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.

If you are not already signed up for emails from this blog, click here.

by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

read more

If You Have This Much Contempt for Catalogs…

If you have this much contempt for catalogs and for your customers, why even bother?

For those of you that have grown tired of me ripping apart yet another poorly conceived start-up, yuppie/millennial-inspired catalog, you can skip today’s posting and still get a passing grade at the end of the semester.

For those of you with the morbid curiosity to see how some catalogs simply blow through money, read on…

I received a catalog this week called Marine Layer, based in San Francisco. I immediately noticed two red flags that tell me these guys won’t last long. First, they number the editions of their catalog, which in my experience is a sure sign of catalog hubris, as if they expect their catalogs to become collectibles (“Oooh, you have a pristine copy of Edition No. 5, that one is rare.”) Second, they just opened a store on Newbury Street in Boston. From my perspective of 50+ years of seeing retailers move in and out of shops on that street, I know that a presence there usually indicates a huge ego on the part of upper management, and out-of-control spending.

Let’s look at the catalog. Look way down in the lower left corner. Do you see that tiny gray circle? It offers 15% off – BUT WHO IS GOING TO SEE IT?

marine-layer-cover-with-ins

The back cover is even worse. It at least features some of their products, but they are not for sale. The real problem with the back cover is the call-out for free shipping and returns.

marine-layer-back-cover-oh-hey

Again, who is going to see that? (Or, maybe I should emulate their hipster copywriter and say “Duh, who is going to see that?”) There were six additional similar sized call-outs inside the book for free shipping, spread out over 56 pages, and all in tough-to-read reverse type. There were no additional reminders of the 15% off offer.

To me, this shows the folks at Marine Layer have contempt for their customers. Why bother to have discounts and free shipping offers if you hide them from your customers, and potential customers?  Oh, I know, if you made mention of these offers in a bigger manner – in a manner that someone might actually notice – it will destroy your brand and the curated image you are presenting. And you refuse to make the dotwhack on  the front cover any bigger because it will “look trashy”. Well, when your venture capital dries up because your sales and profits are going nowhere, maybe you’ll wish you had promoted these two offers differently.

If you have been reading this blog for a while, you know that the three most important spreads in the catalog for sales are the opening spread, the back inside cover spread, and the center spread. So how did Marine Layer do with those pages?

marine-layer-opening-spread

marine-layer-center-spread

marine-layer-exit-spread

That’s right – they did nothing with them. They used them for “lifestyle” and branding shots.  That’s 11% of the available space in the catalog – and the most valuable selling space – completely wasted on non-selling. Sure, there are some people who viewed those pages and said “wow, I can relate to this brand”. But, I’ll bet Marine Layer’s CFO would rather have used those spreads for hard selling instead of soft branding.

But here is the main problem I have with this catalog. The catalog’s primary selling point – or gimmick – is that they have products made with a proprietary material, which according to them, is incredibly soft. They even bound a little six panel brochure into the center of the catalog to explain what makes this fabric so great and unique. (And this bind-in card was not cheap). But they fail to make this story part of their selling throughout the catalog.

marine-layer-sept-2016-bind

This is a mistake that so many catalogs make. You have something unique, and that you love, but you assume that everyone else immediately recognizes it for its uniqueness and that they immediately share your passion for the product. It doesn’t happen that way.

marine-layer-absurdly-soft

This is the first selling spread (pages 4/5) in the Marine Layer catalog. I showed it to my wife, and covered the price, asking how much she would pay for an “absurdly soft” t-shirt. She said “I can get the same thing at Target for $8”. Marine Layer’s price is $39. Ouch.

Before going further, let me state that I received some comments several weeks ago to my blog posting (Value or Not?) on the Filson catalog, and (in my opinion) the exorbitant prices they charge for their flannel shirts. The comments were equally divided along the lines of “yes, that catalog has lost touch with reality” to “you know Bill, just because you are a cheap Yankee who thinks that $150 is ridiculous for a flannel shirt does not mean that the Filson customer agrees”.

