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.

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 Catalogs In The Year 2025 – Part 3

What about new catalogs – will there be any in the year 2025? This is part 3 of my thoughts on the future of the mail order industry, and where catalogs will be in seven years.  Click here for Part 1 and Part 2.

Let me go back to the original question submitted by a reader that prompted me to write this series of posts. This was his closing comment: “I imagine your vision might be pretty on target and might help some folks avoid investments in a future that just isn’t likely to be there.”

Will there be a future for catalogs? The short answer is that catalogs will never completely go away in the same way that blacksmiths/farriers have not completely gone away – people who own horses still need to have them shod. But there are a lot fewer horses today than there were 100 years ago.

The long answer to that question is that catalogs in the future will never have the same value to consumers or to companies that they do today. Therefore, is it wise to invest in a future that isn’t likely to be there?

Again, let me start with a historical analogy.

In the late 1990s, a catalog got started near Portland, ME called Lighthouse Depot. Everything it sold had a lighthouse motif – gifts, apparel, home furnishings, and small replica lighthouses from around the country. I worked with the owner for several years as worked to make his business grow.

The most significant and steady part of his business were the small replica lighthouses. The catalog worked with several manufactures that were introducing new models of current and historic lighthouses. There were collectors that snapped these up as they were issued – customers actually had standing orders to receive each new lighthouse replica when it was released. It was like buying dog food on a continuity plan. What catalog wouldn’t want that type of recurring order?

I commented to the owner one day that I felt the “lighthouse” craze was a fad, just like scrapbooking. He assured me it was not, as he believed there was a deep love affair among the general population with anything lighthouse themed. At the peak of their growth, they had 104,000 12-month buyers.

Then along came eBay. Suddenly, all of those replica collectors realized that their collection of “collectible” lighthouses, which they had expected to sell and retire on the proceeds, were not even worth the original purchase price. No one wanted them. Sales at Lighthouse Depot plummeted, not just on the replicas, but everything. The company eventually went out of business and no longer exists.

Yes, you can argue that the “lighthouse craze” was just a fad that was short-lived. But, who knows, maybe the “yoga craze” will turn out to be the same. Or the “mountain biking craze”. Or the “urban logger” craze (which I don’t get at all).

My point is that many catalogs got started because they rode a wave of interest that crested quickly and died. This has not happened in consumer catalogs alone – look at Staples as an example of a B2B catalog that was ubiquitous in every office. If you wanted to order an office product, you went to a central office (maybe Accounting), looked it up in the catalog, and had someone order it. Now you just go online and look it up and send someone a link for what you want.

Aside from the aforementioned “wave of interest”, why else do people still start catalogs, especially today? There are several reasons:

  1. The obvious reason is that catalogs still appeal to a segment of the population that are motivated by a print catalog. I’m one of them. My 17-year-old son would never look at a catalog, even though I’ve explained to him that catalogs pay the bills in our house. Yet, my generation is going to get smaller as my son’s generation become the dominant shoppers in 2025. So, starting a catalog just to appeal to few old geezers like me that like to thumb through a print catalog instead of using my phone doesn’t seem like a good bet.

 

  1. Almost all of the new catalogs today started as a website, and maxed out their potential to acquire new customers using PPC and SEO. A catalog seems like a logical extension of their “brand”, and hence, a good way to acquire new customers. It’s easy to get a few hundred thousand names from the co-ops, and do an initial mailing. The initial mailing results are awful, compared to what new catalogs experienced 20 years ago, but these new mailers don’t know that. They look at the 0.7% response rate and think “Man. That’s pretty bad.” But their co-op rep says “Now that we have actual responders, we’ll tweak the model”. And they do, and response rate goes up a little more. With luck, maybe one of their new lists performs above break-even. The mailer creates an analysis to show that these new buyers are being acquired for slightly less than their most expensive PPC words, so they keep plugging away with a catalog for a few more years. In my opinion, they will soon hit the same wall that most existing catalogs have hit, which is that the faucet of viable prospect names from the co-ops has peaked, and then dried up.

 

  1. There will always be a desire to start catalogs by new “Patagonia wanna-bes”. No one today or in the future will invest money to start a new Lillian Vernon, National Wholesale, or Plow & Hearth – catalog companies that have generated tons of relatively low average order transactions. Amazon, Wal-Mart, and Jet will have those marketplaces covered. Instead, the new catalogs in 2025, like the new catalogs in 2017, will all be about “lifestyle”. Entrepreneurs that haven’t fully thought out the logistics of starting a catalog will be driving these new ventures. They will not know to ask how and if it can be sustained, or where are the new customers going to come from? But they will want to share their vision and their dream with the world, which they cannot do with a mere website. It can only be done with a 48-page catalog, selling products on only half the pages. And they will quickly learn, as so many other catalogers before them have learned, that selling “lifestyle” is not so easy, and that selling “merchandise people actually want” is hard.

