Not all mailers are cutting circulation – despite popularity of the Web
According to research firm Boston Consulting, business-to-business Web transactions are expected to soar 33% a year, reaching $2 trillion by 2003. With Web business booming, will b-to-b catalogers reduce circulation of their print books in favor of the ‘Net? We spoke with three b-to-b mailers of varying sizes to find out how the Internet will affect their print catalog circulation strategies.
If it ain’t broke…
This year Marlborough, NH-based Supreme Audio plans to mail 140,000 catalogs, the same amount as last year. “In terms of the printing and mailing expenditure vs. yield, that quantity seems to work well for us,” says Bill Heyman, co-owner of the $2 million cataloger, which sells sound systems and music to dance schools and fitness facilities. But though the total quantity mailed will not change, he plans fewer remailings, with a larger quantity in each drop. “We’re trying to focus more by reducing the frequency of the mailings but widening the breadth of each,” Heyman explains.
Supreme Audio’s entire print catalog is replicated on its Website. Heyman would not reveal the percentage of sales that come from the Web, except to say that it’s currently in the double digits – far exceeding expectations. And despite “a continuing increase in the percentage of Web sales each month,” Heyman vows he will “definitely not” cut back on the quantity of print catalogs he mails. Fitness and dance products represent “the smaller portion of my Web business and virtually the entire portion of my catalog.” Three-quarters of the Web business comes from sales of square dance music – merchandise that is not included in the print catalogs.
Also, Supreme Audio does significant institutional and federal government business, “and those customers particularly like the printed catalogs, because they can easily pass them among end users and purchasing agents,” Heyman says. “Even though they are good Web users, and they can print information off the Web, we still get a lot of requests for print catalogs from this group of customers. In fact, people in general who converse with us via e-mail often request a print catalog.”
So Heyman doesn’t envision any long term changes in strategy for Supreme Audio. “We’re moving very rapidly on the Web,” he says, “but, quite frankly, I don’t see any dramatic change in our catalog structure.”
S&S Worldwide, a Colchester, CT-based cataloger of institutional recreational and physical therapy supplies, is further proof that not all mailers are seeking to slash circulation and move customers online. This year, S&S will mail about 5 million catalogs, up 20% from 1999. “In recent years, to increase profitability, we were steadily trimming mailings, and we went a little too far,” says Jeff Winters, vice president of sales and marketing.
S&S plans to increase prospecting and the frequency of customer contact to keep visibility high. “A lot more competition has come on board in the last two years,” Winters says, “so we’ll be mailing higher quantities more frequently. Some of our catalogs will increase in size, and some will decrease. On average, page counts will probably be about the same.”
With annual sales approaching $100 million, S&S markets about 18,000 products in all, to camps, municipal park and rec programs, and other institutions.
In 1999, S&S saw a 10%-12% increase in sales – not from e-commerce, but as a result of improvements in the product line and price trimming to meet competitive pressures. S&S has also been upgrading its Website and adding features, such as a chat area, but Winters doesn’t see his customers embracing the Internet, considering that only about 5% now buy online. In fact, less than 50% order by telephone; they fax or mail hard copy purchase orders. “Our customers tend to rely on the ‘Net as an informational medium,” he says.
In the past 10 years, Winters has noticed a shift – particularly for more expensive products – in which “the catalog is not enough service for them, and a direct salesperson is too much. What they want is someone available by phone or e-mail, with the catalog as an information platform.” So the print catalog, he believes, “will be with us for a very long time.”
Scaling back on print catalogs
Close to 50% of the nearly 40 million catalogs mailed by computer marketer Multiple Zones International go to business-to-business customers and prospects – primarily IT and purchasing managers. According to Lorne Rubis, the $487.4 million cataloger’s chief operating officer, these electronically savvy customers prefer to do as much of their business as possible on the Web.
At the same time, focus group research indicates that many customers still want print catalogs. “They like it for reference,” says Rubis. “This business is so dynamic that it’s often not possible to have in our catalogs current pricing – or even current SKUs – for the 20,000-30,000 products that are germane to their businesses. Yet most ongoing customers still want something in print.” Multiple Zones plans this year to send fewer of its smaller but more targeted catalogs to its business segment.
Business-to-business sales for Renton, WA-based Multiple Zones were $248.6 million in 1999 – a 41% increase over 1998. As for this year’s strategy, “we’re reemphasizing the account executive, emphasizing the Web more heavily, and slightly de-emphasizing the direct mail piece,” says Jim Bromley, senior vice president/chief financial officer.
Bromley, who estimates that the Web generates about 20% of the company’s business, says that Multiple Zones is planning to add more service enhancing attributes to its five Websites – including improved search capabilities and a product comparison feature. “But our customers are also telling us that they don’t want print to go away completely.”