Both opinions are correct. Sometimes a catalog’s prices are seemingly out of touch with reality, and yet they have customers who willing pay those prices. Maybe the customer sees value where the rest of us don’t, maybe the customer just wants to make a “vanity” purchase. Maybe the customer is ignorant of other options.

The point with Marine Layer is that they may actually have a t-shirt worth $39, but they have done nothing to convince me as a consumer and a prospect why it is worth that much. The opening spread did nothing to communicate that point to me. Nor do any of the individual selling pages. And the bind-in, which 99% of the readers of the catalog are going to skip, is buried in the middle of the book. This does not have to be a “technical” explanation about cotton and wood fibers. You can appeal to my vanity. But do some selling!

I understand I’m not their target customer. I understand that companies need to be “innovative” to stand out from the crowd.  But innovation comes from merchandise, from the products you are selling. It does not come from having contempt of your customer and contempt for using a catalog to sell.

I stated earlier that Marine Layer had contempt for their customer by designing a catalog which hides offers, gives no explanation as to what makes their products so unique and is seemingly over-priced. However, they also show contempt for “catalogs” themselves. They probably love their stores. But as a consumer, and catalog professional, I sense that they really don’t like catalogs. They don’t want to employ any of the standard techniques that successful catalogs utilize to drive response. I’m certain that upper management is taking a counter-intuitive  approach, as in “We are special, not like anyone else. So we don’t want to have a catalog like anyone else. We know better than everyone else.”  This is just wasteful.

At some point in the future, this catalog will no longer be treated internally as a fun, whimsical project. At some point, someone is going to be given P&L responsibility for it. They are going to be constantly butting heads with the “brand” police that want to continue producing a catalog that is short on selling, and hence short on sales and profits. They will read this catalog critique and wonder how in the world they can turn this catalog around. It is a tough battle to win.

If you are not already signed up for emails from this blog, click here.

by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

read more

When You Have To Spell It Out, You’ve Missed The Point

Sometimes I just can’t let go of observing when a company is pouring money down the drain.

Datamann is working with a catalog client that recently launched their first catalog. They tested over a dozen prospecting lists – mostly from the co-ops – and the response rates were all over 2.2% with a few approaching 4%. Yes, they had a strong introductory offer, but the secret to their success in my opinion was having really strong merchandise. Maybe some of you routinely achieve even higher response rates on your prospect mailings, and that’s great. But for every prospect list to perform better than 2.2%, on a first-time mailing, well, that just doesn’t happen very often.

I’d like to tell you that Datamann, and their list broker (4Cite Marketing), their printer and even the co-ops were all responsible for this strong success. But that would be overstating the role each of us played. The client, along with their consultant, created what I’d call a “down and dirty” book which drove response. It wasn’t pretty, but it drove sales. In meeting with the owner, and reviewing their final creatives for the first book, I made recommendations for some last minute changes. The owner’s response was one of a kind – “Tell me what I need to do to make money and make this work, and I will do it”. My creative suggestions were simply tweaks to a book that was already 95% OK.

I wish I could reveal the client’s identify, but I can’t – for obvious reasons of client confidentiality. But I will say this – there was not one speck of space in this catalog wasted on “branding”, telling a story, announcing why the owner had always wanted to mail a catalog, or announcing this was their first catalog, etc. The products in the catalog were all aimed at sales and driving response. (It’s amazing what a mailer can do when they follow the advice of people that have been doing this for a while).

I bring this up as way of setting the stage for my comments on a new catalog I saw from Rodale, publisher of magazines such as Prevention, Men’s Health and Running. The front cover stated this was the “third issue”. As an aside, why do magazine publishers that launch catalogs always feel that they have to number each issue? Do they think someone is going to collect each one and bind them together into an anthology someday? No, they do it because they think that consumers are sitting by their mail box just waiting for the next “issue” of the catalog.

Rodale-Cover

Rodale’s new catalog had the obligatory President’s Letter on page 2, which explains the catalog’s mission – a complete waste of the most important real estate in the catalog. Worse, there were six pages completely dictated to “branding”, and further explaining the catalog’s mission, which in a 56 page catalog equals 11% of the space not doing anything to drive sales. This included the single page below of the empty Mason jar, and the center spread of the woman overlooking the lake.