Every new catalog faces one daunting task. It is not being profitable, it’s not finding new customers, it’s not having unique merchandise (although that is daunting) and it’s not having great margins.

The most daunting task that every new catalog faces is being able to SELL THE DREAM.  Not the entrepreneur’s dream, or the consultant’s dream or the creative agency’s dream, but the CUSTOMER’s dream. What does the customer want and can it be delivered in a way that can be sustained, and is relevant to the customer?

Somewhere right now, there is another “Jeff Bezos” type entrepreneur who is setting his/her eyes and mind on every market – including whatever market you are in. They are ignoring the established way of doing business, and planning a new way that will leave the existing players in the dust, because they are appealing to the CUSTOMER’s DREAM. If it has not already happened with your market/product category, it will. Your customers are consumers and consumer behavior has changed from what it was 20 years ago. Today, your website and your mobile site HAVE TO BE better than your catalog – that is where people go first when seeking product information. Whether you have a great looking catalog in the future will be of little importance to the customer. They just want the products they need, and they want to order them in a way that is convenient to them. Much to your chagrin and amazement, these consumers have ways of “discovering products” without catalogs. And the next “Jeff Bezos” – whoever that person is – will wipe the slate clean with a new online approach to meeting the needs of your customers, and it is doubtful that it will include a catalog.

We are at an enormous disadvantage trying to look at the future 8 years out, because most of us are looking at the future through our “catalog mindset”. We are trying to envision what catalogs will be like in the future, when we should be thinking about how consumers will be buying then. That is why I asked Amy Africa to be one of our speakers at our seminar in April 2018. If you can survive the next two years, Amy is going to tell you how you need to be communicating with your customers in the future. And according to Amy, you haven’t seen anything yet!

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

In The Year 2025 – Part 2

Who will be the catalogs that survive to 2025? This is part 2 of my thoughts on the future of the mail order industry, and where catalogs will be in seven years.  Click here for Part 1.

Let’s start with another historical reference. In the 1990s, there was a catalog of women’s apparel and home furnishings called Faith Mountain, located in Virginia. Every one of their women’s dress jumpers was labeled “exclusive”.  But there was nothing exclusive or unique about them. They were just another navy-blue jumper. However, the folks at Faith Mountain believed their jumpers were exclusive because they had 5 buttons instead of four, or two pockets instead of one.

The catalog hit a peak $20 million in sales in 1999, but was reportedly never profitable, and eventually closed down in 2002. I always thought the owners were simply kidding themselves thinking that their products were unique and exclusive, and apparently, so did their customers.

So, who among the catalogs still mailing today will survive? For part of my answer to this question, I’m going to turn to the wisdom of Kevin Hillstrom, who has pointed out that the large players and the small guys (not just in catalogs, but in most industries) tend to be the ones with the greatest likelihood to survive. The catalogs in the “middle” will struggle and many will disappear.

In my opinion, that means the big players like LL Bean, Cabela’s/Bass Pro, Lands’ End, Williams-Sonoma, will likely survive into 2025, and beyond.  Not because they have products that are unique or that you can’t find on Amazon, but these bigger titles still have iconic brands which will resonate with consumers (assuming they don’t wander off to the wilderness) for years to come. They still have clout with the consumer. Catalogs will still play a role in their sales in 2025, though most likely in a diminished role from what it is today.

I do not include the big catalog conglomerates (Orchard Brands, Cornerstone, Amerimark) in this “big catalog” category. They may have many synergies, they may have big internal databases, but with the exception of a few individual titles like Garnet Hill and Frontgate, there are no “superstar” consumer titles among them that have the brand clout to stand out. They are mostly a collection of tired look-alike titles, that just happen to be part of a big company.

I see smaller catalogers (under $5 million in sales) surviving as well, assuming they have something truly unique to sell. Dakin Farm is an example I have written about before. They are a small catalog located here in Vermont (where Datamann is located) selling Vermont smoked meats, Vermont cheese and maple syrup. They have two stores, which are destinations for tourists. Once those tourists go home with their purchases, Dakin Farm uses their catalog to drive additional sales. Amazon may be able to beat Dakin Farm on price, but they won’t be able to create the Vermont “flavor” that sets the catalog apart. If you have never been to Vermont, the catalog probably would do nothing for you. But if you had been here, it will remind you of the good times you enjoyed on your vacation.

That’s what other small catalogs will do as well. They will stay small and keep it all. Their margins are good, and they have a small set of reliable vendors on whom they can rely to “get stuff done” without the cost of additional employees.

