right and focus where it matters in the future.

Going back to my first sentence – the lesson of Massimo at Brookstone and Be An Outsider is that corporate ad campaigns give the person responsible for it a warm feeling, but no one else notices. Focus on improving your merchandise instead.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Holiday 2017 Catalog Observations

Since most of you are prepping for big sales this week, I’ll keep today’s posting short.

Response:

I’m still hearing mixed signals for response so far in November. Some of you are doing well, some of you are soft. Most of you told me that you have a lot riding on what happens in the next 14 days. In some cases, your entire year’s success hinges on your sales over the next two weeks.

Here is one thing I noticed – Lands’ End has been pushing (via emails) 50% off selected product categories, and LL Bean had a 25% off everything offer last weekend. That tells me some mailers are sitting on a ton of inventory.

Catching Up:

Years ago, I tried to draw conclusions based on the number of catalogs I was getting at home in a certain month or a certain week, compared to the prior year. But, I’m on so many seed lists, decoy lists, and customer lists, I realized how fruitless it was to make those comparisons because I can never accurately determine why I was mailed a catalog. And of course, one lone catalog shopper in rural NH is not indicative of the rest of the industry. So, I stopped trying to do year over year comparisons.

However, since the beginning of November, I’ve received over 200 unique catalogs at home. Based on a quick count, more than 70% have had some type of free shipping offer – either full free shipping, or with a minimum $ amount purchase. Five years ago, that would have been 5% to 10% of the catalogs received. Five years ago, we were already in the Amazon-era of cataloging, yet it has taken until now for most of you to acknowledge that you have to change your marketing to remain competitive. Now you are simply playing catch-up.

Someone Has Been Busy Selling:

One other thing that has stood out among all the catalogs I’m getting this season – they are loaded with blow-in inserts.  Years ago, getting catalogers to accept blow-ins was a hard-sell because they felt they detracted from their brand, or they just couldn’t be bothered. Apparently, the resistance to accepting those inserts has been outweighed by the lure of incremental income. I see no harm in accepting these inserts for most of you, and the extra income can be used to fuel your own customer acquisition efforts.

They’re Back!

Two years ago, I wrote about the death of the Chef’s Catalog (click here).  But guess what was in my mail box this week? A quick check on-line revealed that the remnants of the company and customer list were acquired by some venture capital folks in Napa Valley a year ago, with the intent of having just a lively website.

Oh, but the lure of launching a catalog must have been too great. I read that one of the reasons they bought the company was access to the “11 million past Chefs customers who will be the initial targets of the Chefscatalog.com launch. People enjoy purchasing from Chefs Catalog. They value the assortment that enables them to cook at home, set the table and entertain.”

Let’s hope these investors, none of whom appear to have any catalog experience, did not really believe that their 11 million old customers (which must have gone back to start of the company in 1979) were all viable. But I doubt it. I also suspect that no one was whispering in their ear “Do you really think it’s a good idea to launch a catalog of homewares that are available in every other kitchen/cooking catalog and on 1,000s of websites? Especially a title that crashed and burned just two years ago?”

Granted, I do believe that the prior owners of the Chef’s Catalog (Target) squandered the opportunity to grow the catalog by linking it to products in Target stores. But, these new owners are coming into a crowded field, with a product category that is already saturated. If the spread below is any indication of their “merchandising” ability, they don’t stand a chance. All of these products are available at either Wal-Mart, Bed, Bath and Beyond or certainly Amazon.

Here’s another thought: why stop here? Maybe this could be a new trend – resurrecting dead catalog brands. Why not bring back Home Trends, Right Start, Deerskin, and Spiegel? If there really is a “resurgence of catalogs” (as I read in one blog recently from a catalog-centered vendor), then bringing back old, dead titles should be a great opportunity. Maybe there’s a whole new generation of skiers wanting to buy sweaters from the Carroll Reed catalog.

Have a happy Thanksgiving.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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The Board

The Board of Directors. The owner. Upper management.   No matter where you work, you have to deal with one of these three factions, and sometimes all three.

More and more I’m hearing from clients and other catalog mailers that their Board of Directors/owner is questioning the need for a catalog. Most of the requests are reasonable, asking the catalog staff to conduct hold-out tests, reduce circulation by eliminating “unprofitable circulation”, and examine ways to reduce costs, and potentially live without a catalog, or at least, not mail as many.

