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Bigger Book Keeps Cataloger RedEnvelope on Target

A 40 percent overall circulation increase combined with a larger catalog has put RedEnvelope on a pace to reach its goal of doubling its holiday sales this year.

“You've got to look at the core performance of your most recent mailings and we're very optimistic, though it's an environment in which you must be cautious,” said Martin McClanan, CEO of RedEnvelope, San Francisco. “Having upscale buyers and accessible prices has provided a good mix for us.”

RedEnvelope's typical customers are upscale gift shoppers who are 60 percent female living in upscale suburban or urban areas. Average household income is over $70,000 and the company's best metro areas for sales include Los Angeles, San Francisco, New York and Boston. McClanan described the average catalog item as costing between $60 and $80.

“We're not really a luxury cataloger,” he said. “We have an upscale product assortment and I don't think people are cutting back as much on our products as they are with luxury items such as high-priced jewelry or electronics. Those who market those items are probably having to work harder this year.”

Last year's 6-inch by 9.25-inch, 52-page RedEnvelope Holiday Gifts 2000 catalog has been replaced by three Holiday 2001 books, including two 68-page catalogs and one 44-page catalog, all of which measure 8 inches by 9.5 inches.

The first 68-page drop, featuring a mother and daughter on the cover, was targeted to the house file and went out the first week of November with a circulation of 1 million. It emphasized gifts and had less emphasis on food.

“Our entire 24-month file performs well and we tend to mail most of it,” McClanan said.

The second 68-page drop, featuring a father and daughter on the cover, shifted the emphasis to prospects. It went out Thanksgiving week with a circulation of 3 million to 4 million.

“With prospects, we're looking for people in our demo — upscale direct buyers in major metro areas who are high-end gift shoppers,” he said. “And we're looking to target them based on what season they shop in.”

The 44-page book reached homes last week with a circulation of about 1 million and a house file/prospects split similar to the first book.

“That catalog is for last-minute gifts for which we can guarantee inventory availability,” McClanan said. “There is no drop ship or perishable merchandise in that book. The wider spreads allow us to use lifestyle photography in a bigger way, and we have a more relaxed separation of the items.”

The increased size of the book has also allowed for a 25 percent to 30 percent increase in the number of items available.

“The men's assortment has been very strong and the food items have picked up in the last week,” he said. “The plants and gift baskets have been strong along with home accessories.”

Product descriptions that contain the circled letters “RE” are RedEnvelope exclusives.

“Almost 50 percent of our merchandise is proprietary,” McClanan said. “That's up from zero three years ago and it's up about 25 percent to 30 percent from last year. Proprietary products are about brand differentiation and it keeps us from being a commodity seller of goods. Creative merchandise is the life blood of the company.”

Several $18 items are in the catalog, including spa tools and death by chocolate cookies. Some of the items at the other end of the price spectrum include the $230 leather travel bar, $240 remote control plane and $250 GPS tool.

The table of contents in this year's books is a single column running down the right side of page 3 with product and lifestyle shots occupying the rest of page 3 and all of page 2. Last year's catalog combined the table of contents with product shots that ran from page 2 through page 5.

“We wanted to get the product toward the front of the book as much as possible, giving us the maximum amount of real estate in the front of the book for selling, but there is always a balance since we have such a variety of categories,” he said. “And with the prospecting we do, we have always felt a need to provide a comprehensive index.”

The catalog does not include an order form, and only mentions the Web site and toll-free phone number for placing orders. McClanan said that 40 percent of the company's catalog business is generated via its Web site, RedEnvelope.com, a level that is unchanged compared to last year. The majority of orders come by phone, with a very small percentage of orders sent by fax or mail.

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