Why Buy the Cow

One of my mother’s favorite sayings was “Why buy the cow when you can get the milk for free?” Apparently not too many other mothers repeated that advice to their offspring — or at least not the moms of online marketers.

Many consumers — myself included — have been spoiled by the free shipping and handling offered by myriad Web merchants. Sure, catalogers have long used the promise of free S&H as an inducement to prospects or inactive customers, just as branded-goods manufacturers have long used coupons and rebates. But as mentioned in Paul Miller and Mark Del Franco’s cover story, “The Price of Free Shipping,” the pure-play online retailers really went nuts with promises of free S&H and below-cost prices in hopes of gaining customers. Of course, a customer ain’t worth much if you can’t afford to keep him — a Business Management 101 truism that the Web hotshots somehow failed to understand, and that led to a flood of red ink and closures.

So it’s heartening to find that most of the catalogers contacted for the article aren’t allowing themselves to be swept up in the free-S&H battle raging between online superstores Amazon.com and Buy.com.

That said, catalogers and other marketers do have to offer us spoiled consumers something to make us feel that we’re getting a deal of some sort. Department stores have learned this the hard way: During the past decade or so, they’ve increased their number of promotional events to the point where shoppers have been trained to hold off buying until the next Anniversary Sale or Preholiday Sale or Pre-preholiday Sale.

The trick for catalogers is to make the offer valuable to the consumer but not prohibitively expensive to provide. In our other cover story, “Lessons Learned from a Back-to-School Season,” a spokesperson for Talbots Kids explains that the cataloger/retailer gives a discount when customers buy more than one item. But while it appears to be a bargain to the shopper, for Talbots it’s more a matter of passing on the cost-per-unit savings it subsequently enjoys. The bottom line doesn’t take a hit.

It’s no use crying over spilt milk, free or otherwise. But those marketers, online and offline, that have thrived the rise and fall of the pure-plays are those that know how to persuade customers they’re receiving free milk even as they’re paying market price for a Holstein.

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