In several cases, the requests are more draconian. In two instances, the catalog staff has been flat out ordered to cut circulation by 30% or 50%, while still maintaining current sales. In one case, the “Board” has decided to completely eliminate all prospecting with the catalog, and move all new customer acquisition to the web.

What’s driving this?  Many of these people are not trained catalogers, so our first impulse is to dismiss their requests as being uninformed good intentions. I’m also not naïve enough to think that all these owners, board members, and upper management are reading this blog and absorbing my comments about the future of catalogs.

No, they don’t have to read this blog, and they don’t have to be professional catalogers, to know what is happening. They are aware of what is going on around them. They see and read about all the major retailers having problems. They know from their own experiences ordering products online as general consumers, whether with Amazon or some other vehicle. They surmise what is happening even without the specific proof for the individual company on whose board they serve, or which they may own. And they are looking at the future.

One common thread I see is that no matter how professional, diligent and talented the staff are at many of these catalog companies, there is a general assumption among the “Board/owners” that the staff doesn’t know what they are doing, or at least not looking to the future.

Years ago, there was a big management change at Brookstone. Our sales at the time were 80% retail, 20% mail order, but because of the way the company’s accounting was done, the catalog represented 50% of the company profits. This put me, the only “catalog guy” left after all the management changes, in a very visible spot. One day, I was asked to explain to the new upper management team, all of whom were “retailers”, how catalog circulation worked.

This was before PowerPoint, so I remember drawing everything out on the white board in the Board room. In my opinion, the basic concept of how to determine which segments of names that should get mailed hasn’t changed that much in 40 years. I learned circulation planning from Bill Knowles at Potpourri in the mid-1980’s, and still use the same basic principles today.

If you had been an outsider at my presentation that day at Brookstone, you would have thought western civilization was going to end. These “retail” guys were second guessing everything I presented. They told me my basic concept of determining the cost per new customer/order was totally flawed, although none of them had alternatives. They were amazed that we exchanged names with our closest competitors (Are you crazy? You give our best customers to Sharper Image? We’ll put a stop to that!), and that our best house file segments generated less than a 10% response.

You’ve all been in similar situations. You do know what is going on, and you are professionally running the catalog and your website. Sure, you don’t have 100% response rates (who does?), but let’s face it, it’s tough to explain catalog reality to people who are non-catalogers, and who “don’t speak the language”.  Fortunately, in my case, the CFO at Brookstone, who was a hold-over from the prior administration, jumped into the discussion and helped bail me out that day.

I learned many things that day, as well as in many, many similar presentations over the years on how to explain to the Board, the owner or upper management how the catalog works, and why certain things work and others don’t.

One thing I always do is use a current non-catalog example of an industry changing. Today, I point to the auto industry, specifically, The Ford Motor Company. In May, Ford replaced their CEO, in part because the Board felt that the existing CEO was not focused enough on moving the company toward electric and self-driving cars.

But, here is the flip-side to what is happening at Ford. Last week’s 3rd quarter earnings showed a 63% profit increase, which was fueled by sales of F-series pick-up trucks, the best-selling vehicle in America since 1977. It is a reminder that despite all the talk of innovation, driverless cars, and electric vehicles, Detroit is still a truck town. The billions of dollars in revenue generated by truck and SUV sales are what enable research in these other areas. Further, Ford, and the other automakers, can’t just throw a switch and walk away from selling big trucks, which are what consumers in 2017 still want.

The same applies to your catalog. Your customers may be moving more online. Your ability to prospect with your catalog may be dramatically reduced because of declines within the co-ops. There are a whole host of reasons why you need to be looking at alternatives to your catalog. But keep in mind, and make sure your Board/ owner/ upper management are aware that you can’t just flip a switch and close down your catalog, and expect to replace all those sales with more Facebook ads, not in 2018 anyway. It is an evolutionary step which must occur over time to protect existing sales and profit.

If you are in a similar situation with your Board/ owner, and need someone to jump in and help add another voice to the conversation, you can always give me a call, and I’ll be happy to meet with them. This discussion is different at every company – there is no established “argument” for either keeping or not keeping a catalog going. But I can help you establish realistically expectations for changes to the status quo that won’t sacrifice sales and survivability in the long run.

As an added bonus, if you are located within driving distance of my home in New Hampshire, I’ll even come in my Ford F-150.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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