Web Won't Drive Paper Catalogs AwayWhen the Internet first was used extensively in the mid-1990s, companies realized that catalogs could be put on the Web. But those who spent money creating standalone Web catalogs learned a valuable lesson: standalone Web catalogs don't work as well as paper catalogs.
They found that most Web orders came from people who had the paper catalog in front of them. The Web catalog turned out to be an ordering mechanism, not a sales medium.
Why was this so?
It appears that a nice-looking catalog in the mail is like a magazine. It is interesting to read. You discover what is out there, read about it and decide to buy something. You can carry the catalog around the house, read it while eating, take it to your bedroom or out on the terrace, tear pages out and stick them on your refrigerator. A paper catalog has a shelf life of days, even weeks.
A Web catalog is a passive device. You can read it only when you are at a computer. It does not reach out to you and say, "Read me," though this may change if Microsoft and Intel succeed in their bid to introduce Media Center PCs that combine TV, video and the Internet in a remote-controlled, large flat screen designed for the living room, bedroom and the study. But widespread use of such devices is still iffy, and several years away. Viewing a Web catalog currently is limited to the office or the home office.
Where the Web continues to disappoint, however, is in browsing for products. You can flip through a catalog and find a sweater you like in about 30 seconds. Doing this on a Web catalog may take several minutes or more, as each page looked at has to be downloaded. Those without broadband have an even tougher time, and few consumers want to waste their time. That's another reason the Web is not a great sales medium but is a great ordering medium.
The final nail in the Web catalog's coffin is cross-sales. A good phone salesperson can get a 20 percent cross-sell rate, which means one out of five people who call to order one thing are persuaded to buy something else that they did not intend to buy.
To match that rate, Web sites must use collaborative filtering, something Amazon.com does very well. The software is expensive, but worth it. GUS, the biggest cataloger in the United Kingdom, raised its cross-sell rate from 20 percent to 40 percent by using this new software with its phone centers. Few Web catalogers have invested in such tools.
One area where Web catalogs excel is in the location of obscure products. Web customers who have learned to use services like Google.com can find products and services that would be almost impossible to locate any other way.
Try entering "wicker screens" or "stone composite columns" in Google. You will find 10 sources for each in 26 seconds. Each listing leads to a Web catalog. Try finding these products in the Yellow Pages or by walking through the mall! It's hard to measure, but the combination of Web catalogs and a lookup service like Google has opened a new shopping medium of potentially vast proportions.
What has been most interesting recently is combining a paper catalog with e-mail. A cataloger I worked with tested this with very positive results. When its millions of paper catalogs were due to be mailed, it selected a group of customers who provided their e-mail addresses. Four groups were identified:
· Got an e-mail before the catalog arrived, asking them to look for the catalog and featuring a particular item.
· Got an e-mail timed to arrive exactly with the catalog.
· Got an e-mail timed to arrive the week after the catalog arrived.
· Got no e-mail, only the catalog, as they were a control group.
Generally, the e-mails boosted catalog sales almost 20 percent over sales to the control group. Since the e-mails were almost free, the experiment was highly successful, and it has been extended to all future catalog shipments by this cataloger. The three different times for the e-mail dispatch seemed to have little effect on the results.
The cataloger learned something else: those who used the Web to order placed a higher annual dollar volume of sales than those who ordered only by phone. So the Web had two benefits: higher sales and lower costs, saving about $1 on each Web order.
Most catalogers have been achieving a 15 percent Web order rate. Some have boosted this to as high as 35 percent. The percentage is growing as more people use the Web and as catalog Web sites improve.
We can conclude the following:
· Paper catalogs are here to stay. You cannot have a successful catalog sales operation without them.
· Web catalogs are mainly an ordering mechanism, not a sales medium.
· E-mails calling attention to a paper catalog can be highly profitable.
· Collaborative filtering software can boost the cross-sale rate in Web sales and call centers.
Though paper catalogs are essential, having a Web copy is worth the effort and will be increasingly profitable in the years ahead.