Libey: Inventory, European Invasion to Impact DM Industry

CAMBRIDGE, MA– Donald R. Libey predicted change will come from inside the U.S. direct marketing industry but will also be foisted upon it by outside forces during a luncheon speech yesterday at the New England Mail Order Association’s Spring 2005 Conference here.

After 30 years in the business and owning or running more than two dozen companies, Libey, who is a managing partner of Libey-Concordia, claimed to have a level of expertise on which to base his predictions. But more importantly, he said he has the time to read, learn and think about these issues.

One of his predictions was that inventory will be a battleground on which the struggle for market share will be fought between DMers and retailers over the next decade.

In this struggle, the direct marketing industry has several points going for it. For example, direct marketing is growing at a rate of 9 percent per year. By 2007, sales will total $3 trillion in the direct marketing, telemarketing and online universes combined. By 2012, the total will be $5 trillion.

In addition, direct marketers have database expertise while retailers still don’t know who their customer is, Libey said. Plus, DMers know customer service, niche development and data analysis better than retail.

However, the one thing that sets retailers apart is their command of supply chain logistics. “They can move stuff,” said Libey. This is a great strength that DMers don’t have for the most part, he added.

In the future, “the smart multichannel marketers will have zero inventory,” Libey continued. This will give DMers an advantage over the invasion of retail into their market.

Another of Libey’s prediction was that there will be significant consolidation in this industry in the next 5 to 10 years. But it won’t just be U.S. companies buying other U.S. companies: We are standing on the cusp of an invasion of European companies looking to buy U.S. DMers, Libey said. For example, the largest DM group in Europe recently asked Libey to tell them the secrets of U.S. direct marketing because they’re preparing to enter the market and have their sights on many different categories, Libey said.

“The Web is dying” he continued, referring to the fact that the Internet has developed to the point where we can only expect to see more of the same. The next big thing will be the World Net, which will link together all personal electronic devices — from TVs and stereos to GameBoys and refrigerators — and do it from anywhere in the world. Ultimately, all marketers will be World Net marketers, Libey said. “You thought mastering multichannel was tough.”

Also, as more customers comparison shop, marketers will all have to become multi-position marketers. Meaning that instead of offering one product in one price range, it will be necessary to offer different brands in different price ranges. Those who don’t do this, will become irrelevant, Libey said.

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