2 Firms Aim to Take Over E-Catalog Sales

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Two competing companies are expected to unveil initiatives at this week's 15th Annual Catalog Conference & Exhibition in Boston hoping to corner the market for online catalog sales.

CatalogFinder Inc. (www.catalogfinder.com) and Catalog City Inc., (www.catalogcity.com), two online catalog directory publishers, said they will begin selling products and accepting orders for clients. A significant difference between the two is who will pay.

CatalogFinder, Eugene, OR, plans to charge consumers an undisclosed monthly membership fee to join its CatalogFinder Shopping Emporium Club when it launches Aug. 1. The club is free to merchants. Catalog City, which will launch its initiative in September, will charge catalogers a setup fee and then sell various levels of ad positioning within its site. Catalog City's consumers will browse free. Both firms are taking an undisclosed cut of sales.

The two companies already offer catalogers free listings. CatalogFinder said it is handing off 2,000 catalog requests a day and that it lists 15,000 books. Catalog City said it lists 20,000 books. Both companies also said they had big-name backing. CatalogFinder said it has an undisclosed arrangement with several companies, including AT&T. Catalog City cited partnerships of similar stature but declined to name any.

As they gear up to start taking orders, both firms have taken steps to overcome some of the inherent problems catalogers face online. CatalogFinder, for instance, has enlisted the help of Web technology firms RealNetworks, Seattle, and Live Picture Inc., Scotts Valley, CA, to develop product-viewing technology.

"The challenge of shopping online is being able to see the product," said Deborah Lee Marlow, CEO of CatalogFinder, adding that the CatalogFinder Shopping Emporium Club's technology will allow online consumers to "zoom into the fine stitching of Bruno Magli shoes in a way that doesn't take two or three minutes to download."

Marlow projected that between 600 and 800 catalogers will participate in the CatalogFinder Shopping Emporium Club and that 1 million consumers will join in the next year.

To compete with CatalogFinder, Catalog City has teamed up with Order Trust, Lowell, MA, to process orders and transmit them to sellers for fulfillment. Mark Milne, vice president of marketing for Order Trust, said his company offers the advantage of a single virtual shopping cart for purchases from multiple vendors. From the merchants' standpoint, Milne said, "this allows us to monitor repeat-buying behavior and furnish information to create loyalty programs."

The setup also gives smaller catalogers a chance to begin experimenting with e-commerce through a reliable third party that already has scale, Milne said, adding that Order Trust processes 1.5 million transactions a day.

Lee Lorenzen, president and CEO of Catalog City, Pacific Grove, CA, estimated that 50 percent of catalogers have a Web site and of those, 10 percent can accept orders online. He said 2,100 catalogers have signed contracts with Catalog City and between 20 and 50 will be online by early July, and 1,000 by year's end.

"With 2,100 signed contracts, we can't switch them all on at once," he said.

Roberta Grizzard, marketing assistant with herbal remedy cataloger Indiana Botanic Gardens, Hobart, IN, said her firm will advertise with Catalog City and is listed on CatalogFinder.

"We're testing various areas online to see what's going to work best for us," she said, but declined to offer details.

Grizzard said Indiana Botanic Gardens mailed about 12 million books last year under four titles.

Although amassing large numbers of shoppers and multiple merchants online has been lucrative, there are hurdles, said Chris Stevens, senior analyst of electronic commerce at the Aberdeen Group, Boston.

"Anywhere that companies can aggregate multiple suppliers to improve presale and comparative-shopping processes, they will make money," he said. "[But] the first downside is meeting the market and business requirements of each participating supplier. Second, they have to develop a substantial user base and brand without allowing a company that already has the brand [and user base like Yahoo] to introduce the technology and offer the same service."

Both firms say they plan to build traffic quickly. Marlow said CatalogFinder will spend about $10 million for advertising online and offline in the next year. Lorenzen said Catalog City will spend $2 million in the fourth quarter to coincide with its launch to consumers. It also is giving clients discounts for promoting www.catalogcity.com in their books.

When asked whether Direct Media Inc.'s Catalog Link online catalog-request service was a potential competitor to CatalogFinder and Catalog City, Dave Ahl, general manager of Catalog Link, said Direct Media, Greenwich, CT, has no plans to take orders online for catalogers. Third-party e-commerce initiatives "get in between the cataloger and the consumer," he said. "We believe catalogers want to take their own orders."

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