Faced with flagging consumer confidence and high energy costs, skittish marketers aren’t taking any chances. Even before the holiday shopping season was truly under way, merchants were rolling out the promotions, from free shipping and handling to gifts and discount offers. And these strategies might just be working, as several marketers at press time were reporting a strong start to the season.
For example, the Holiday Big Book of Minnetonka, MN-based general merchandise mailer Fingerhut has a more promotional look to it than it has the past few years, says chief marketing officer Bob Safford. Offers include a free DVD/CD player with the purchase of a 32-inch TV, a free clock with any purchase, and deferred billing of up to five months.
Fingerhut isn’t limiting its promotional efforts to the print catalog, however. The company will run what Safford describes as an aggressive e-mail campaign — two or more e-mails a week as opposed to the two or more e-mails per month it usually sends — to customers and opt-ins. It also plans to offer a different online promotion daily and will provide limited-time-only free shipping and handling offers several times throughout the season.
As of mid-November, Fingerhut was reporting a 7%-10% increase in year-over-year sales for the season, on a low-single-digit rise in circulation. Between late October and mid-December, Fingerhut plans to mail its 386-page Holiday Big Book to 1 million customers and an undisclosed number of prospects. The company also mailed 2 million copies of a 72-page prospecting catalog in late October; it’s scheduled to drop another 2.5 million copies of the prospecting book on Dec. 23.
Fingerhut has already doubled the number of first-time buyers in 2005 and aims to double that number again in 2006, Safford says, although he won’t disclose actual numbers. Average order sizes for Fingerhut’s existing customers so far this holiday season are flat with last year’s, but order values for first-time customers have increased 40%, in part because the cataloger is offering higher credit limits to prospects, he says.
New promos, new products
Like Safford, Caswell-Massey CEO Ed Coleman describes his promotional strategy as aggressive. And as is the case with Fingerhut, the Edison, NJ-based toiletries manufacturer/marketer is seeing strong results so far this season.
“With one month down and the two biggest yet to go, we are running ahead of expectations,” Coleman says. October sales were up 6% from last year’s, and at $65-$70, the average order value was up 10%. The $20 million-plus company increased holiday circulation 38%, from 800,000 in 2004 to 1.3 million.
Caswell’s offers include free shipping and handling for specific periods, early-order discounts — 20% off any order placed before Oct. 31, for one — and a free teddy bear with any purchase of $125 or more. To reactivate customers who have not ordered in two years, it will offer them 20% off orders received by Dec. 21. Other, smaller promotions include a men’s miniature cologne sampler (a $20 value) free with any purchase of $100 or more while supplies last, through Dec. 31.
Fall/holiday sales at Redmond, WA-based Computer Gear, a catalog devoted to computer-themed gifts, jumped 79% on a 45% circulation increase, exceeding plan by 34%. “We added some new products that have been selling well and rolled out to some test lists that did well last year to account for some of the increase,” says vice president of operations Mark Mackaman. Some of these big sellers include a four-inch Christmas tree that lights up in six colors when plugged into the computer’s USB port.
Computer Gear has several promotions up its sleeve, such as a free gift with any $100 order. The company also offers a free Swiss Army Signature Tool (a $19.99 value) with purchase of its Alox Swiss Army Memory Tool with 1GB configuration. “Most customers appreciate getting two gifts when they buy one,” says Mackaman.
More than 55% of Computer Gear’s orders are placed through its Website, with 85% of those online orders driven by the print catalog. The marketer expects its average order size, now at $65.95, to inch upward to $67.45 at the height of the holiday season, Mackaman says, thanks in part to promotions.
Recipients of the Imagine the Challenge catalog won’t find any promotions among its pages. But the Taylor, MI-based toys merchant is offering several promotions on its Website, including a free gift with any purchase of $75 or more, 20% off any $100 gift certificate ordered before Thanksgiving, and certificates for 25% off already marked-down prices. Vice president Adam Carrick says the company did not include the offers in the print catalog because it wanted the flexibility to discontinue them on short notice.
As of mid-November, the Web promotions had generated a 5%-10% lift in response, Carrick says. Imagine the Challenge had increased its print circulation 20%, and at press time year-over-year sales were up 7%. But Carrick was still expecting an increase of 15%-20% for the holiday season overall.
Bean throws down the S&H gauntlet
Outdoor apparel and home goods cataloger L.L. Bean raised the holiday promotions bar considerably when it announced on Oct. 21 that it would offer free standard shipping and handling on all orders until Dec. 21. “We needed to come up with a creative option to at least keep up with and hopefully surpass our past numbers,” says the Freeport, ME-based merchant’s spokesperson Rich Donaldson. “This is something we were considering for many months,” even before Hurricane Katrina hit the Gulf Coast region in late August, raising concerns about consumer spending.
At press time Donaldson said that it was too early to share specific numbers about holiday sales, but the cataloger hopes that the shipping and handling offer will raise both response and order size. This might then enable L.L. Bean to cut back on circulation after the holiday period and also allow for more discounting.
Bean isn’t the only merchant to offer free S&H: 79% of online retailers surveyed by Shop.org and BizRate said that they planned to offer free shipping this holiday season. But most companies that offer free shipping do so with conditions, such as a minimum order size. What’s more, Bean announced its offer very early in the season.
“I’m surprised to see this move so early,” John Rogers, director of multichannel marketing for Bean competitor Orvis Co., told Multichannel Merchant shortly after Bean’s announcement. “Somehow it’s discouraging to see this sort of offer extended right now. How can it be good in the long term?”
Not all marketers feel compelled to follow Bean’s lead, however. Orvis, for one, has no plans to offer free S&H. Nor does outdoor gear and apparel mailer Cabela’s. The Sidney, NE-based cataloger/retailer is generally not in favor of promotions, says spokesperson James Powell. “We would rather charge a fair price for shipping and handling and concentrate on offering the best product year-round.” And because so many of Cabela’s products are heavy, deals on shipping and handling costs aren’t really an option, he adds.
Imagine the Challenge shies away from offering free shipping and handling for the same reason, says Carrick: “Toys are just too heavy to eliminate shipping and handling costs.”
But another toys marketer, Denver-based eToys, is offering free shipping on selected products this year, says vice president of marketing Gary Lindsey. In 2004 it had offered free shipping on orders of more than $99. So far, early holiday sales are 20%-30% ahead of plan, Lindsey says, though circulation is up nearly 500% over 2004, the second year it mailed a print catalog.
Circulation on the rise
Circulation overall is up, according to several list and marketing professionals. “In addition to concentrating on reactivating old house file names and using hefty promotions to get them, catalogers are now beginning to opt for new prospect names coming from outside lists,” says Susan Darling, group vice president of Hackensack, NJ-based list services firm Mokrynskidirect.
“A lot of companies seem to be mailing more without overmailing and without overprospecting,” says Geoff Batrouney, executive vice president of New Rochelle, NY-based list services firm Estee Marketing Group. “The season is surprisingly strong so far, and results are excellent.”