Rodale-Page-42

Rodale-Center-SPread

And yes, truth be told – the center spread is technically selling. If you look under the woman’s shoes, there are four lines of tiny reverse type listing four items which she is wearing, including the scarf (What scarf? Do you see a scarf?). Now, even those of you that are “creatively” challenged can admit that’s not going to do a thing to sell those products.

In my opinion, when you have to use “editorial” content to explain to your customer what you are attempting to do with your catalog, then you’ve already missed the point of what a catalog does. A catalog sells product by making the consumer see the product and say “Wow, I want that.” You should not have to tell them why you think they should want it.

However, here’s my biggest problem with the catalog. In Rodale’s effort to create a lifestyle catalog of “healthy solutions for a happy life”, they assembled a mish-mash of products.  Collectively, the products have a theme of being good for you and good for the earth, including:

  • $102 organic cotton bra and matching $68 organic cotton panty
  • standard hand-crank apple peeler for $65, which Amazon sells for $12!
  • 68 oz. spray bottle of Organic Youth Serum for $98, (“anti-aging serum contains organic prickly pear seed oil”)
  • “Oversized Cashmere Scarf” for $188, with no information on the size of this “oversized” product, and no information on the cashmere other than it being 100% cashmere. But what kind of cashmere? It makes a difference if you are going to spend $188.

Rodale-4-spreads

Ignore the ridiculous pricing for the exact same products found elsewhere for 1/5 of Rodale’s price. Ignore the amateurish creative mistakes (which should have gone away by the time they got to the third issue). Focus on this – by bouncing all around from a merchandise perspective from daywear, to cosmetics, to housewares, to jewelry, they have failed to position themselves as being a “leader” in anything. Instead they have tried – as many other catalogs before have tried and failed to do – to create a “lifestyle” catalog around a theme that sounds good in principle, but lacks the ability to drive a “response”.

Consumers buy products from catalogs because they envision themselves using them. They want products that meet their needs, and if it is apparel, that will “look good” on them. They may feel good when that purchase also supports a higher goal such as fair trade or organic fabric, but as many other catalogs have discovered over the years, those factors are not compelling enough to sustain a catalog based solely on good deeds and being “socially conscious”.

The Rodale catalog reminds me very much of the catalog which Reader’s Digest launched around 2005 called American Made, in which every product was made in the USA. Again they had a mish-mash of products that were connected only by a common thread of being made in this country. As I recall, it lasted about two years.

Rodale-Catalog-Sept-2015-P5

The final “odd thing” about the Rodale catalog was the last page, which contain a subscription offer for each of their magazines, none of which was more than $15, and single issues for $3. This final page was totally incongruous to the rest of what they were attempting to do. Doesn’t anyone ever look at how dumb some of this stuff looks?

In the past six weeks, I’ve had a ton of new subscribers to the blog. I can tell that many of you are analysts in marketing and merchandise, and well as marketing and merchanside managers and directors.  You are typically not the ones that come up with ideas for boondoggle like this catalog. But you are responsible for executing those plans. Yes, I have been harsh on this catalog, but no harsher than I have been with other catalogs over the past 20 years, starting with my old “What Were They Thinking” presentations. I have highlighted the faults with this catalog today to illustrate a point to the new generation of catalog and ecommerce employees, which is this: when someone launches a catalog or makes significant changes to an existing catalog that has NO EXPERIENCE in what they are doing – watch out. Because when it fails, you don’t want to be standing near the fan.

If you are not already signed up for emails from this blog, click here.

by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

read more

Is There Enough Room For All These?

The price of entry into launching a catalog used to be pretty cheap 20 years ago. As a result, I have several boxes of catalogs in my office labeled “Catalogs No Longer Mailing”.  Most of them failed because they were undercapitalized, but they also had two other things in common – they were either not unique (meaning they were mostly copycat catalogs), or they were trying to create a “lifestyle” where one didn’t exist.

One I remember was called Atlantic Rancher. It featured grizzled old men that were supposed to be “authentic” fishermen.  Products included $150 flannel shirts (which 20 years ago, was a lot for a flannel shirt), not exactly what a working class fisherman would wear. It was printed on 80 lb. paper that could stop a bullet, and featured one or two products per spread. It mailed two or three times before the last copy went into my “No Longer Mailing collection”.

