While the catalog industry generates more than $120 billion yearly in revenue, conventional wisdom is that it creates at least another $120 billion in latent demand (by mailing 15 billion catalogs a year) that simply leaks away into the $2 trillion-plus U.S. retail market.
With the advent of the Internet and the multi-vendor shopping services it offers, catalogs can cost-effectively capture a much larger percentage of the demand they create. The key to finding this incremental $120 billion in annual sales is to realize that partnerships win on the Web and to understand the e-commerce partnerships available.
Essentially, five levels of Web partnerships exist for catalogers, each providing varying complexity and opportunity. Catalogers need to understand the benefits and limits of each.
1. Catalog finder. Here, companies provide access to a database of catalog titles, descriptions and scanned catalog covers whereby consumers may search, find and discover a catalog or series of catalogs offering products in which they might be interested. Consumers can request online or by phone that these catalogs be mailed to them.
In some cases, consumers also may link through to the cataloger’s Web site. This service benefits catalogers in that it provides additional exposure to consumers who are interested in their category of products and it also helps consumers find catalogs that haven’t yet found them.
Pros: For catalogers, brand exposure is always good, and essentially no Web integration is required. It also is easy for consumers to shop in the traditional way via a paper catalog that offers high-resolution product shots, easy-to-read product copy, an efficient browsing method and a simple and secure ordering method – the phone.
Cons: Customers tend to use the Web to search for products they don’t otherwise know where to find. This partnership level may remind them of brands they already know, but it probably won’t create sales or demand for brands they don’t know.
2. Page Finder. In the second level, companies provide access to the scanned pages from thousands of print catalogs and make these pages searchable via text, catalog title and merchandise category.
Page Finder partnerships let consumers get more detail by viewing the entire catalog’s pages and zooming in for better detail. In addition to browsing through catalog pages and finding products and merchants they may not have known existed, consumers can consummate a purchase the old-fashioned way by calling the cataloger’s toll-free number and giving their credit card information over the phone.
Pros: Catalogers enjoy brand exposure and the chance to show their product line without any need for live data feeds or Web integration. Orders received at a call center from Web scans of catalog pages can be tracked via special source codes to measure the significance of this low-cost method of distributing paper catalogs.
Cons: For consumers, browsing pages immediately is better than waiting for a print catalog to arrive in the mail. However, this method of online shopping doesn’t make it easy for consumers to locate specific products of interest, tell immediately whether they are in stock, compare them with other merchants’ offerings or order them using an online method.
3. Product Finder. Companies give the consumer even more detailed information at the product level. Normally this takes the form of a database of products where consumers can search, browse and compare products from many catalogers. The products can be organized and searched via merchant-specific or brand categories as well as by the type of merchandise.
Pros: When consumers can easily search, locate and compare products that meet their immediate need, a sale is much more likely.
Cons: The Web rewards authoritative selection. When a search results in a limited number of products or products that aren’t easily comparable and require the consumer to do too much work, it may be easier for the consumer to abandon the Web and go to the local retailer or another Web site.
4. Shop via link. Companies provide a Product Finder level of service and then let the consumer link the search Web site to the cataloger’s Web site to finish evaluating the product and make the purchase.
This model is easy for the online search site to implement and is popular on major portals and affiliate sites for this reason. These malls typically point their traffic at the catalogers’ destination sites for either a cost-per-click advertising fee or a revenue-sharing commission based on the sales achieved during such a link-off user session.
Pros: Having an interested customer on the cataloger’s site allows the cataloger to control the rest of the shopping and buying experience. In addition, the consumer has left the aggregated site and now can buy products only from one merchant, enhancing the probability of the customer buying from that merchant.
Cons: While it’s a win for the cataloger whose site the customer links to, for every customer that links to that one cataloger’s site, there are hundreds, perhaps thousands, of customers linking elsewhere.
The link-off model, though easy for portals to implement, forces consumers to learn new navigation at each cataloger’s Web site, to create new passwords and to re-enter all credit card and shipping information each time they buy from a new merchant.
5. Buy via a single shopping cart. Aggregated e-commerce sites and some portals offer not only a Product Finder partnership but the ability for the consumer to add the product directly into a single shopping cart shared across all of the catalogers in an online shopping mall. This multi-merchant shopping cart lets consumers make the purchase right then, right where they are, no matter where that may be.
Pros: A consistent mall layout and multi-merchant shopping cart removes the need for consumers to learn new navigation, create new passwords and re-enter credit card and shipping information. Also, each merchant benefits by being listed next to other great brands and family-friendly catalogers.
Once a consumer gets comfortable buying from one remote seller, he is primed to buy from others. Lastly, the consumer may enter the mall looking for one product or merchant but end up buying from several because they are listed together and can be shopped via such a convenient method.
Cons: In a multi-merchant environment, the customer’s search will allow him to find products that meet his needs. This is good for the merchants in the mall, but bad for those that are not. This implies that catalogers must develop a way to distribute their product and inventory data across the Web and to develop the order integration methods that will allow online shopping malls to seamlessly drop orders into the catalogers’ systems. Doing this across the many heavily trafficked Internet intersections can be challenging for catalogers whose IT resources are already strapped.
Catalogers traditionally spend billions of dollars yearly “building their stores” in print form and locating them conveniently at the consumer’s doorstep. The Internet lets catalogers cost-effectively build their stores in digital form and no longer be restricted to their own URL location. Catalogers interested in capturing their share of the market will want to ensure their products are everywhere consumers shop and buy.