Cataloging Study Highlights Revealed
The study includes sections on mergers and acquisitions by Harry Chevan of Gruppo, Levey & Capell; the economic impact of cataloging based on the DMA's annual WEFA study; and 20 in-depth company profiles from recent editions of The Dean Report.
The benchmarking study portion is based on results from 139 catalog companies with revenues in excess of $1 million, opposed to 108 companies in the last study. This cutoff was chosen as companies with lower revenues tend to distort individual statistics because of their small scales. These companies gave their answers to 122 questions, many of them multiple part, and completed a 44-line pro forma income statement for 1997 and 1996.
The topics covered included marketing, merchandising, operations, interactive marketing, finances and strategic and administrative issues. Naturally, the length of the report, more than 140 pages, cannot be condensed here. Therefore, we will discuss three areas that stood out.
<B>Mix of companies.<B> In the past, the respondents to this survey tended to be heavily weighted toward consumer cataloging. In fact, the participants in last year's survey were 68 percent consumer, 11 percent hybrid and 21 percent business-to-business. This year, the results are 33 percent, 49 percent and 18 percent, respectively. However, when the hybrid sales are proportioned between consumer and BTB, consumer sales represented 70 percent of the total. Thus, consumer cataloging still dominated the results.
A factor in the growth of hybrid cataloging is that we're seeing more catalogs going after business outside of their traditional segments, whether it's corporate sales and gifts or selling direct to the end user. The reasons are many, but it is primarily to maximize the infrastructure and catalog costs.
The other change was this year's respondents had lower overall sales than in the past. Last year's respondents had median sales of $15.7 million, whereas this year the median was $7.5 million, which we still suspect is higher than that for all catalogs.
<B>Planning, or lack thereof.<B> Over the years of conducting this study, we've been struck because well over half of the companies don't have a long-term strategy. If they do, they haven't committed it to paper. It baffles us how a company can spend hours and days preparing a circulation plan for the next mailing, yet, at best, only have an idea of where they want to be in a few years and no plan on how they'll get there.
Many may think this is irrelevant, that circumstances will change and, therefore, why go to the trouble of preparing a plan. The simplest way to look at strategic planning is as the map that leads you through the wilderness.
For example, you can plunge into the woods heading west, by following your compass and if you run into a major natural obstacle, scale it, go around it or go back and start again. Or you can get a map that at least shows where major obstacles -- such as impending postal increases, shortage of labor, etc. -- are and then plan your route. There still may be surprises and needs for changes, but at least you know where you want to go, have a plan on how to get there, how long it will take and you have the flexibility to alter your route if circumstances change.
<B>Interactive picks up:<B> Not surprising, the use of and presence on the Web is continuing and is fast approaching almost 100 percent participation, although there will probably always be a few holdouts. This year, more than 70 percent had a Web presence, led by the hybrid catalogs at 76 percent. The lowest was among the pure consumer companies, with only 61 percent having a presence. Of those on the Web, 46 percent can conduct business online, including taking orders. This may seem low, but at the time the survey was conducted such prominent companies as Crate & Barrel didn't have Web sites, let alone e-commerce.
In tracking activity, the companies reported a dramatic increase in visits with consumer companies averaging more than 100,000 visits per month, hybrid 21,263 and BTB 4,185. In 1996, the numbers were one-quarter of these or lower. As the Web-browsing public becomes familiar with shopping on the Web and more companies provide for e-commerce sales, we should see the interactive revenues climb from their 1 percent of overall sales, as reported this year, to the range of 10 percent or more shortly.
This study is probably a must-read for anyone in cataloging. If you want a copy, contact the DMA at 301/604-0187. The price is $395, plus shipping and handling.
<I>Bill Dean is president of W.A. Dean & Associates, San Francisco, a catalog consulting, publishing and research firm.<I>