More Fall 2017 Catalog Observations

Response and Distractions:

Finally, some good news to share. From what I’m hearing, results seem to be favorable so far this fall for the hard goods and gift mailers. The rash of hurricanes, storms and fires have impacted results in their immediate geographic areas, but the rest of the nation seems to moving along without allowing these events to disrupt their shopping. However, one consequence of all the storms in the South is that until the last few days, they have pushed warm tropical air north for almost six weeks, even here in New England. The result is that I doubt many consumers have been buying sweaters, parkas or wool socks – consequently many apparel mailers are reporting some softness.

 

This is Why It is So Hard – Even The Evangelist Can’t Let Go:

I do the circulation planning for some of Datamann’s clients.  One of them – a steady reader of this blog, and who knows my distrust and disdain for the co-ops – was reassessing whether to mail all the prospect names we had planned for the last drop of their Holiday catalog. The names have not been ordered and the books have not been printed – but we have to make a decision this week. The mailer has been having great success online with several new initiatives this fall, including several new PPC programs. He was debating about cutting catalog prospecting and shifting budget dollars online. He would still be acquiring new customers, but not with the catalog.

ME: “But the last drop of Holiday is one of your best prospecting drops of the year measured by sales per book. Why would you want to cut circ there?”

Client: “But you are the one always preaching in your blog that the co-ops are not going to get any better. If they are dying, why continue investing there, especially since the performance from the co-ops has been so poor this year? And yes, sales/book are stronger than the rest of the year, but the cost per new customer is still way below breakeven. I should spend my few discretionary budget dollars where I have good return, and where there is a future”.

ME: “Yeah, I know what I wrote in the blog. But I find it hard to agree with you to cut back on catalog circ, because it is one of those things that once cut, you will never return to.”

Client: “I understand…but the answer is in the numbers.  If I can find MORE NEW customers elsewhere…and I can manage to improve their LTV, then that is the path I should take.”

The cynics among you will say that I was advocating that the mailer not cut circulation because Datamann is a company which profits from catalogers mailing catalogs. Yes, this is true, but it never shapes our advice to clients. You’ll never see me hawking one of those bogus studies from the USPS or the DMA that says millennials love catalogs.

But I’ve spent the first 35 years of my direct marketing career believing in the power of lists (although maybe not the co-ops), of catalogs, and of mailings. Regardless of the advice and wisdom I dispense in this blog about how YOU must change, when it came time for me to be the practitioner, I found myself not wanting to let go. Sentimentality is probably the biggest enemy of the catalog business.

This is partly why I have distanced myself from working directly with the co-ops. I only do that for one client. For all the others, I work with list brokers from 4Cite and one from Infogroup. It makes it much easier to cut circulation, or take more names from one co-op over another when I don’t have to respond to the Account Manager at the co-op.

Yes, I can empathize with you if you are finding it hard to let go of your existing business model. I love mailing catalogs just as much as you do. But as my client reminded me “the answer is in the numbers”.

 

Just In Time:

Catalogers have always believed that consumers will bend to the catalogers’ timetable. I was always amazed that apparel catalogs began selling their “fall” assortment in late June. The thinking was always that consumers want to get a “jump” on the new styles. Twenty years ago, that might have coincided with the customer’s shopping pattern, but now we know consumers buy much closer to need.

I find it extremely ironic that on the same day this week I received my Vermont Country Store Christmas Catalog, I also received a postcard from Jet (owned by Wal-Mart) advertising Halloween costumes. Catalogs are always working two to three months out, and on-line companies are working one to two weeks out. That’s why catalogs seem so irrelevant to many consumers. When I was a kid, mid-October was just about when I began thinking about a Halloween costume. Using Jet, I can order everything related to Halloween (candy, decorations, party supplies, costumes) and get free 2-day shipping. Catalogs need to adapt to buying at the time of need to remain relevant.

 

Lands’ End is Back:

After roaming the wilderness for many years, Lands’ End is back. In my opinion, their current book has the charm of what I used to expect from Dodgeville ten and twenty years ago. To be sure, it is an updated look, especially with the cashmere offer on the front cover and first four opening spreads of cashmere. But the balance of the book is very reminiscent of the Lands’ End of old.

This is supposedly what their customers wanted – a return to “good old Lands’ End”. It is certainly what all of you catalog professionals (and especially the Lands’ End alumni) wanted. Time will tell if this was a smart move.

