Just as two heads are better than one, direct marketers have come to realize that two marketing channels are better than one. Because the strengths and weaknesses of print catalogs and e-commerce Websites balance one another, many marketers are determined to use their print books to drive buyers to the Internet to make the purchase.
A key advantage of e-commerce is that it costs so much less to process an order online as opposed to via a call center. Stephen Lett, president of Carmel, IN-based catalog consultancy Lett Direct, estimates the cost to process a mail/telephone order at $3-$5. And for some catalogers, the cost is far greater. For instance, Mike Glassman, vice president of sales and marketing for business-to-business marketer Sport Supply Group, estimates that an offline transaction costs the Farmers Branch, TX-based company as much as $25 more than an online purchase.
“When the customer places an order via the Internet, this cost virtually disappears, assuming that the cataloger’s Website is fully integrated with its order processing system,” Lett says. If the cataloger’s systems are not fully integrated, the cost increases because employees have to manually re-enter Web orders into the system. But that expense is still less than the cost of processing a phone order.
What’s more, the Web enables catalogers to provide more detailed product descriptions — and, indeed, more product — than a print book can. This extra selling space combined with online customers’ ability to return to the Website as often as they wish can lead to more frequent repeat purchases.
But as the pure-plays of the late ’90s learned, even if you build it — a Website, that is — they won’t necessarily come. So whereas just a few years ago catalogers had hoped that selling online would enable them to phase out their books altogether, they’ve since learned that mailings are still necessary.
“The catalog is still the biggest driver of Web traffic out there,” says Michelle Rick, director of customer acquisition for consumer electronics cataloger Crutchfield. About 40% of the $208 million company’s sales are generated online, and a surge in Web sales always follows a catalog drop.
Giving shoppers a push
But not all customers and prospects who receive a print catalog automatically opt to order via the Web. So catalogers that are serious about migrating buyers to the Web are offering shoppers incentives.
In January, Sport Supply Group, which sells sports equipment to schools and institutions, began promoting in its catalogs lower Web-only pricing, Glassman says. The $105.4 million cataloger also offers members of its loyalty program double the number of frequent-buyer points for their purchase when they order online. Customers can redeem the points for merchandise.
“We feel we had to offer some kind of incentives,” Glassman says, “because our buyers — namely coaches — aren’t real technologically savvy and therefore feel uncomfortable buying online.” He looks at the incentives as a variable expense because “we know we’re saving from not handling the order,” he says. Glassman attributes the incentives to a 32% rise in site hits for Sports Supply, which does 21% of its business online, up from about 16% a year ago.
To encourage its catalog recipients to buy online, women’s apparel cataloger/retailer Frederick’s of Hollywood offers incentives such as free shipping on Web orders of more than $99. Frederick’s also tested a “click and save” campaign in which buyers saved 10% on purchases bought via the Internet, says vice president of marketing Danielle Savin. Today, 50% of Frederick’s direct sales come from its Website.
Quincy, MA-based women’s apparel cataloger/retailer J. Jill relies on e-mail incentives to spur Web purchases, reports John Hayes, president of J. Jill Direct. The cataloger frequently tests e-mail offers that alert customers to special Web-only sales. The reward? Hayes says that it costs J. Jill 50% less to take an order via the Web than from the telephone. Within the direct channel, sales through its e-commerce site increased to $52.8 million, or 25% of total direct channel volume, up considerably from $35.0 million, or 16%, a year ago.
According to Lett, the most effective methods are free shipping with orders, free freight, and dollar discounts, such as $5 or $10 off the purchase amount. Some catalogers have also had success offering a gift-with-purchase to online buyers.
One caveat when using promotions to lure catalog recipients to the Web: “There’s always going to be a percentage of buyers looking for a good deal who may never be converted to repeat buyers,” Lett says. So you need to keep track of the long-term value of respondents to special offers to determine the ultimate profitability of your strategy. But then again, “it’s likely that you’ll convert many of those one-time buyers into repeat customers,” Lett says.
The downside of Web migration
But there are drawbacks to shifting customers online. For one, just 54% of the U.S. population is Web-enabled, according to a recent study by the National Telecommunications and Information Administration.
Then there’s the matter of tracking the sources of Web orders. Whereas typically 80%-85% of phone orders can be tracked by source, according to Lett, catalogers generally track the source of fewer than 5% of Web orders.
“Web buyers are not good about entering source codes,” Lett says. “Catalogers know how many total orders are placed on the Web [as a percentage of sales] but they have difficulty tracking the order to specific source code.”
Failure to correctly determine the sources of orders can lead catalogers to make disastrous marketing and promotional decisions regarding future campaigns. But by performing match-backs against the original mail tape — in other words, comparing mail order names against Web buyers — catalogers can do a better job of properly allocating sales by source.
Another drawback is that the average order size on the Web runs about 10% less simply most catalogers aren’t as adept at using upselling and cross-selling techniques online, Lett says. But catalogers can overcome that problem as well — for instance, by offering links on product pages to complementary items.