I bring this up because there’s a new crop of men’s catalogs (a few of them have been around for a few years) that to me, all sort of look alike. And because of that, I see some shake out coming for these books, as I just can’t see them all surviving. Since the price of entry into cataloging today is so much more expensive than previously, there is much more at stake for these companies than in the past.

Let me say up front that I am obviously not the target customer for any of these books. They appear to be targeted to younger, more “hip” men than me. Let’s admit it – I’m pretty square and conservative. I shave every day. I still wear a suit and tie at conferences and when I meet with a client. When I do dress casually, it is usually a plaid flannel shirt from Cabela’s or LL Bean.

None of those characteristics would be part of the target demographics for these catalogs, which include Guideboat, Cooper Jones, and Bill’s Khakis along with at least another half dozen. One of them, Remington 1816, already dropped out earlier this year after mailing just a few times.

First, these catalogs all feature young looking guys with five days beard growth (note to Creative Directors: that “look” is getting tiresome folks!) or the bearded George Clooney look-alike model (see below).

Guideboats-2015-Page-4

Secondly, the creative is over the top. Extra heavy, non-coated paper generally with a very stark look.  Third, the prices are NOT cheap.

Bill's-Khakis-@ept-2015---P

These jeans are $145. Women spend that much – and more – on jeans, but guys? Not so many. Sure, they are made in the USA, and I support buying American as much as the next guy. But not when I can get jeans from Amazon for $30.

The biggest concern I have with several of them is that they are light on products. I love a dense catalog – the more products the better. There is obviously a point of diminishing return, but generally, more products per spread equates to more sales. This is true of apparel, home furnishings and hard goods catalogs. Several of these catalogs are trying to get by with one product per page, or worse, one product per spread.   The catalogs like Copper Jones and Williams & Kent that have five or six products per spread stand a far better chance of survival.

The management of these catalogs would be shocked to hear anyone say that their catalog looks like someone else’s. They will tell you how they are addressing a unique, specific lifestyle that targets connoisseurs of craft beers that drive BMW SUVs, and that hunt quail with trained dogs. They will tell you which colleges their customers attended, which environmental cause they support, and the names of their two children. I’ve had clients tell me this stuff, all of which is based on “supposition and perception” of their target customers and not based on quantifiable facts. But, are they fooling themselves with the illusion that they are speaking to a specific lifestyle?

Lifestyle illusion leads to bad decisions on merchandise, on pricing, on creative and on the respective size/strength of a given market. That will be a topic for a future posting. Stay tuned.

If you are not already signed up for emails from this blog, click here.

by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

read more

New Launches – They Got “It”

This past week, I met with the owners of two new companies who plan to launch catalogs this fall. These are two of several new catalog launches that Datamann is working on for Fall 2015. (A note to other B2B companies – if you are not getting new business like this, maybe you should think about starting a blog.)

Over the years, I’ve worked with many catalog launches. For most of them, their thinking was clouded by one of two things – either by visions of sales grandeur with no corresponding hard effort to acquire sales, or by over the top branding.

Happily, the entrepreneurs behind these two companies were not thinking that way. They “got it”. They wanted response. They wanted to generate orders, and hence, create customers. They basically said “tell me what I need to do to drive response and sell this stuff, and I will do it”.

This may sound odd to some of you, but that admission of wanting to drive response is a rare commodity among entrepreneurs starting catalogs. Usually I’m told how they want to create a “lifestyle brand”, that will be the ultimate source of {fill in the blank here with whatever it is they are selling}, and how they want to emulate Patagonia. I rarely hear new launches acknowledge that they need to acquire customers as quickly and cheaply as possible.

