To grasp the most basic way in which cataloging has changed during the past few years, all you need to do is look at how mailers receive their orders. A mean 48.4% of the orders received by the respondents to Catalog Age’s 2003 Benchmark Survey on Operations came in by telephone. Granted, that’s not much of a decline from the 51.5% of orders received by participants in the previous survey, published in 2001. But the portion of orders received by mail declined by six percentage points, to a mean 16.0%. And most dramatically, the share of orders received by Internet more than doubled, from 11.7% to 24.1%. This shift is leading catalogers to reconsider how e-commerce fits into not only their marketing plans but also their operational strategies and back-end structures.
Slightly more than half of the catalogers who participated in the most recent survey have integrated their transactional Website into their catalog management system (CMS). That’s an appreciable gain from the 31% of participants in the previous operations survey.
The increase in online orders also led to an increase in credit-card payments. A mean 63.8% of respondents’ orders were paid by third-party credit cards, up from 51.2% among participants in the earlier survey. At the same time, use of house credit, including cobranded and affinity cards, declined from a mean 19.8% to 12.1%. Checks became less popular as well; whereas respondents to the earlier survey received checks as payment for a mean 25.8% of orders, this go-around only 18.8% of orders were paid by check.
|Sales less than $1 million:||39%|
|Sales $1 million-$9.9 million:||37%|
|Sales at least $10 million:||68%|
|Sales less than $1 million:||2.9%|
|Sales $1 million-$9.9 million:||3.0%|
|Sales at least $10 million:||3.5%|
The continuing rise of e-commerce hasn’t led catalogers to change the structure of their customer service departments, however. Catalogers still prefer not to have a separate staff handle e-mail orders and correspondence. Only 32% of respondents had employees dedicated exclusively to online service and orders, a statistically insignificant change from the 33% of participants in the previous survey.
Not only do most catalogers apparently cross-train their staff to handle online and offline transactions, but they also expect them to handle customer service as well as take orders. Ninety-two percent of respondents trained their service reps to handle both tasks.
What’s more, 67% of the catalogers with inhouse order-takers expected them to upsell. Only 31% of respondents who use a third-party call center expected the order-takers at the service bureau to upsell, however.
|Sales less than $1 million:||8.0%|
|Sales $1 million-$9.9 million:||9.6%|
|Sales at least $10 million:||13.9%|
Fewer than 9% of respondents offered 24-hour customer service. Consumer catalog respondents were twice as likely than their b-to-b counterparts to offer round-the-clock customer service lines, at 12% vs. 6%.
And while 78% of the consumer catalogers had toll-free service phone numbers, only 62% of the b-to-b respondents did. Fifty-six percent of the smallest catalogers — those with annual sales of less than $1 million — provided toll-free service phone lines, compared with 74% of respondents with sales of $1 million-$9.9 million and 83% of those with sales of at least $10 million. And while 18% of respondents with revenue of less than $10 million didn’t have separate service and order phone numbers, only 8% of the larger companies didn’t offer separate phone numbers.
Catalogers appear to have tightened their guarantees during the past few years. Most respondents said they have an “unconditional” guarantee — 84%, compared with 82% of participants in the previous survey. But among those with the so-called unconditional guarantee, just about 70% had a time limit for when customers could return goods. That’s up from 60% two years earlier.
|Donate to charity||45%|
|Company outlet store||40%|
|Special sale catalogs||39%|
|B-to-b:||Donate to charity||50%|
|Special sale catalogs||34%|
|Sales less than $1 million:||84.7%|
|Sales $1 million-$9.9 million:||87.8%|
|Sales at least $10 million:||87.2%|
Another area that has been transformed by the Internet is inventory reduction. Sixty-two percent of survey respondents said they use online sales to get rid of excess merchandise, making the Web by far the most popular means of burning off inventory. Among participants in the previous survey, the Internet had also been the top method of clearing away inventory, but fewer catalogers — 44% — used it.
Among consumer respondents, the top methods used to reduce inventory were the Internet sale, used by 69%; donating the goods to charity (45%); company outlet store (40%); upselling by order-takers (39%); and special sale catalogs (39%). For the b-to-bers, donating to charity was the top strategy to liquidate stock, used by 50%, followed by Internet sales (44%); package inserts (41%); special sale books (34%), and catalog inserts (31%).
Two-thirds of respondents ended up with final fill rates of at least 95%, up from 58% of participants in the previous survey. But 80% of respondents had been aiming for final fill rates of at least 95%. So of those catalogers, 16% fell short of their goal. Then again, that’s still an improvement upon two years earlier, when 27% of respondents who’d aimed for final fill rates of at least 95% missed their goals.
|Sales less than $1 million:||3.3%|
|Sales $1 million-$9.9 million:||4.7%|
|Sales at least $10 million:||8.1%|
|Sales less than $1 million:||93.1%|
|Sales $1 million-$9.9 million:||94.0%|
|Sales at least $10 million:||93.1%|
Fulfillment and returns
During the past few years, United Parcel Service has solidified its standing as catalogers’ carrier of choice for standard delivery of orders. Nearly 60% of respondents used UPS for the majority of their standard delivery shipments, up from 51% of respondents to the previous survey. The U.S. Postal Service remains a distant second; it was the package carrier of choice among 24% of respondents, compared with 23% two years ago. Federal Express gained market share: Whereas only 3% of respondents to the earlier survey used FedEx for the majority of their standard deliveries, 11% of the most recent respondents said they did.
With all these carriers gaining market share, someone had to be losing share, right? Well, sort of: The loser in terms of usage was “other,” which included DHL and inhouse.
UPS also improved its lead in the expedited delivery sweepstakes. Whereas 52% of participants in the previous survey used Big Brown for the majority of their expedited shipments, 61% of catalogers said so this go-around. FedEx was the second most popular carrier for expedited merchandise shipments, with 28% of catalogers favoring it. Another 7% said the Postal Service was their expedited carrier of choice, and 5% used Airborne Express.
When it comes to returns, 76% of respondents — including 72% of the consumer catalogers and 88% of the b-to-bers — said that their level of returns was about the same as it had been the previous year. Nearly 18% of respondents boasted of declining return levels. Whereas 9% of b-to-b respondents said they were enjoying a decline in returns, 22% of consumer catalogers said the same. Only 3% of b-to-bers and 6% of consumer catalogers admitted to a rising level of returns.
|Sales less than $1 million:||10.9%|
|Sales $1 million-$9.9 million:||10.9%|
|Sales at least $10 million:||13.0%|
The most common cause for returns was that the merchandise did not meet customer expectations; that accounted for 56% of returns among b-to-b respondents and 51% of returns among the consumer catalogers. Damage was the second most common reason, cited by 34% of consumer catalogers and 24% of b-to-bers. Quality was a problem for only 3% of the b-to-b respondents, compared with 12% of the consumer catalogers.
On Dec. 19, 2002, Primedia Business Marketing Research e-mailed 2,952 Catalog Age subscribers with fulfillment management and operations management job functions. Recipients were selected on an nth-name basis. The e-mail invitation contained an embedded URL linking the respondent to the research Website where the survey was located. Respondents were offered a chance to be entered into a drawing for one of four $50 Amazon.com gift certificates. Follow-up e-mails were sent on Jan. 7 and Jan. 16, 2003. Of the 1,876 deliverable surveys, 153 usable surveys were received by Jan. 22, for an effective response rate of 8.2%.
|Sales less than $1 million:||9.1%|
|Sales $1 million-$9.9 million:||7.2%|
|Sales at least $10 million:||8.1%|
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