Catalog Website Traffic Drivers at Work
Merely displaying your Website’s URL on the cover and the footlines of your catalog isn’t enough to persuade customers and prospects to visit — let alone order from — the site. Here’s a sampling of ways in which mailers are using their print books to drive traffic to the Web:
ANTIQUE HARDWARE AND HOME: Under the headline “Why visit our website?” the back cover lists a half-dozen reasons. Among them: Sale items and new products appear on the site before they’re included in the print catalog, and the site includes “valuable ‘How To’ information for the do-it-yourselfer using our plumbing or hardware items.” Below the reasons, in larger red type, is “Take $3 off internet orders!”
BABYSTYLE: This marketer of maternity and baby apparel and accoutrements began as an online-only merchant, so it’s no surprise that its holiday catalog touts its Website. Dot whacks on the front and back covers promote “Free Shipping Plus an additional $10 off if you order online.” The copy inside adds that your order must total at least $50 to receive the discount.
BAYBERRY CO.: The back cover and the order form of the winter edition of the gifts catalog promote free shipping on Web orders of more than $40.
BRYLANE HOME: A snipe on the cover of the Spring Collection 2002 edition says, “For even more items, shop online anytime!” in capital letters.
DESIGN WITHIN REACH: This cataloger of modern furniture devotes a portion of its back cover to the benefits of visiting its Website. Not only can you sign up on the site to receive Design Within Reach’s e-mail newsletter, but “our web site offers numerous products not always included in the catalog, as well as weekly features on new items.”
EMEDCO: “Save 10% at emedco.com!” reads a cover snipe, which also directs you to a page inside for details. Inside, the cataloger of business signage and safety products promises to e-mail a coupon good for 10% off the next online order to visitors who sign up to receive its e-mail newsletter.
GOLD VIOLIN: On its front cover, this cataloger of gifts for seniors placed a sticker that notes “250 more products online!”
THE GRANDPARENT’S TOY CONNECTION: On the front of the 2001/2002 edition, a coverline notes that customers get a 5% discount by ordering online.
HANNA ANDERSSON: “We’ve made ordering gifts on our website even easier!” declares a dot whack on the front cover of the Holiday 2001 edition. Unfortunately, nowhere inside does the children’s apparel cataloger/retailer indicate exactly how it has simplified shopping from its Website.
LTD COMMODITIES: In its spring edition, the b-to-b supplier of gifts and home decor devotes a full page of its order form to the benefits of ordering online. These include order status reports and “lots of new and exciting values found only on our website!”
SENDAMERICA: A P.S. to the president’s letter on page 2 reads, “You’ll find an expanded selection of the crafts, food, and fine gifts you see here at www.SendAmerica.com — and you’ll save 10% on every SendAmerica gift you order online!”
SOUNDPRINTS: A marketer of children’s books and toys, Soundprints promotes a 10% discount on online orders on every spread of the catalog.
WINE COUNTRY GIFT BASKETS: A starburst on the front cover of the holiday edition promotes 5% off Web orders. The offer is repeated on the footline of every left-hand page and on the order form.
Web Migration Dos and Don’ts
Before you make a big push to migrate your catalog customers to your Website, keep the following dos and don’ts in mind:
- Do use e-mail to drive traffic to your Website. B-to-b sporting goods cataloger Sport Supply Group has started sending weekly e-mail blasts to customers with offers (for instance, “Win $1,000 online shopping spree!”) prompting them to buy via the Web. Similarly, women’s apparel marketer J. Jill Group sends out e-mails promoting special online-only sales.
- Don’t trim catalog circulation at the slightest hint of an increase in Web sales. “The catalog is what drives customers to the Web,” insists Michelle Rick, director of customer acquisition for electronics marketer Crutchfield. Although 40% of Crutchfield’s sales come via the Web, the cataloger still mails 30 million-35 million books — three full-line catalogs and four smaller supplements — a year. And Las Vegas-based Femail Creations, which sells women-inspired books, clothing, and gifts, is ramping up its catalog circulation 10% this year — largely to spur online sales, says owner Lisa Hammond. The Internet accounts for about 30% of the cataloger’s $6 million in annual revenue.
- Do be sure your Website is user-friendly. If not, “you could be losing a sale,” says Robin Lebo, president of Charlottesville, VA-based catalog consultancy Lebo Direct. “Sometimes a Website is so complex and hard to navigate, it asks more questions than it answers.” For instance, catalogers still struggle with clearly explaining shipping-and-handling charges online — a top reason potential buyers abandon their online shopping carts. And to keep one-time Web buyers coming back, consider posting value-added editorial, message boards, or other features. “We get a lot of repeat business on our Website,” says Femail Creations’ Hammond, “mainly because it’s a community site, not just a place to buy things.”
- Don’t expect all of your customers to eventually buy online. For one thing, just slightly more than half of the U.S. population even has Internet access. For another, “not everyone is comfortable ordering from the Web,” Lebo says.
- Do promote your Website in your print catalog. Merely posting your URL on the bottom of each page isn’t enough. Frederick’s of Hollywood, for instance, devotes an entire page in its catalog to instruct its buyers on how to order online.
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