Both the very large and very small companies will contend with the Amazons of the world, but they will not compete with them head-to-head. Amazon will be there, but the big guys have value in their name and brand (i.e.: their products) which brings them authority. You can buy a pair of boots from Amazon, but they are not the iconic LL Bean boots. LL Bean, which continues to have a hard time keeping those boots in-stock, is doing fine selling those boots through its own channels at the moment, which includes taking their Bootmobile to college campuses.

The small guys will have unique products which Amazon simply is not going to be able to sell, because they are proprietary to that catalog, or just too small a niche even for the almighty Amazon to pursue.

There are two big issues for “middle-size” catalogs in the future: first, how will you find and develop unique product, which Amazon can’t copy, and two, what will be the source of new customers – where will they come from? The big guys have house files of millions of names, retails stores that generate buyers, and can afford to advertise. The little guys have always been in a niche market, and already had to discover numerous ways of finding the buyers in that market, and for the most part, did not rely upon the co-ops.

Oh, the catalogs in the middle: not big enough to have the critical mass of customers or the name recognition of the big guys, nor having a product mix that is truly unique. How do they grow if Amazon is choking off the supply of names to the catalog co-op databases, as well as competing with them directly with product?

I don’t want to single out any specific titles by saying “If I were working at Catalog ABC, I’d be really nervous because you’re in Amazon’s cross-hairs”. So, let’s see if any of these are true for you:

  • More than 10% of your products are found in at least two other company’s catalogs. If that’s the case, they are on Amazon too, and you are not unique.
  • You have no truly proprietary products.
  • Your definition of “unique” is similar to that of Faith Mountain, that you have a brown wool cardigan sweater with five buttons, and the manufacturer sells everyone else four buttons. Yes, your version is “unique to you”, but does the customer care?
  • You have products labeled ‘As seen on TV’.
  • You rely on the co-ops for more than 90% of the prospect names to which you mail the catalog.
  • You acquire less than 40% of your new customers from on-line activities (PPC, SEO, Facebook ads).

Unless those middle size catalog mailers start the hard work of developing alternate sources of new customers and some truly unique merchandise, they will not survive.

I’m not a baseball fan, but I read an interesting story in the WSJ last week on how the Houston Astros and LA Dodgers, the two teams in this week’s World Series, exemplify a trend in baseball. Both teams went through a period known as “tanking”, a method of team rebuilding that involves enduring a stretch of consecutive seasons with horrible results in order to acquire the pieces (mostly through top draft picks given to the worst teams) in order to make their way to the top of the standings. The owners of these teams would rather suffer several years of total ineptitude in order to shoot to the top than suffer the mediocrity of always being stuck in the middle of the standings. (If this principle applies to football, then the Cleveland Browns should be poised to win back-to-back Super Bowls soon).

This is what you have to do with your catalog. You have to be willing to suffer some years when sales and response will not be great in order to develop unique products and sources of customers that do not rely on the co-ops. And in my opinion, the unique product is the most crucial of the two.

I just finished writing the copy for the brochure announcing our catalog seminar in April 2018. (Yes, it’s ironic that I’m writing about the demise of catalogs but I still rely on print – a brochure – to drive attendance to our seminar). The overriding theme for our seminar in April is that you must do something different, and that survival in the coming years for most of you is going to be extremely hard work. But, you must begin now.

I’m going to wrap this series up next week with a look at new catalogs today and in the year 2025.

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

In The Year 2025 – Part 1

I love it when this happens.  Last Monday, a reader responded to last week’s posting with a great question. His question was so good, I decided to respond by turning my reply into today’s posting (which will be a multi-part reply).

Here is his question, along with a little background (which is edited for length):

“In reading your most recent posting, I just had a vision of a trendline to your emails with the label “catalog effectiveness in delivering new customers or sales” and the trendline is a long, slow downward slope.

I get a fair number of catalogs but I rarely buy from a catalog and I am rarely inspired to buy because of a catalog. Out of the past six or eight items I purchased online, those purchases resulted from an email, an online article / review or a reference from a friend. I would consider myself an active consumer (40+ years) and as I think about it, I think the last time I bought something based on a catalog was maybe five or six years ago.

This personal experience, coupled with your blog postings makes me wonder what you see the “mail order” landscape looking like in 8 years. That’s not such a long time from now and I imagine your vision might be pretty on target and might help some folks avoid investments in a future that just isn’t likely to be there.”

Wow – what a set up! What are my thoughts on the future of the mail order industry, and where will “catalogs” be in 8 years, or 2025? First, let me say that what is left of the catalog industry is changing so quickly, that none of us can predict where things will be in 8 years. So, let me quantify my response by saying that this is all speculation.

Being a history buff, I can’t look to the future without looking at the past. How many of you remember that Jeff Bezos was Time Magazine’s 1999 Person of the Year?

