E-commerce: Disappearing ink

May 01, 1999 9:30 PM  By

Robert Lickton’s grandfather founded Lickton Supply Co., a bicycle gear and accessories catalog, in 1935. For more than 60 years, the Oak Park, IL-based company mailed up to 15,000 catalogs twice a year. But in February 1998, CEO Robert scrapped the catalog mailings, opting to sell exclusively via the Web (except for the company’s Oak Park store).

“Printing a catalog is just not fast enough,” Lickton says. “By the time the book gets to the customer, it’s obsolete because prices and inventory often change. With a Website, you can change copy at any time, you don’t have to worry about space limitations, and the cost is much lower.”

Since going online, Lickton claims the company’s gross sales have increased 25%, while costs have been cut in half, since it no longer has paper, printing and postage expenses. But what would Robert’s grandfather think? “He’d say, ‘Show me the money,’” says Lickton, who has become so enamored with electronic marketing that he makes this bold prediction: “If anybody is still printing catalogs in five years, they’ll be out of business.”

Strong words. But Lickton isn’t the only cataloger who, lured by the promise of lower costs, greater profitability, and the ability to reach a larger audience, has forsaken print catalogs for the Web.

“I know of very few print catalogs with sales of less than $5 million making money, be-cause of the costs involved in producing a catalog,” says Annette Zientek, founder of Seattle-based Christine Columbus, a marketer of travel accessories for women. Although Christine Columbus started in 1995 as a print catalog, in June 1997, Zientek decided to switch to selling exclusively online. “We felt that if we could control the up-front investment and if we were clever, we wouldn’t have to spend a lot of money,” she says.

Zientek says it cost her company about $12,000 to build its Website; the host server’s fee is another $2,500 a year, and to update the pages costs approximately $100-$200 each month. In comparison, it used to cost $20,000 to print and mail a 32-page catalog. “And that $20,000 is just for that book. For that same $20,000 we can completely revamp our Website and have a longer shelf life without having to mail a half-million books,” Zientek says.

Fresh Home & Garden, a collaboration between flower telemarketer 1-800-Flowers and home goods cataloger Plow & Hearth, is another print catalog that’s gone electric. Only one edition mailed, in October 1998; since then the catalog has been available exclusively online, says Peter Rice, president of Madison, VA-based Plow & Hearth. Response to the plant gifts catalog didn’t justify the production costs. “It can be produced much less expensively online,” he says.

Even some of the larger catalogers are considering transforming some of their titles to online-only. Weehawken, NJ-based Hanover Direct announced that it would reposition three of its print catalogs-golf title Austad’s, women’s apparel book Tweeds, and housewares mailer Colonial Garden Kitchens-as primarily e-commerce brands, following an $18 million drop in annual sales among these three titles.

For this year at least, however, Hanover will continue to mail books for the three brands. “Catalogs will always be a part of our brand,” says Larry Svoboda, chief financial officer of $546 million Hanover Direct. “The shift toward e-commerce will be gradual.”

Print still has its place Robert Lickton’s prediction notwithstanding, few expect print catalogs to go the way of the dodo and the Betamax. For one thing, while it’s possible to build a Website for several thousand dollars, fully transactional sites can cost up to $6 million, according to New York-based market researcher Jupiter Communications.

And that doesn’t include promotion and advertising costs. For instance, Lickton still mails cards and fliers promoting his Website and his store; Zientek also mails fliers and press releases to promote Christine Columbus, in addition to establishing strategic links with other Websites. And computer marketer Egghead.com, which shut its stores and catalog divisions last year to reposition itself as an online cataloger, still mails 250,000 copies of its Surplus Direct catalog each month. Although the book is primarily an e-mail traffic builder, customers can order from it directly, says Egghead.com spokesman John Hough.

Ken Gassman, an analyst at Richmond,VA-based Davenport Securities, says that marketers will continue to mail because “they need to maintain top-of-mind awareness.” Nor does going online-only mean you can get rid of your phone reps. “We still take orders via phone, mail, even over the fax, because people still have that trepidation in doing business over the Web,” Zientek says.

Whether marketing via a catalog or on the Web, “the basic ingredients are the same,” Hough says. “The offer must be competitive, and product selection must be first-rate. The customer expectations are much the same.”