Another sign that these two entrepreneurs were on the right track – they both wanted help and were willing to pay for it, and did not argue over every point of advice I offered.  I don’t expect that they will follow all my advice and counsel, but they were taking copious notes and nodding at the right times. They’ll do well. They were not like the dot-coms starting catalogs that think since they know how to do the web, they can do catalogs too, and who either seek no advice from catalog consultants, or tell consultants like me that we don’t know what motivates a customer to buy from a catalog. (I love hearing that from people who were not even born when I started in the catalog industry. Man, I’m getting too old for some of this!)  I will tell you that 10 pages of non-selling editorial or photos of the catalog staff are not what motivates consumers to buy products. But you can’t convince them of that.

But here is what is really different from years past when I helped many catalogs launch – both of these companies had existing businesses. They had a combination of sales either from the web, from retail stores, or from a wholesale business. They were not starting a catalog completely from scratch with no experience in the product category.

This makes a huge difference in their collective mentalities vs. those entrepreneurs behind catalogs launched as recently as 10 years ago. In years past, the entrepreneur had both a passion for the product in the catalog, but more important, a passion for wanting to mail a catalog.  Again, the concept of having a “passion to mail a catalog” may sound odd to some of you. However, it is no different than reading in your local newspaper about someone that wants to start a restaurant (who has no prior restaurant experience), because this is the person’s lifelong desire since they love to cook. Meanwhile, you’re thinking to yourself “they have no idea of what they are getting themselves into, and will last 6 months.”

The entrepreneurs behind catalog launches today – at least the ones with which Datamann is working – are focused on selling products that they already know. Catalogs are just one more way of doing it. They do not consider themselves “catalogs or catalogers” any more than I consider myself a NASCAR driver because I drive a pick-up truck. And they certainly don’t consider their launching of a catalog as being a cog in the bigger vindication of the growth of the catalog industry. It is simply something they are trying to grow more sales.

Catalogs-Mailboxes

I do not consider these launches as signs of a “catalog renaissance”. Nor do I consider them aberrations to the general decline of catalogs. As I have said in this space before, there is still a need for catalogs. But that need is not universal by demographic, and it is certainly not as big as it used to be.

If you are not already signed up for emails from this blog, click here.

by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

read more

The 8 Hour Window of Vulnerability

As most of you are just getting back to work after enjoying a 3-day weekend in celebration of Independence Day, I’m going to take a departure from my usual observations on the catalog industry, and give a brief personal experience from 25 years ago, which relates to what is happening in the catalog world today.  However, if my personal follies are of no interest to you, you can skip today’s posting, and still do well on the final exam later in the semester.

In 1992, while working at Brookstone, I came up with the idea for a catalog business. I was actively involved at the time with the VT/NH Direct Marketing Group, where I was in contact with many successful small and mid-sized catalogers in northern New England. I thought “if all these guys can launch and run catalogs, I ought to be able to as well.”

Bear in mind, this was at the peak of cataloging in the US. The economy was reasonably strong, and obviously, this was before the internet. Life was good for catalogs, and I wanted to be part of it.

My idea (and please don’t laugh) was to develop a catalog of consumer products for cemeteries. In New England, we still have lots of traditional cemeteries, with traditional gravestones (not the kind that are flush with the ground). I thought I could develop a business around clip-on flower baskets, gravestone cleaners, and even cemetery “statuary”, which included everything from garden gnomes to religious figures that you could stick in the ground next to your loved one’s grave. (Stop laughing).   It might not have been for everyone, but I’ve driven by some cemeteries that look like a carnival with all the “stuff” with which people decorate their family plot.

Because this was pre-internet, one of the ways I researched the field was by obtaining advertising press kits from various trade publications that served the funeral and cemetery business. You’d be surprised at how many there were back in the early 1990s – at least 20. One was from the American Cremationist Society, which coincidentally was having their annual conference and trade show in Boston in a few weeks.

At the time, 15% of deaths nationwide resulted in a cremation, with the percentage at 50% in several states. As I read their material, a little light bulb went off. The magazine was full of ads for cremation urns, which were universally some of the ugliest things I’d ever seen. My brilliant idea was to develop a line of cremation urns in the shape of the departed’s favorite hobby, such as a golf bag, a sports car, bowling shoes, and of course my favorite, a tractor. (Yes, I’m serious). I thought this would be a great. So I signed up for the conference in Boston.

