The inconvenient truth of the multichannel future

If one listens with blind faith and acceptance to the proffered description of the state of multichannel direct marketing in the United States, one might conclude that the future is bright.

In fact, our fragmented industry is divided by special interests, the divisive creep of politics and unaligned self-serving motivations. The Web interests ignore catalog interests; telemarketers decry mailers; letter mailers seek postage advantage over catalog mailers; e-mail is viewed as spam; and retail stores are the enemy.

There is a political and economic war emerging in the multichannel world. As the velocity of consolidation increases and large strategic and private equity groups buy more companies, a profound shift in economic power is happening.

An unprecedented, massive transference of ownership from the private to the investment sector will take place over the next few years. Companies will no longer be built for the long-term benefits of both owners and customers but will be flipped in five or so years for the sole financial benefit of the private equity firms and their short-term investors.

Politically, the multichannel milieu is being divided by special interests representing postal rate setting, data mining and ownership of customer transaction history, privacy provisions, control of search and keywords, approvals and control of e-mail access and massive homogenization of prospect lists. Add to that legislated blocking of telemarketing to consumers and, potentially, businesses, even the possibility of serious do-not-mail controls at the state and, perhaps ultimately, at the federal level.

Direct marketing is being legislated, regulated, surcharged and dominated out of business.

Catalogers are a good example and an industry I am most familiar with. Most catalogers are small companies without the financial resources to fight the battles for the future. The recent postage rate increase has proved this point sufficiently.

Next will likely come battles of privacy, mailing access and data control as well as intellectual property ownership. The small cataloger doing $40 million to $100 million a year, trying to manage import competition and margin erosion, attempting to remain competitive, giving first-rate customer service, faced with free shipping online, has no chance against the inexhaustible forces of the global brands waging a political and economic strategy of divide and conquer.

The massive global brands have decided that the upstart multichannel marketing world must be controlled. We are too good at what we do. We are taking too much share from the global brand companies. We have mastered customer knowledge and are on the verge of predicting customer needs and wants.

Multichannel is too good of a model to be allowed to succeed. The global brands must win this battle or the economic costs will be horrific. And that leaves our little industry at risk.

In almost all venues of policy, rate setting, legislation, regulation and control, we have no unified voice or consumer support. We have no place at the various tables of the future where our fates as small merchants will be determined. We have spent all of our time and all of our resources on technology, merchandising and fulfillment; we have almost totally neglected and ignored the very real needs of policy, politics, representation and public relations. We are to the future what the Main Street business was to Wal-Mart: an irritant to be absorbed and digested.

Here are some things the public must know:

Convenience comes with a cost. Because we are masters of giving customers what they want in only a few days, delivered to their homes or businesses, 100 percent guaranteed, at a competitive cost, they must also recognize there is a cost to provide that service.

We need a permanent and effective unified industry public relations program that tells our story – one that describes our silent partners and their opportunistic or annual price increases, such as the U.S. Postal Service, UPS, FedEx, Google and others who cost the customer money.

Remote shopping requires contact. If customers want the ability to shop remotely through multiple channels, then they need to support the contacts that make that possible, such as catalogs, mailings, e-mails, telephone calls, inserts and others. As an industry, we have always forced the contacts. It is now time to begin educating the customer to request contacts. We must create demand or our future contacts will be legislated out of existence.

Small is better. We have done a terrible job over the past 50 years of telling the world why direct marketing is better. Because we are an industry of small companies and small brands, we have had to master customer service, speed of delivery, product superiority and overall business perfection to survive. Compare that tradition of excellence with the mediocrity of big box retailers and global brands.

What happens when it is gone? If do-not-mail becomes law, an entire branch of American commerce disappears. The public has very little understanding about what that means. There is no public information program to explain what that means.

The politicians understand what do-not-mail means; they have almost always written exemptions into the proposed laws that allow uninterrupted, self-serving political fundraising by mail. It is the public that is being led by narrow interests to believe this is a good thing.

If ever there was a time in multichannel direct marketing for aggressive action to preserve our industry and to manage and improve our position with the public, now is that time. Perhaps it is time to put our political, policy, public, regulatory and economic house in order before creating future channels. At some point, it will be too late.

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