Special Report: Catalog Marketing

E-SPECIAL REPORT
A PRIMEDIA Property
May 20, 2005

--Catalogs and the Web: A Beautiful Friendship
By Jim Emerson

Video may have killed the radio star, but it looks like print catalogs and the Internet have a much more symbiotic relationship.

About half of consumers shop by catalogs and online. Forrester Research predicts 2005 might be the year when U.S. Internet sales surpass those of mail order catalogs. However, good old-fashioned print catalogs will still generate many of those online revenues.

The dynamics between online and catalog shopping are in a rapid state of transition. L.L. Bean's customers shop more via the Web than traditional print catalogs, and in Britain more consumers overall buy online than by mail.

Print catalog mailings are perhaps the biggest factor in generating online customer orders for catalogers, according to a study commissioned by the U.S. Postal Service.

--Multichannel = Multibuyer

Consumers who receive catalogs are more likely to become multibuyers online, accounting for 15% more transactions, and will spend on average 16% more than customers who did not receive catalogs, according to the study.

The USPS also reported that consumers who receive catalogs in the mail are more than twice as likely to make an online purchase, compared to consumers who don't receive catalogs, regardless of household income, education or geography.

On the flip side, the potential for generating prospect files through search engine optimization is largely untapped. Research from Internet Concepts LLC shows that only about 6% of catalog sales can be traced directly back to shoppers using sites like Yahoo! or Google.

Among existing customers, catalog shoppers are increasingly going online to place orders. Forty-three percent of catalog orders are processed by telephone and 33% are completed online, according the 2004 Abacus Annual Catalog Industry Trend Report.

The Direct Marketing Association's 2004 State of the Catalog and E-Commerce Report said print catalogs generated 15.4% of all marketing channel sales in 2004 for companies surveyed, compared to 27.3% in 2002. Electronic catalogs and Web sites generated 15.7% of overall sales in 2004, but no comparison figures for 2002 are available.

--Finding Prospects

Income, ethnicity, profession and psychographic data are frequently overlaid on house lists and prospecting files to identify more product categories that existing catalog customers are buying from, list professionals said.

Average response rates for catalogers' house files run 4.9%, compared to 5.9% two years ago, reflecting a 17% decline among companies surveyed for Catalog Age's Benchmark Report on Marketing. For outside lists the current response rate figure is 1.3%, compared to 1.4% in 2003.

Catalog customer response lists rank as the best performing overall with a 4.2% response rate, according to the DMA's figures. The next highest, 1.7%, is for e-mail lists, followed by 1.5% for cooperative databases, 1.4% for subscription lists and 1.2% for compiled files.

--Facts and Figures

* According to the DMA, the typical catalog customer is a woman (71%) in her early 50s, married (63%) and employed (58%), with roughly a $53,000 income. She lives in the suburbs and her husband is also employed.

* An estimated 167 million consumers made consumer catalog purchases during the last 12 months, based on statistics from ParadyszMatera. DMA data shows that catalog shoppers place about 11 orders annually, making on average three purchases from their favorite catalogs. Consumers and businesses combined spend roughly $150 billion on catalog purchases per year.

* More women than men prefer shopping by catalog during the holiday season. Roughly one-third of women make consumer catalog purchases, compared to one-quarter of men, reported the NDP Group.

* Catalog customers are expensive to find. The average acquisition cost for one consumer customer is $18.06, compared to $33.83 for a business-to-business customer, according to a Catalog Age survey.

* Approximately 10 billion catalogs are mailed annually, racking up roughly $3 billion in postage, the USPS noted. Consumer catalog printing costs typically equal 8% of total income generated, compared to 4.3% for business-to-business catalogs. The DMA reports that postage expenditures equal about 9.8% of the income generated from consumer catalog customers and 2.4% for business-to-business customers. Industry estimates show a typical catalog order ranges from $100 to $150.

* By far the most popular product category for catalog shoppers is apparel (57%), followed by gifts (51%), books, music and videos (48%), home furnishings (31%) and electronics (27%), according to the DMA. The next biggest market categories are sporting goods (25%), travel services (23%), sports and entertainment tickets (19%), flowers (13%) gardening supplies (13%), pet supplies (11%) and food (8%).

* With a 16% annual growth rate, tools represent the fastest growing category for products sold by catalog, followed by products for men and seniors, which each have seen a 9% increase in sales. The apparel segment has seen a decline in catalog orders, down about 5%, revealed DoubleClick's 2004 Abacus Annual Catalog Industry Trend Report. The home furnishing sector has remained flat with little change.

* Fifty-nine percent of catalog shoppers will keep catalogs they order from at least three months or until a new copy arrives, DMA survey findings noted.