Perspectives and Opinions on Catalog and eCommerce Marketing

I attended the Internet Retailer Conference (IRCE) in Chicago last Wednesday, and then hurried back to New Hampshire to catch the last part of the VT/NH Marketing Group’s Conference. Both conferences were amazing in their own way. Internet Retailer had over 9,500 attendees, and there really was an excitement at the conference that I have not seen in years. (The DMA will never be able to match IRCE again). It took me over two hours just to walk the exhibit hall, and that was with minimal eye contact with booth attendants.

Although I was only at Internet Retailer for one day, I heard three separate speakers mention that catalogs are a viable way to drive website traffic. Of course, the speakers said it like they had just discovered this phenomena, and that they were geniuses for having figured this out – but at least they acknowledged what we all already know.

Conversely, I did not hear a single speaker mention the Marketplace Fairness Act (national collection of sales tax on internet and mail order purchases).  The focus was on growth, and change. And yes, there more “industry experts” touting the magic of mobile strategies and omnichannel strategies than were advocating catalogs, but that’s to be expected – it was an internet conference.

I have to say that I’m not concerned about the sales tax issue (Marketplace Fairness Act), which was recently passed by the US Senate. I expect it will eventually pass the House, and be signed by the President. This is not the first time it has come up. Whether it happens in 2013 or 2015, it will pass. But, this is not the end of the world – the supermarkets will still be open tomorrow. This will be a burden for some to comply with, but this is a fact of life, and you need to adjust your business. Change equals basic catalog survival.

When I worked at Brookstone, I never felt we were at a competitive disadvantage because we had to collect sales tax in 40 states, and Plow & Hearth didn’t.   The administrative burden is the only issue that I see, but I do not see it as onerous.  I’m sure that there will be a ton of 3^rd party businesses that will offer a service to handle this for companies. Yes – it adds cost. But I see it as being no different than requiring a dairy farmer to pasteurize his milk, which was a huge battle back in the 1930s and 40s. It’s a cost of doing business. The trick is to figure out a way to be more efficient somewhere else to cover the sales tax cost. (You would not believe how many catalogs can’t do something as basic as posting NCOA changes back to their own order processing system – that is such a basic efficiency!).

The collection of a nationwide sales tax is the least of your problems. Look at Amazon – and look hard at what it is doing to your  business. Amazon now represents 12% of all internet sales. In their Q1 2013 financial report, they reported that their marketing expense is only 3.9% of net sales.  Most of you are spending 30% of net sales on marketing. Conversely, Amazon is spending 8.6% of net sales on technology – most of you are spending less than 1%.

Where does that pay off?  I searched on Wal-Mart.com for a pair of brown 45 inch shoelaces the other day, and my search returned a leather wingback chair and a paperback titled “Revenge of the Lunch Ladies”.  The same search on Amazon returned over 30 listings for various types of shoelaces. Maybe the Wal-Mart site was simply having a bad day, but when the largest retailer in the world can’t execute a simple search for shoelaces, and Amazon returns 30+ options, you can see what you are up against.

We continue to focus on trying to preserve our old way of doing business.  We have to change. Yes, if we can delay a national sales tax through the efforts of groups like the ACMA, then we should do it. But, we are wasting too much energy on those issues. Focus on growth without worrying about those issues.

That’s what was great about the VT/NH Marketing Group conference. Obviously, it was much smaller than IRCE, but the focus was on the tactical opportunities (for example, video and retargeting) to grow your catalog or online business. The beauty of the sessions at this conference was that (for the most part), they offered tangible, incremental ways to change your business and add sales.

Here is an example of a company changing how it does business. Ben Meadows is a B2B catalog featuring products for people who work outside, primarily foresters and farmers. They now offer a year’s worth of ground shipping for $39, similar to Amazon Prime. I recently placed a $110 order, and paid $15 in shipping. If I ordered 3 times a year from them, it would pay for me to “buy” this offer.  Will they give up some shipping revenue? Probably, but they are at least taking a stab at setting up a different business model to compete not just against Amazon, but to keep their customers happy.

It is not easy to start a new business model; it is much easier to lament what happened to my old model. But if you want to stay relevant, you need to make that change.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 802-295-6600 x235

blapierre@datamann.com