Amazon was only five years old at that point, and Bezos was only 35. I reread the article in Time from 18 years ago, and here are several key facts:

  • Amazon did $1 billion in sales in 1999, and lost $350 million;
  • The article predicted that Amazon would become the biggest online store, which has happened;
  • The article predicted that Bezos would become the richest man in the world, which probably will happen;
  • The article marveled about the fact that total online “holiday” sales for the entire season, for all online companies, was $5 billion in 1999.

Here are my two significant observations from that article. First, the editors of Time got in right back in 1999 with regards to where they thought Amazon was going, and how successful Amazon would be. Virtually no one in the catalog industry at the time believed Bezos would succeed because of the way Amazon was hemorrhaging cash. Catalog companies that lost money like that never survived.

The second thing that stood out to me from the article was Bezos’ enthusiasm and vision that he saw for the possibilities in the future. I’m not a big Amazon or Bezos fan, but it is incredible to look back 18 years later and see how all of the things he said would happen have come to fruition. He is a brilliant guy. He’s also extremely optimistic. The ruthlessness that so many (including me) attribute to Amazon is simply his taking advantage of so many missed opportunities by everyone else.

Going back to that article illustrates how much the catalog industry got wrong. It also shows how much other people got right. So, with that as my preface, here are my thoughts on where catalogs will be in eight years:

  1. For the catalog companies that survive to 2025, their catalogs will not be the main sales driver for the business and will represent no more than 25% of total demand.

 

  1. The catalog will be used ONLY to drive additional sales from EXISTING customers, but not all customers. With the exception of catalogs catering to a customer over age 70, it will be a support vehicle for other channels and only be mailed to customers for whom a catalog still resonates.

 

  1. If there is any prospecting with the catalog, it will be minimal, because no one will want to invest in a customer acquisition tool that is declining. It would be like investing a ton of money to fix up a 1975 Dodge Dart – what would be the point?

 

  1. What those “other” channels will be is hard to know. It could be the company’s website, their mobile site, their Amazon store, or something not yet envisioned.

 

  1. There will be fewer catalogs, but the ones that do survive will be exciting. There will be no room in the future for catalogs that try to discount themselves to prosperity. These survivors will carry products that are truly unique and hard-to-find, or brand dominate.

 

  1. But that does not mean that lifestyle catalogs will survive (more on this later).

 

  1. Because there are fewer catalogs, there will be a lot fewer vendors. There will be one or two catalog printers. There will be one or two catalog co-ops. All of these businesses will consolidate under one survivor of the existing players now.

 

  1. All of the companies that support printing will also contract. There will fewer paper mills, more and more of which close every year already. There will be no paper brokers. When there is less supply and less competition, prices will go up.

 

  1. Companies like Datamann that support the catalog industry will still exist, but we will be supporting the company regardless of what channels they are using. We may not be doing traditional merge purge, but our clients will still need customer databases, merchandise analysis, sales allocation and data hygiene.

 

  1. The remaining catalog companies will NOT be at the mercy of the few remaining vendors, because the catalog will not be essential to their sales and survival. There will be so many other options for acquiring customers that the catalog vendors will exist at the mercy of the catalogs.

 

  1. Any cataloger that is 57 or older today will most likely be retired in 2025. There will be little “institutional” knowledge left of how to make catalogs that drive response. Catalogs will be overseen by a CMO whose strength is in online or mobile, not catalogs. But that is OK, since catalogs will be of secondary or even tertiary importance to the companies where they are still used. The problem that causes is that catalogs will have no internal “champions”, someone who can voice support for what the catalog has to offer, to drive sales to those other channels. This will cause the catalog’s role to diminish even more.

 

  1. There will be hardly any knowledgeable – and credible – catalog consultants left as they will have all retired. The few “consultants” who will remain will not be concerned about their long-term reputation, because there will be no “long-term”. Thus, they will never say “no” to a client or a potential new catalog launch. Every new catalog idea, no matter how poorly conceived or funded, will be encouraged to “dive in”.

 

  1. Even though it makes perfect sense, there will be little cooperation among the remaining catalog titles. They could work together to develop a catalog run (instead of vendor run) prospecting database, or work to develop joint fulfillment centers. But, they see those options as low priority compared to fixing their merchandise and finding customers.

 

  1. The paper and print industry will still be writing articles on the fact that “print is not dead”, and vendors will still be citing studies from the USPS that people love direct mail. Somethings will never change.

Who will be the catalogs that survive to 2025? That will be Part Two.

One final note: Going back to Jeff Bezos being Time Magazine’s Person of the year – since 1928, there had only been three other individuals that were younger than he was when he received that recognition – Charles Lindbergh, Queen Elizabeth, Martin Luther King, Jr. Not bad company.

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

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

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.

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