NRF Panel: Catalog Still Matters in Internet Age
Take Uncommon Goods, a retailer of unique, quirky products that launched its site in 2000. Portal deals did not help acquire new customers, but affiliate relationships raised conversion rates. Still, the average order size was $20 to $25, low in Uncommon Goods' eyes.
The retailer finally heeded consumer requests for catalogs. On a blended average, it found 70 percent of its catalog recipients placed orders online. It reached 80 percent in certain segments.
"They're a much more profitable customer, with $70 to $75 average transaction [size]," Thomas Epting, chief operating officer at Uncommon Goods, told delegates at the National Retail Federation's 92nd Annual Convention & Expo in New York.
Coldwater Creek, a three-catalog company, had a different experience. The company began in 1985 as an apparel cataloger, started selling online in 1999 and has 42 retail stores. All items in its books are now online, about 3,000 SKUs.
In 2000, the Coldwater Creek site accounted for 20 percent of company sales and total direct revenue was 42 percent. Last year, the Internet accounted for 30.2 percent of the $465 million posted in net sales, the catalog took 43 percent and retail stores accounted for 26.8 percent.
"A lot of this is a catalog shift," said Karen Reed, senior vice president of marketing at Coldwater Creek. "A quarter of the customers now come from the Internet. It's building our file, it's building our business."
The company has 6 million e-mail addresses on file, boosted by catalog browsers plus traffic from 7,300 affiliate relationships.
"Ordering online is much more cost-effective for catalog operations," Reed said, referring to the costs saved by fewer inbound calls. Coldwater Creek is mailing fewer catalogs to a select assortment of customers, replacing that with e-mails.
But Reed acknowledges the role of the catalog. About 10 percent to 20 percent of Internet orders are initiated online, then completed by telephone. And there is the visual impact and portability of a catalog.
"It's a more pleasurable way to shop," Reed said, adding that some customers go directly to the site, enter an SKU number and buy online. A smaller percentage still prefers to call and buy.
Bill Bass, new vice president and general manager of Sears Direct, is a champion of the catalog for many factors. He switched places with Dennis Honan, who now heads e-commerce at Lands' End, to exchange best practices across Sears. Sears last year bought Lands' End.
Bass this year intends to test different catalogs to different customers as well as page counts to a cross section of the $40 billion retailer's file.
He recounted an experiment Sears undertook in 1999 with reduced mailings to Internet customers. It was a disaster.
"If you don't mail catalogs to Internet customers, they stop buying from you," Bass said. "That was an expensive experiment."