Launched just eight years ago, Lands’ End’s corporate sales division now accounts for more than 10% of the apparel cataloger’s $1.32 billion in annual sales. And while total company sales declined 3.8% last year following a 15% reduction in circulation of the core catalog, corporate sales climbed to $140 million.

The overall promotional products market is growing too. The Irving, TX-based Promotional Products Association International says annual sales grew 11% in 1998 alone, to $13.1 billion. To take advantage of the growth, Lands’ End is pumping up its division’s Web presence.

In 1998, the Dodgeville, WI-based apparel cataloger began building what it calls “online stores” – customized extranets created and hosted by Lands’ End – primarily for “our larger clients,” says Mike Grasee, director of Internet business development. These clients, which include automobile manufacturer Saturn, buy casual apparel personalized with their logo to give away as incentives or for employees to wear as a uniform. By using Lands’ End’s proprietary “logo snapshot” technology, the online stores allow customers to view how their own logos would look on various products. Lands’ End, which has built seven online stores so far, does not charge clients for the extranets.

The company is also implementing the live chat feature, available on its consumer Website, on its corporate sales site as well. “Because there’s so much more order information involved with business-to-business, Lands’ End Live can help at the point of purchase,” Grasee says.

In another enhancement, Lands’ End has partnered with software suppliers Ariba and Commerce One to implement software that enables the cataloger to electronically route purchase orders within its client companies to get the approval necessary to process the orders. The customer companies supply Lands’ End with lists of managers who need to sign off on purchases; the cataloger then programs the data into the software.

By enhancing and simplifying the online sales process, Lands’ End hopes to attract new customers, boost average order sizes, and shift orders from the print catalog and the call center to the Web. But “the print catalog is here to stay,” says Grasee, who notes that for some customers, the catalog acts as a traffic driver or a reference guide.

Lands’ End spokeswoman Anna Schryver adds that while “all our business-to-business orders are going to touch the Web somehow, the print catalog and the Internet are closely related, so it’s too early to decide” whether the company will reduce circulation of its corporate sales book.

KATIE MULDOON: I’ve noticed only one major creative trend in business-to-business catalogs lately: varnished covers. Many business mailers are applying a coating of a varnishlike substance to the cover while the catalog is being printed – just like putting on a sixth or fifth color.

Computer image and typography software cataloger EyeWire Studios is a good example of a b-to-b mailer that puts out attractive catalog covers made even more striking by varnishing. This coating not only intensifies the look of the cover, but it also gives the whole catalog a more upscale appearance and creates the image that the book is meant to be retained.

Some marketing techniques are making business catalogs look a little more promotional. For example, there’s been increased use of ink-jetting on the cover of many b-to-b catalogs. Office supplies cataloger Viking is probably the leader in ink-jetting. The company often uses cover messages that recap past purchases and promote savings on those same items.

Offering and promoting low prices is important in many b-to-b product categories – especially the computer market – so we’re seeing more promotional blurbs on covers. For instance, industrial cleanup products cataloger New Pig mailed a recent issue that prominently promoted special offers on the cover.

MICHAEL FOSSO: I would have to say that the biggest creative change in b-to-b has been low cost technology. Innovations such as direct-to-plate printing, portable document file (PDF) work flows, and digital photography have enabled us to reduce costs – and at the same time, to improve our catalog creative.

At S&S we target three specific markets: recreation, education, and healthcare. Our markets are very competitive, so as with any other cataloger, it’s important that we grab the reader’s eye with attractive photography and benefit driven copy. Now that we’ve switched to digital photography, with its lower costs, we have a little more money to spend on making the books look better.

For instance, we are increasing our use of models and location shoots. Our models are all age correct, depending on the target market. In our S&S Opportunities catalog, which sells products for physically challenged adults and children, we use models who are physically challenged. We also often use models with Down’s Syndrome where appropriate in the Opportunities catalog, because we think it’s important to show true-to-life models in a positive way, benefiting and enjoying our products.

Because we market so heavily to youth in the recreation and education markets, we tend to use a lot of primary colors and bright photography. Our S&S Brite Start catalog, which sells products for children in the kindergarten-third grade age range, prints on a heavier paper stock, which really enhances the colors. Many of our products cross markets, so we have to rewrite the copy to the specific market and reshoot the photography with the age correct models.

STEPHEN R. LETT: While ink-jet messaging is nothing new, more and more business mailers are using it as part of their creative. I’ve seen more highly personalized and targeted ink-jet messaging on the front cover of catalogs – and it’s no longer just the biggest catalogers doing it.

For example, business stationery cataloger The Drawing Board uses customer data to target specific messages to its buyers. If a customer has had a history of buying personalized address labels, the cataloger will ink-jet a special offer or reminder about this product on the front cover of the book, using the customer’s name as part of the message.

Personalization techniques such as ink-jetting help business-to-business catalogs build a strong bond with their customers with a highly targeted marketing and creative approach. This enhances the relationship with that buyer and helps sell more products.

Both revenue and earnings figures continue to be strong among the publicly traded business-to-business and computer mailers tracked by Catalog Age. Except for Moore Medical Corp., every cataloger tracked reported a gain in second-quarter sales. Moreover, 75% posted an increase in income or a decrease in their net loss.

Among the computer mailers, all but one posted a double-digit gain in revenue. (The exception, Multiple Zones International, made do with a 7.7% rise in net sales.) At Merrimack, NH-based PC Connection, which sells computer equipment to small and midsize businesses, revenue jumped 33%, from $174.3 million to $231.8 million, which the company attributes to its increased outbound telemarketing. Earnings rose 14.2%, to $4.7 million.

While revenue at Shrewsbury, NJ-based Programmer’s Paradise rose nearly 20%, to $60.8 million from $50.8 million, it was the software marketer’s earnings figures that made news. Profits shot up 185%, to $963,000 from $338,000 in the second quarter of last year. But while its return on sales rose from 0.67% to 1.58% (or 1.58 cents earned for every dollar of revenue), that percentage was still well below the 2.4% typical of its computer brethren. And given that Programmer’s Paradise sells software, which generally carries a higher margin than hardware, the cataloger should be able to deliver better profitability than its hardware peers.

While the eight computer catalogers tracked showed a 28% increase in second-quarter revenue and a 162% increase in profits, their overall price-to-earnings ratio (P/E) still lagged behind that of the stock market at large. While the average P/E for the computer group was just under 19.0, the Dow Jones Industrial Average P/E was nearly 26.0, and that of Standard and Poor’s 500 Index was more than 35.0.

“Clearly, investors are skeptical about these catalogers’ ability to deliver continued earnings growth,” says Nick Holland of investment firm Ulin & Holland in Boston. “This concern may be driven by continuing price declines and resulting margin pressure in [the computer] sector.”

Not to mention the belief among investors that Web-only marketers and manufacturers selling direct to buyers on the Web will horn in on computer catalogers’ turf. “I don’t believe the Internet will take market share from [computer catalogers], but that philosophy is partly why the price-to-earnings ratios are lagging,” says Tracey Turner, spokeswoman for PC Connection.

In the business-to-business segment, increased margins from proprietary products boosted the bottom line of telephony tools cataloger Hello Direct. According to president Dennis Waldera, sales of proprietary products such as the Linestein, an analog-to-digital line adapter, helped propel the San Jose, CA-based cataloger’s net income from $579,000 to $828,000, a 43% improvement over last year’s second quarter. In all, Hello Direct has enjoyed 10 consecutive quarters of revenue and earnings growth.