For many catalogers, says Derrick Egbert, the whole can be greater — and more cost-efficient — than the sum of its parts. To that end, the industry veteran last year helped three New England catalogers form the Catalog Consortium as a way of boosting their buying power.
“I thought about the fact that the industry is very fragmented,” says Egbert, who runs a Cambridge, MA-based consultancy, Egbert Associates. “There are hundreds and hundreds of mom-and-pop businesses that range in sales from $1 million to $30 million. They all have their own warehouses, their own call centers, their own merchandise, their own DNA.”
The three original members — Hudson, NH-based footwear and apparel mailer Comfort Corner, Wells, ME-based specialty gifts cataloger Lighthouse Depot, and Medford, MA-based footwear marketer Support Plus — were soon joined by five other catalogers. By pooling together they were able to buy telephone services at a lower rate, saving hundreds of thousands of dollars by taking advantage of volume discounts. The group has also saved money on corrugated. One member estimates that the consortium, whose gross revenues total $125 million, has saved more than $1 million since its formation.
Vendors benefit from the consortium as well, Egbert says, in that dealing with eight clients at once saves them time and cuts down their cost of sales.
Some effort required
Part secretary, part diplomat, Egbert has taken on the role of keeping the catalogers focused. “They are all running around with thousands of priorities; my job is to try to get them to understand this is high-priority stuff,” he says. “The concept is easy, but making it happen takes a lot of skill.”
Creating a consensus among members can be challenging at times. For instance, Lighthouse Depot president Don Devine says that the members could save as much as $0.05 a catalog if they could band together on comailing. But to accomplish that, the corsortium participants have to agree on a common catalog size and ship date.
“It requires some flexibility on the part of catalogers,” Devine says. “Like everything else that has a pot of gold at the end of the rainbow it takes real diligence to get there.”
While saving money is the most tangible benefit of the consortium, Egbert puts a heavy emphasis on how members can learn from each other at the quarterly meetings. Even if the group runs out of ways to save money, he plans on continuing with the meetings.
“Just getting together with a group of eight peer catalogers and exchanging all kinds of thoughts and ideas, things that are working for some people and not working for others, is beneficial,” Devine notes.
If you’re thinking of forming a consortium of your own, Egbert advises limiting it to eight or so members. Adding more members doesn’t get you steeper discounts, just a more unwieldy assembly each quarter. As for the size of the member companies, he believes that catalogers with annual sales of $5 million-$40 million are the best candidates. Companies with less than $5 million in sales probably wouldn’t bring enough buying power to the table, and those with more than $40 million could be too dominant and throw their muscle around.
And, of course, “another important factor is having people involved with sharp, entrepreneurial, innovative thinking,” he says.