The funeral industry, which is closely linked to cremations, does not want anyone to know anything about how it works, largely because of the huge margins it makes. Security getting into the exhibit hall was intense. To keep prying ears and eyes further away, the exhibit hall (displays of urns, coffins, and CDs of funeral music) was in the same large room where the presentations were being made. I sat through about 5 minutes of the first session which was a tour of cremation parks of Florida (complete with slides), when I decided to hit the exhibit area.

That’s when I began to raise suspicion among the exhibitors.  First, no one knew me, and this was a pretty small, tight-knit group. Second, I was the only attendee not sitting spellbound watching the slides. Finally, I was the only person in the hall – male or female – not wearing a dark black suit. As I walked among the exhibits, collecting brochures on cremation urns, almost every exhibitor was watching me.

I finally struck up a conversation with one of the funeral urn dealers, and told him of my idea. He asked how I intended to sell these urns, and I casually said that using direct mail and possibly catalogs, I was going to sell directly to consumers. Little did I realize that in the funeral industry, when you say that you are going to sell directly to consumers and bypass funeral directors, it is akin to waving a huge red flag at a bull.

At the same time, a new speaker had taken the podium, and his presentation was echoing through the exhibit area. He had a slow delivery with a very strong southern accent. He was talking about how to convince the family of the departed, to still purchase a coffin, even though the departed was going to be cremated. Apparently in some states the coffin was required, but in some states it was optional. The speaker mentioned how to use the “eight hour window of vulnerability” during which you can sell the family just about anything.

Just then, an exhibitor from one of the booths I had earlier visited came up to me demanding to know if I was a funeral director. When I replied no, she demanded her brochures back. At this point, the speaker was just getting to point #7 on how to sell the coffin along with the cremation, and I realized I did not have what it took to take advantage of the “eight hour window of vulnerability”.  Not wanting to be accosted by any further exhibitors, I left the exhibit hall in a flash, and never revisited my idea.

On my drive home I concluded that the concept of the personalized funeral urn, sold direct to consumers, could never work because the only thing that made direct sales profitable were repeat sales from the same customer – which in this case seemed unlikely.

What were my mistakes?

First, I knew nothing about the funeral or cremation industry. I was like the person that buys and opens a restaurant simply because they enjoy eating out. I realized that I did not want to deal with “unpleasant things”, which I perceived at the time as dealing with grieving family members trying to find a suitable final “home” for their lost relative.  This is no different than catalogers not wanting to deal with deep-seated merchandise issues – mainly that their merchandise is not unique, nor competitive – and instead spending their time with easy things like being multi-channel. To win in any industry, you have roll up your sleeves and deal with the real issues.

Second, although hardly anyone in 1992 even knew about the internet, no one at the time could have perceived how it would have enabled the direct sales of a product such as personalized urns. So I will give myself a pass on that. The mistake I made was failing to realize that the trend where 15% of deaths nationwide in 1992 resulted in a cremation would only continue to increase.  Today, that number stands at 50%! That’s a lot of urns.

Third, I missed a cultural aspect of cremations. In a traditional burial, the coffin is picked and all funeral arrangements are made within that initial “eight hour window”.  But I have subsequently learned that in cremations, it is not uncommon for a different urn to be chosen long after the initial decisions were made. So, there is a market for “aftermarket cremation urns”.

Finally, my own “catalog driven” mentality led me to think in terms of pricing these items for fairly standard mark-ups. I could not envision pricing them in such a manner as to make money on the initial sale, since repeat sales were out of the question. The funeral industry has no problem with this, taking an urn that cost them $25 and selling it for $400.

Today, you can find all types of personalized urns online, including Wal-Mart! Most of the personalized urns I found online sell for around $200, and look like they cost about $25. So the margins may not be as generous as what a funeral home would make, but I’m sure these online urn dealers don’t have the overhead of maintaining a funeral home.

Fisherman Urn

 

In the end, my reason for wanting to launch such a business is still valid, as most cremation urns available online today are as ugly as those available 25 years ago. So who knows – even though I initially failed to see the future trends of cremations, and failed to see the internet, maybe I can still develop that line of tractor shaped urns.

If you are not already signed up for emails from this blog, click here.

by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

read more