 

Amazon Headquarters 2

You all know that last month, Amazon announced plans to open another headquarters somewhere in North America. Called “HQ2,” the facility will cost at least $5 billion to construct and operate, and will employ as many as 50,000 workers. Cities and states all over are hatching plans to get the prize. The dealine for applications is this Thursday, October 19.

I just want to put you all on notice that New Hampshire (where I live) has thrown its hat in the ring as one of the sites for Amazon’s planned second world headquarters. Our carrot? We have no sales tax, no income tax, and lots of undeveloped land. Our governor is going all in on this, and he appears to be serious.

Of course, there are a few problems with choosing NH. Two of Amazon’s criteria are the location must be a city of 1 million population, and there must be an international airport within 45 minutes. Our largest city only has 110,000 people, and our only international destination from the Manchester Airport is Toronto. But our governor is pushing the “quality of living” angle, promoting the fact that we have moose – lots of moose and bears.

Here’s the rub – online companies like Amazon have contributed to the death of many of our small retailers, who in my opinion, offered lousy service and over priced merchandise. However, when the small hardware stores and  clothing shops close, the local restaurants struggle, and then they close too. Then the “quality of life” angle gets harder to push. Our neighboring town of Peterborough has two thriving businesses right now – retirement homes and funeral parlors. I’m thinking that New Hampshire’s chances of landing Amazon HQ2 are slim.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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You Never Know From Where The Punch Will Come

This posting is about a company that tried to control its own destiny and failed, but there is a lesson here for every catalog, especially those jumping on the Amazon bandwagon.

In 1999, I was contacted by a lingerie manufacturer in East Los Angeles that wanted to start a catalog. He had been manufacturing underwear for more than 15 years. He got a big bump in business about 10 years earlier when Victoria’s Secret started buying some of his products. They liked working with him so much, they contracted with him for more and more products. In the year prior to his call to me, VS represented 80% of his sales.

Then it happened. Victoria’s Secret informed him that they had established their own manufacturing plant in China, and would be scaling back their purchases from him dramatically. He never thought that VS would throw him a punch like that. He thought they were his partner. He thought his own catalog would be his route to survival, because he wanted to control his own destiny.

I was doing a ton of traveling at that point, and as luck would have it, I was going to be on the west coast in two weeks, so I arranged to meet him. I won’t retell the whole meeting, but there was one memorable moment. After we had met for a few hours in his office, he asked if I would like to see where the products were made. We walked down a short hall, and he opened a set of double doors, and there was row after row of “work stations”, with hundreds of women of every possible ethnicity, each hunched over a sewing machine, with piles of bras and panties all around them.  When you see a company in human terms like that, it gives you a very different perspective on what the owner was attempting to do. He was not only trying to save his company, but save a few hundred manufacturing jobs as well.

I gave the business owner a very sobering estimate of what was involved in a catalog launch, and 18 years ago, it was still fairly easy and lucrative to do. But still, I pointed out all the issues, not the least of which was that he would probably not be profitable for 3 to 5 years. But, he thought he had two massive advantages – he was the manufacturer, so he had great gross margins, and he knew the business, and knew what sold.

He decided to do the launch on his own, with no additional help from any catalog consultants, including me. I did find him a former copy writer from Brookstone who apparently had been waiting her whole career to use the word décolletage in product copy.

Instead of doing an in-studio photo shoot as I recommended, the owner spent a modest fortune on a photo shoot in Mexico with some very expensive lingerie models (apparently models that look good wearing a piece of cloth that can just barely be called a garment are very pricey). The book mailed once and that was it. I never heard from the guy again and don’t know whether he survived as a manufacturer.

So, what’s the lesson to today? Simply this: Thousands of companies are now flocking to Amazon. They know the dangers involved, but also realize that if they can’t beat them, they might as well join them.  A reader the other day told me that two years ago Amazon was 15% of their business, and soon it would be 40% of their overall business. For many of you, Amazon is becoming your number one sales channel.

You see your use of Amazon as a way to control your own destiny. For some of you, the future looks rosy as those Amazon sales keep climbing. But what happens when Amazon becomes 70% or 85% of your sales? What happens is that you have lost control of your destiny, because that punch that knocks you out of business could come at any time.

