Pure-plays defend business without catalogs

Dec 01, 2000 10:30 PM  By

According to the Direct Marketing Association, at least 17 Web pure-play marketers have launched print catalogs. Food.com, Kidstoysplus.com, Lucy.com, and Gold Violin are just a few to jump onto the print bandwagon.

“The trend is to be in multiple channels,” says Lauren Freedman, founder, Chicago-based consultancy The E-tailing Group. For one, “online-only marketers are realizing that not all their customers are online all the time,” she says, adding that it’s also expensive to develop a brand online alone. “I think that’s why we’ve seen many online players going offline” by mailing a catalog,” she says.

Indeed, the costs to acquire customers strictly online are nearly double that of a multichannel marketer. According to a study conducted by market researchers Shop.org and Boston Consulting Group, customer acquisition costs for online retailers are $42 per customer, compared to $22 for multichannel retailers.

The founders of Austin, TX-based Garden.com, which mailed its first catalog in December 1999, believe that “a multichannel marketing approach is a critical component of any Internet-based business,” says chief marketing officer Lisa Sharples. “And some of the more traditional marketing tools we use, such as our catalog, provide us with a successful and measurable way to acquire customers – both on- and offline.”

But some marketers have bucked the trend by starting with print catalogs and becoming online- only merchants. A few of these renegades say they have no regrets.

Bring on the renegades Less than three years after mailing its first catalog, $5 million luxury gifts marketer Boutique Beverly Hills transformed itself into a Web pure-play. Founder Paula Kent Meehan viewed the Internet as “the new frontier and a great way to market the business,” says director of marketing Charlet Riddell. Boutique Beverly Hills had mailed 750,000-1 million catalogs a year, dropping its last books in September 1999.

To widen its reach on the Web, Boutique Beverly Hills has registered 31 domain names including the swanky town’s zip code. That means customers are steered to Boutique Beverly Hills if they type in the URL “90210.com,” or “Shop90210.com,” for example.

Oak Park, IL-based bicycle supplies marketer Lickton Bike Supply stopped mailing its print catalog in February 1998. “We will never mail another print catalog again,” insists CEO Robert Lickton, whose grandfather started the company in 1935.

Since Lickton took his company online-only, the costs that would have gone to paper and production now drop directly to the bottom line. More impressive, company sales have jumped 50% sales during the past two-and-a-half years.

“Our business is accessible to a wider audience,” Lickton says. “I could never afford to mail to all of those customers.”

Also, because 95% of its bike accessories are imported from Europe and China, being online-only allows Lickton to quickly react to changes in prices with a few keystrokes. “You couldn’t react that quickly with a print catalog,” he notes.

Seattle-based women’s travel products marketer Christine Columbus stopped mailing its print catalog back in 1997. A few months later, founder Annette Zientek built the company’s Website for $12,000, though she has since revamped it and updates its pages on a monthly basis.

Zientek cites the Web’s lower costs as the obvious reason for discontinuing her print catalog. The Website’s host server fee is $2,500 annually. In comparison, a single 32-page catalog mailing could cost $20,000.

The acquisition argument Although expensive to print and mail, catalogs remain a proven method of alerting prospects to a business’s existence and of promoting new products to customers.

To compensate for the lack of exposure that a print catalog provides, both Zientek and Lickton rely on links with other Websites as well as on public relations efforts. For instance, Christine Columbus has been mentioned in The Chicago Tribune and The Washington Post. And both Lickton and Zientek still collect mailing information for those who register on their Websites, mainly to send direct mail pieces notifying customers of upcoming promotions online.

But multichannel proponents say that may not be enough. “If you’re waiting for customers to remember your URL when they shop, I think that’s a bit of reach,” says E-tailing Group’s Freedman. She adds, though, that the strategy of going online only is not necessarily flawed if the company wants to remain a small venture and is less interested in winning over new buyers than in retaining existing customers.

Dot-com stigma endures When it comes to raising cash, many pure-plays are feeling the aftereffects of the great Internet shakeout that began in the spring. Given how many Internet businesses collapsed due to an inability to profitably acquire customers, it’s not surprising that investors are wary of online-only marketers.

Like the man who inspired the name of her company, Zientek says she has found it difficult to raise financing for her adventure into the new world of e-commerce. “I’m not trying to prove the world is round,” Zientek says. “I’m just trying to prove that there is a better way to navigate it.”

Internet toy merchant eToys last month became the latest pure-play to launch a print catalog. But the Los Angeles-based marketer didn’t mail its first book; instead, the 36-page catalog was inserted into millions of Sunday newspapers nationwide on Nov. 3.

The 9″ x 11″ catalog, which spokesperson Gary Gerdemann describes as a “guide,” is designed to show prospects hundreds of the Website’s toy offerings and steer them to shop online. The book does provide a toll-free number for ordering, but the catalog’s primary purpose is as a “vehicle to get people on the Website, because that’s where we can best showcase the products,” Gerdemann says. The catalog’s format mirrors that of the Website, categorizing merchandise by age range, toy category, price, and brand.

Gerdemann says that eToys isn’t calling the first edition a “test”; he says that the company will distribute the catalog by other means aside from Sunday newspapers. He declines to provide specifics, however.