BRAVE NEW WORLD
Unless you’ve spent the last few years on Pluto, you know that the Internet has grown massively in popularity, and that has had a huge effect on how traditional catalogers are conducting their online business.
“It’s become much more disciplined and much more businesslike,” offers Judy Neuman, vice president of interactive media at Eddie Bauer, Richmond, WA. “There’s still no bulletproof formula for what ‘right’ looks like, but we all have a lot of experience to figure out what doesn’t work and to focus on what does. I do believe we’ve gotten much more focused on the retail one-to-one basics and are applying them online.”
Neuman started Bauer’s online division (www.eddiebauer.com) in late 1994 and launched its site in August 1996, making her a digital veteran.
The paper catalogers say that a major reason to stress their electronic presence is to offer today’s busy consumer multiple buying channels. Some have even bigger designs. In April, Lands’ End (www.landsend.com) launched a TV campaign intended to move shoppers from the mail order catalog to the kind you click on.
Traditional catalogers have an advantage over Internet start-ups in that they already have a fulfillment infrastructure in place. But that difference will only go so far. Now the front end is getting more emphasis.
Says Steven Sibulkin, managing director of online retail and distribution for Mainspring, an e-commerce consultancy in Cambridge, MA: “The next stage of evolution is characterized by better cross-selling and upselling, taking what catalogers now do-selling in a static environment-and making it interactive, responding to consumer requests, having some intelligence for what one product means for another.”
Catalogers are going gaga with the bells and whistles of the Internet. Following the online booksellers, many are adding express check-out abilities. Avon (www.avon.com) has an Interactive “Virtual Beauty Advisor.” And the sites are streaming audio and video-Victoria’s Secret (www.victoriassecret.com) is a notable but perhaps not great example, given the overload it experienced when it broadcast its runway show.
Apparel sites are allowing surfers to “try on” outfits on the Web with “mix and match” technology-barring the use of paper dolls, you can’t do that in a mail order catalog. Eddie Bauer opened its “Virtual Dressing Room” in October.
Lands’ End has mix and match for swimwear, and there’s an element of it in the site’s new “Your Personal Model” service, which allows women to build 3-D models of themselves for suggestions on flattering outfits (over 100,000 women have done so since it debuted in November).
Lands’ End has gone back to the future with the mix and match concept. With its Specialty Shopper feature, a customer can call or e-mail to have an employee physically match up items or to answer similar questions-it has a room with every one of its offerings. (The service fielded 27,000 e-mails last year.)
Traditional catalogers on the Internet have leapt into the e-mail trend, including using HTML mail with full graphics.
“E-mail is probably my strongest marketing tool online, and having a picture really helps the sale,” says Stephanie Healy, interactive sales manager for Omaha Steaks, Omaha, NE, which sends out recipes, special offers and other fun stuff (it recently sent a steak grilling chart).
n April, Omaha Steaks (www. omahasteaks.com) started testing a system from Shop2U.com, Fairfax, VA, which claims to be the first company to deliver catalogs via e-mail. Omaha Steaks is also testing “endorsed” mailings; Shop2U created a catalog with items from Omaha and Faith Mountain (www.faithmountain.com) and mailed it to both house lists. “We’re really trying to work with others who have strong brands online, have great service and who live up to our standards,” Healy says.
Many catalogers claim they are finding new customers on the Web, but outsiders aren’t so sure. Often it turns out that a Web customer may not have bought within the last 24 months but had been an earlier customer, says Ken Gassman, consumer analyst at Davenport & Co., Richmond, VA.
But it seems pretty certain that-given the Internet’s demographics-traditional catalogers are generally finding a younger and more male audience online.
According to a comparison of Acxiom/ Direct Media’s Catalog Link file of online customers and its SmartBase database of paper-catalog shoppers, the Internet customer is younger, wealthier, more likely to be married and more likely to have children. For example, 83.3% of online shoppers, but only 59.3% of regular catalog customers, are between 25 and 54; 23.2% of paper catalog shoppers are 65 or over, while only 2.9% of Internet shoppers are.
Macy’s.com is finding a different geographic customer. “We’re doing business in all areas of the country, and we’re interested in the high volume we’re doing where we don’t have stores,” says Kim Miller, vice president of Internet strategy for Macy’s.com.
Macy’s is unusual in that it’s had a transactional Web site for longer than it’s had a catalog; the Macy’s site (www.macys.com) is over two years old, while Macy’s By Mail dropped its first catalog in August.
It appears the online customer can be a fickle friend. Judy Neuman of Eddie Bauer says that retention rates are lower online and the big challenge for this year is to change that. But it’s too early to come up with formulas for lifetime value-though some people are trying. “When people talk about lifetime value, I just laugh,” says Neuman. “Who knows what tomorrow is going to look like, let alone a lifetime?”
And what about the online bottom line? Analyst Gassman says that most catalogers are not disclosing their separate Internet figures, and many that do aren’t exactly setting the cyberspace on fire. Except for those whose demographics match the upscale (and male) Internet user, “the numbers are tiny-not small but tiny,” he says.
Lands’ End did recently disclose its Internet numbers. In its last fiscal year, the online business did $61 million (up from $18 million the prior year), which was 4.5% of the company’s total $1.37 billion. Healy of Omaha Steaks says the Web business has been profitable from the beginning and is now at almost $8 million in annual sales.
One cataloger taking a cautious approach to the Web-it’s online sales are less than 1% of total, and that’s just fine-is Lillian Vernon Corp., Rye, NY. “We have a realistic view that the Internet certainly represents an important part of the future of retailing, but it’s a long-term build,” says David C. Hochberg, vice president of public affairs.
The slow but steady route Lillian Vernon (www.lillianvernon.com) is following goes for merchandising, too-the site offers only 400 of the cataloger’s best-selling items. Vernon will expand the site as sales increase.
But even for those like Vernon that aren’t on a virtual fast track, there are advantages to being on the Internet. Hochberg says that while its catalog buyers are 90% female and 10% male, its Web shoppers are 75% female and 25% male.
If ever a business was poised to take advantage of the Web, it’s the catalog industry.
Catalogers invented much of what passes for direct marketing. They were the first to segment their customer files, the first to stress customer service, and among the first to think in terms of multiple channels (i.e., mail order and retail).
And they are ahead of the pack online, as you will find by reading the profiles in this issue of Catalog Special, a supplement sponsored by Acxiom/Direct Media.
Take J. Crew, which is pursuing an aggressive multichannel strategy. It’s not clear how big a business its Web site will be, but it’s already a significant contributor to company revenue.
Then there’s The Wine Enthusiast. As Jonathan Boorstein reports, the site pulled in $1 million in a single month.
Finally, there’s Alloy, which did things the reverse way: As Kris Oser reports, it started as an online business, then moved into paper catalogs.
Want to know more? The trends-and some additional case histories -are covered in Thom Weidlich’s overview piece.
Hope you like it.
Good surfing.
