EXCHANGES: Sharing less with their rivals

Some exchange less because fewer competitive lists are available

Are catalogers becoming reluctant to share names with their competitors? Opinions of sources are somewhat mixed, but the Catalog Age Benchmark 2000 Report on Lists (see June issue, page 63) indicates that the percentage of respondents willing to exchange their lists with competitors has been declining steadily since 1996. This year, only 11% of those surveyed exchange with competitors, versus 25% who did in 1996’s survey (see chart, right).

Reasons for not exchanging names can vary. Steve Jones, vice president of direct marketing of Austin, TX-based golf supplies catalog Golfsmith says his company hasn’t been doing as many list exchanges with competitors because the pool of name sources has dwindled lately. “It’s not that there are too many competitors; there aren’t enough. When you’re in a niche market like ours, exchanges with competitors are routine. But if you reach an impasse on exchange policy, or if your competition goes out of business or consolidates, it can take away a significant portion of the exchange market,” he says. And as Jones points out, “there were only a few players in the print catalog market to begin with. When [golf catalogs] Competitive Edge and Austad’s left the marketplace, it got even smaller.”

Similarly, at San Luis Obispo, CA-based hot sauce catalog Mo Hotta Mo Betta, cofounder Tim Eidson says his company isn’t exchanging as much as it once did – mainly because it’s not that effective for the mailer. “I resisted ever exchanging names until a couple of years ago, when a competitor approached me about it. My results weren’t great, so although he wanted to exchange again, I didn’t,” he says. Like Golfsmith, Mo Hotta Mo Betta doesn’t have many direct competitors, he says. “There aren’t that many opportunities to exchange, and there’s often a lot of duplication. But I’m exchanging lists less than I have, even with noncompetitors – that kind of prospecting just isn’t as effective for us, especially compared with co-ops.”

Indeed, some list industry experts point out that the popularity of consumer co-op databases may play a significant role in reducing the number of exchanges – not necessarily because mailers are passing up name-swapping to participate, but because active buyers on so many lists are already receiving multiple offers from co-op participants. And one source, speaking under conditions of anonymity, says that co-ops are in some cases pulling down response rates. “I have a client with a high percentage of gift-giving buyers. Other gift mailers were doing very well with his list for a few years, but when those names went into a certain co-op, they began dying on the vine. We could only attribute the result to fatigue.”

The results of Catalog Age’s surveys showing a decline in competitive exchanges do not surprise this source. “I think people are holding their better names a little closer than they used to. I frequently see large mailers’ list cards. One might show 2 million names, for instance, when in reality they have more like 4 million. They’re keeping their new names and their best customers for themselves, and why shouldn’t they?”

Catalogers, the source says, are dealing with a finite universe of buyers. If, for example, a mailer gets a high volume of responses through a Wall Street Journal mention, these names may be new to the universe. “And if the cataloger turns those names over to a co-op, and these names begin getting 200 catalogs a year, then the mailer has to share its business with competitors.”

Roy Schwedelson, president of list company Worldata/Webconnect, agrees that exchanges with competitors have declined. “I never understood why mailers would exchange with competitors. Some of the brokers and fulfillment houses pushed it in the past, sacrificing the long-term lifespan of a pool of buyers,” he says. As for co-ops, Schwedelson says, “they have absolutely made a difference [with exchanges]. The more you hit on various catalogs, the more the names become public domain.”

An opposing viewpoint

But not everyone is opposed to sharing names with the competition. Nancy Tait, executive vice president of Bear Creek, the Medford, OR-based parent of food catalog Harry and David and horticultural book Jackson & Perkins, says she prefers competitive or noncompetitive exchanges to straight rental arrangements. “We’re always looking to exchange. That’s our first choice. And we haven’t seen a decline in the number or percentage of exchanges we do.”