Beating the category killers

Aug 01, 2005 9:30 PM  By

Today’s “bigger is better” retail mentality, the growing popularity of comparison-shopping Websites, and the onslaught of marketers offering low prices and vast selections has made it harder than ever for smaller mailers to compete. Nonetheless, a number of smaller multichannel merchants have managed to defy the odds, by homing in on a niche audience, offering unqiue products or services, or getting creative in a number of other ways.

Carving a niche

Atlanta-based books cataloger Bas Bleu sells products that can be bought on Amazon.com for the same price or less. But Eleanor Edmondson, president of the $12 million company, says its customers are willing to pay a bit more for the editorial services Bas Bleu offers: highly personal reviews and a well-edited selection that simplifies the selection process for them.

“We try to give the impression of being an old-time small bookseller that has a distinctive point of view,” Edmondson says. “Our choices have some element of imagination, joy, and literary wit that appeals to our customer.” Bas Bleu targets middle-aged, largely upscale women with a literary bent.

Catering to that sensibility necessitates a disciplined merchandising strategy. The best-seller that everyone is reading on the beach is weeded out in favor of finds such as Revenge of the Middle-Aged Woman or Oxymoronica: Paradoxical Wit and Wisdom from History’s Greatest Wordsmiths. “We look at what our customers have purchased in the past for clues to what they might like in the future,” says Edmondson.

When selective merchandising is a priority, says Jim Padgitt, president of Mount Pleasant, SC-based consultancy Direct Marketing Insights, the small cataloger often has an advantage over merchandisers for large corporations. “Small catalogers are in a specialized product niche that they understand deeply and have a passion for,” he notes. By contrast, merchandisers for large companies may be skilled in the general art of merchandising but not armed with as much knowledge of the specific product category.

At your service

Lavishing as much attention on customer service as on merchandising can also pay off for small companies. Ukiah, CA-based fruit gifts mailer GotFruit.com includes not only basic food storage information in its outgoing packages but also extra tips and free recipes, says marketing director Julie Cooper. A box of papayas, for instance, might include tips for easier peeling.

“We like to think our customer gets a little more attention and that we’re more customer-focused,” Cooper says.

It helps that GotFruit was able to negotiate a favorable shipping contract with United Parcel Service, in part because the mailer is probably the largest outbound shipper in Mendocino County. “It has allowed us to continue to offer free shipping,” Cooper says. “We also remain very competitive on our 2nd Day Air shipping charges.” Last year GotFruit shipped around 225,000 packages. The number of packages sent to customers has doubled each year since at least 2002, Cooper says.

And though GotFruit sells fewer gift baskets than Harry and David, it offers the same guarantee of a full refund or replacement if a customer is dissatisfied. The company also prides itself on following up the initial automated response to customer queries with a phone call or an e-mail “from a human being” within 24 hours. “We just try to be good communicators,” says Cooper.

Edmondson of Bas Bleu says her company doesn’t allow automated e-mail or phone responses. She’s also a stickler regarding the language her service reps should use when communicating with unhappy customers. “We do apologize,” for example, is forbidden, because Edmondson considers it phony and stilted: “We want something more spontaneous — ‘We will fix it for you’ or ‘Let us see what we can do for you’ — so customers don’t feel like they’re getting a canned response.”

A key advantage of having a smaller staff — 8-10 reps in the case of Bas Bleu — is the ability to watch them more closely, Edmondson says. “I might walk through the call center, hear something I don’t like and take the call center manager aside, and say, ‘That phrase bothers me,’” she explains.

What’s more, the Bas Bleu reps are able to give callers more attention than those answering the phones for some of its larger competitors. “Our reps will say, ‘Hold on, I’ll go get the book, and read you page 25,’” Edmondson says. “I think that helps our customers feel a sense of community with us.”

Find and seek

The same narrow focus that enables smaller merchants to compete with larger companies, unfortunately makes prospecting more difficult. Surry, VA-based Virginia Traditions, which specializes in smoked meats, has had disappointing results renting lists from companies with customer bases that seemed at first glance to be close enough to their own buyers to work, says president Sam Edwards. For example, the Omaha Steaks list didn’t perform well for the $3 million cataloger/retailer. “Maybe beef steak eaters aren’t necessarily high performing pork eaters,” Edwards says. “Our focus is on high-quality, Southern-inspired foods. We’re not known as a company that’s going to offer tremendous discounts and free shipping.”

The most effective lists, Edwards says, come from other companies that have a customer base with a specific affinity for Southern-inspired foods and, if possible, meats. But the more closely related the company, the less likely it is to rent its names to Virginia Traditions. Edwards says that one way around this is to propose a list exchange, which more marketers are comfortable with than the rental because there is an equal exchange of vulnerability between the two companies. “Most will at least try it for the first year as an exchange,” he notes.