SOHO, so good

By 2001, many more business-to-business catalogers are expected to target the small office/home office (SOHO) market. “It’s clear the home has become an extension of the office,” says Raymond Boggs, home office program director for Framingham, MA-based research firm International Data Corp. (IDC).

In fact, the growth of “home working” households has jumped 15.6% annually since 1995, increasing from 27.3 million in 1995 to 34.7 million in 1997, according to IDC’s Home Office Overview. IDC projects the number of home office households to increase to 40.2 million by 1999.

“We believe there are probably 40 million households or more with home offices,” says Rick Black, president of the Schaumburg, IL-based Reliable catalog division of $300 million Boise Cascade Office Products. “Twenty-five million of those offices are specific generators of income; the remainder are more casual home offices used for paying the bills. By 2001, we see the number of [income-generating] home offices doubling to 50 million.”

But despite promising growth, “virtually no catalogers have really gotten a good handle on SOHO,” says consultant Don Libey, president of Haddon Heights, NJ-based Libey Inc. “The problem with SOHO, from a catalog point of view, is it’s very difficult for catalogers to service a market with a $35 average order. Those mailers that will make SOHO work will have to approach it with the thought, ‘I can’t beg you for an order every week or month, therefore, I’m going to learn more about you than anybody else.'” He adds that catalogers will have to find ways to “put merchandise on SOHO customers’ shelves seamlessly, delivering product quarterly, and thus become SOHO customers’ only suppliers.”

It’s about specialized service In order to make any money and bring in any significant volume selling to SOHO, Black says, catalogers and other marketers must cater to all of SOHO practitioners’ needs in a more specialized way than they do in the volume-driven commodity market of standard office supplies. That’s why Reliable’s 10-year-old Home Office specialty catalog sells high-ticket products such as office furniture, electronics, and even decorative items rather than pages of paper clips and the like.

On the backend, most office supplies catalogers’ fulfillment centers are primarily set up to handle large volumes of small items, such as paper clips and pens. Reliable uses only two of its nine regional warehouses to ship home office goods, such as furniture and electronics.

Looking toward 2001, Black plans to study the market and its potential growth even more closely. “We have to sort true home offices from casual offices,” he says, and try to find “the true loyal customers who use their home offices for serious business. That’s where we’ll find good, solid repeat business.”

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