Abacus Indicator:

According to the Abacus 2006 B-to-B Industry Insights Report, business-to-business marketers experienced a 9% gain in revenue over the past 24 months, spurred by a 2% increase in buyers with 13% more transactions. Offsetting the b-to-b gains was a 3% decrease in average order size. Nonetheless, all major categories on the Abacus B2B Alliance co-op database experienced growth.

The Internet has created a more price competitive environment, which may be a factor in decreasing average order value, says Elisa Krause, Ph. D., vice president of strategic accounts and analytics for Lafayette, CO-based Abacus. She says that retailers need to decide whether to play in the price war game or it they will develop a competitive advantage strategy that allows them to grow share in a more intense market place and stay true to their brand image.

“B-to-b marketers have the power to affect their strategies and customer loyalty by asking the right questions, such as, ‘Are my offers unique and specialized enough to differentiate me? Are my products focused on my core customer segments and by segment? Are my price points appropriate?’said Krause. “By tracking key performance metrics (KPI’s) associated with their business, direct marketers can continually evaluate the impact of merchandise, service and pricing strategies on customer loyalty and take the appropriate course of action to optimize performance.”

Abacus Indicator

According to the Abacus 2006 Multi-Channel Annual Trend Report, the major retail markets in rural and urban areas differ in their growth and decline by channel. The most recent report showed that call center/mail order purchases represented 65% of orders in rural areas, with 35% of those orders placed online. This compares to 45% and 35% catalog vs. Web orders, respectively, for urban areas. Because rural locations typically have fewer stores, it is not surprising that these areas were more likely to purchase through call centers and traditional mail order channels than in retail locations.

The performance of these major retail marketss also differed according to geographic region. Due to an aging U.S. population and widespread relocation to the south, the top major retail markets for online sales growth are similarly located in southern states with growth rates of more than 50% for online purchases. Hurricane affected areas such as New Orleans helped boost southern major retail markets experiencing high online growth, as did Florida, with six of the top 20 growing online areas.

“It is important for retailers to understand the dramatic differences that exist in the channel trends for all geographic areas in order to plan their marketing strategies accordingly,” said Elisa Krause, Ph. D., vice president of strategic accounts and analytics for Lafayette, CO-based Abacus. “Retailers can leverage data, such as purchase behavior data, for greater insight into their performance in a given major retail markets against their competitive set and have a greater understanding of how to invest marketing dollars, both in stores and other channels.”

Abacus Indicator

According to the Abacus 2006 Multi-channel Annual Trend Report, sales trends continue to vary significantly by product category, ranging from increases of 75% to declines of 86%.

The combined apparel and accessories category continue to lead in total sales, representing 35% of all activity within the Abacus Alliance corporate databases and generating $8.6 billion in sales from 70 million transactions. Home décor and furnishings followed with 22% of total spend, with the combined gifts category coming in third with 15% of total sales.

“In order to maximize marketing dollars, merchandisers and retailers must look not only at how their customers are buying but also what their customers are buying,” said Elisa Krause, Ph.D., vice president of analytics for Lafayette, CO-based Abacus. “By understanding which product categories are growing and which are declining—and combining that knowledge with insight into what channels are driving those sales—merchandisers can devise strategies to better improve ROI.”

Top growth categories:
Low-ticket beauty (+75%)
Golf apparel and merchandise (+46%)
Computer hardware (+45%)
Mid-ticket female apparel (+37%)
Video (+36%)
Health and wellness (+34%)
French decor (+26%)
Recreational and outdoor enthusiast (25%)

Lowest growth categories:
Fruits and nuts (-86%)
High and mid-ticket jewelry (-42%)
Gardening tools and supplies (-23%)
Petite size female apparel (-22%)
Hunting and fishing (-18%)
Pool gear, swimwear, and sunglasses (-16%)
Theme gifts and merchandise (-13%)
Collectibles (-12%)

Abacus Indicator

According to the Abacus 2006 B-to-B Industry Insights Report, small businesses continued to be the largest market sector for business direct marketers, accounting for 81% of 2005 b-to-b direct revenue. Roughly 1.1 million contacts at small businesses made a b-to-b direct purchase last year, spending a total of $566 million. Large businesses followed by spending $77 million, while midsize businesses spent $52 million. Abacus classifies small business companies as ones with 1 to 49 employees; mid sized companies 50 to 99; and large sized companies 100-plus.

Although they purchased more frequently, small businesses spent an average of 32% less per transaction than large businesses, with an average order size (AOS) of $191; large businesses had an AOS of $295.

“Overall, the small business market represents significant growth potential for direct marketers,” says Stacey Hawes, vice president of business-to-business services for Lafayette, CO-based marketing services firm Abacus. “But it is also important for marketers to remember that while they hone their strategies to capitalize on the wealth of opportunity among small businesses, they may have to cast a wider net to capture the volume of business equivalent to a single large business customer.”