Amazon is ruthless. They know that once they have the majority of your sales, they can start to squeeze you. Maybe they’ll increase the fee they collect as a commission on your sales. Maybe they will charge some “Amazon access” fee. I expect that in many cases, they will become the manufacturer, and simply drop your line completely.

Amazon is not your friend. It is a sales channel that eliminates dependence on others – especially sellers like you. They want to control every aspect of the transaction, and are well on their way toward that goal.

What is the alternative? Don’t walk away from Amazon, regard it as you would any other channel. But just remember, as it becomes a bigger piece of your sale pie, it could also turn around and punch your headlights out. Be careful.  And continue to build a diversified portfolio of sales techniques, beyond your current catalog. That is what we will focus on at the Datamann Catalog Seminar in April.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Fluff or Reality?

Six months from today, you’ll have a choice – do you want fluff or reality?

On Thursday, April 5, 2018, Datamann will be hosting our sixth annual seminar on catalog growth and survival for the VT/NH Marketing Group.  I’m very proud to say that this has become the largest single-day event for catalogers in the US.

Once again, we will be joined by two of the industry’s leading experts on the future of catalogs and ecommerce – Amy Africa and Kevin Hillstrom. We will give you specific, detailed methods on how to survive and even grow in this tough market.

Here is where you have a choice about fluff or reality.  I saw that one of the co-ops gave a presentation last month at a conference about selling on Amazon. The co-op rep was a co-presenter with a guy that has actually sold products on Amazon for 5+ years, and who could have used the full hour (he could have used a whole day) to discuss all the nuances, tricks and implications of selling on Amazon. But the conference organizers chose to give half the session time to the co-op – possibly because the co-op was a sponsor of the event.

This had me intrigued – since the co-ops are missing out on all the transactions that are migrating to Amazon, what could one – or any – of the co-ops possibly have to offer about the subject? I downloaded a copy of the presentation, and the 21 slides from the co-op were the usual superficial fluff you would expect. The first dozen or so slides described the Amazon shopper’s demographics, as compared against the co-op’s database. No surprises here since probably more than half the US population uses Amazon. The next few slides were about the Amazon customer’s perceptions of retailers and their opinion on free shipping. Guess what – the co-op’s findings are that Amazon customers prefer Free Shipping. (I’ll bet you are kicking yourself now for missing this presentation).

So, what was the final message from the co-op regarding Amazon? It was basically this: Go ahead and sell on Amazon because the Amazon customer is also buying from other sources – like catalogs – at “more than average levels” as indicated by activity found in the co-op’s database.  Of course, nowhere in the presentation does it indicate how that average Amazon shopper’s activity has been trending with non-Amazon sources over the past five years.

And we know why that number was not reported – none of the co-ops want to admit that Amazon is choking off their transactional information, and thus their ability to provide you with viable prospecting models. What else would you expect from one of the co-ops but a presentation that says all is well, and Amazon is not a problem for either you, the mailer, or the co-ops?

I know you are not that naïve. I know you want to be treated with respect. That is why our seminar exists, as an alternative to the few remaining catalog conferences, symposiums, client events, etc., that are vendor sponsored, vendor dominated, full of fluff sessions and hard selling of services to you. Sure, Datamann is the sole sponsor of this event for the VT/NH Marketing Group, and Datamann clients get a few perks from attending. But in six years, I’ve never used the podium to tout Datamann’s services. Nor do I share the attendees list with any other companies that want to set up time with you to discuss retargeting, Facebook ads, or online tracking. If you attend our seminar, you can relax and learn.

I’m honored to have Kevin and Amy join us again. We will not be presenting fluff. The tools, strategies, and tactics we will share are not easy tasks to accomplish. They are hard work. (No, there is no magic mailing list which Kevin is going to reveal to you when he says to adopt low cost/no cost methods of customer acquisition).  We will be discussing the reality of the industry and your survival. Sadly, some of you won’t survive. But you stand a better chance of continuing the fight if you face reality instead of naively embracing fluff.

The 2018 seminar will be held at a new location (for us) – the Event Center of Nashua, New Hampshire, a new conference center combined with a Marriott Courtyard only a few miles over the border in New Hampshire from Massachusetts, and much easier to get to if you are flying into either Boston or Manchester.

More to follow. See you in Nashua in April.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

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