April 30, 2013, 1:52 PM

Top 500 catalog retailers sell high-priced items to mainly older shoppers

In apparel and consumer electronics, catalogers boast the highest average order value.

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Age, it seems, may benefit catalog and call center retailers in the 2013 Internet Retailer Top 500 guide.

This group of merchants enjoys the second-highest average ticket of $202.70, trailing consumer brand manufacturers with $230.88, but ahead of retail chains at $192.51 and web-only merchants at $187.78.

Within the two largest product categories in the Top 500, catalogers outpace other merchant types. Of the 136 apparel and accessories retailers in the guide, catalogers have an average ticket of $167, compared with $142 for consumer brand manufacturers, $126 for retail chains and $125 for web-only retailers.

Among the 46 retailers selling computer and electronics products, catalogers have a $560 average ticket, besting consumer brand manufacturers with $363; retail chains, $352; and web-only, $287.

One reason catalogers might rank high is because catalog buyers tend to be older, say analysts. “As people get older they shop catalogs more,” says Steve Lett, president and founder of catalog consultancy Lett Direct Inc. “The 20’s and 30’s age groups are not your prime catalog market. The heart of the market is 45-plus.”

Indeed, data from some of Lett’s clients shows that at least for these unnamed retailers older shoppers are the largest group. For one, a gift cataloger with an average order size of $65, 47.44% of its shoppers are 65 years old or more. For another, an upscale clothing accessory retailer with a $200 average order size, 31.4% of its shoppers are 65 years old or more.

An analysis of age groups among the four merchant types in the Top 500 appears to support that assertion. Of them, catalog retailers have the highest average—31%—of online shoppers 55 years and older. In comparison, only 28% of customers of web-only retailers are at least 55; consumer brand manufacturers, 26%; and retail chains, 25%.

“Online businesses tend to cater to a younger demographic of 15 to 45 years old that has embraced the online channel,” says Tanya Hansel, founder of consultancy Hansel Group Marketing. “This customer segment searches for free shipping offers, compare prices and jumps from site to site before making a purchase.” Older consumers often are driven by a specific need or are responding to a promotion, she says.

In fact, on average, 51% of online catalog shoppers are 45 years old or more. In comparison, the average is 48% for web-only retailers; 45% for consumer brand manufacturers; and 44% for retail chains.

Catalogers with many customers between 40 and 65 year need to find a balance between catalog frequency and online initiatives, Hansel says. “Certain segments can tolerate fewer catalog mailings while other segments might need a higher frequency,” she says. Testing will reveal that, she adds. Catalogers could conduct a hold-out test, in which a retailer withholds catalog delivery for a specific time for a sub-segment of its consumer database to gauge if sales differ from a similar group that does receive catalogs.

“A hold-out test will enable catalogers to measure how much in incremental sales are driven by the catalog and whether these incremental sales are profitable, after accounting for gross margin and catalog mailing costs,” Hansel says. “If your audience is comprised of 20-somethings and they receive eight or more catalogs per year, run a hold-out test.  The hold-out test results might show that there is no difference in sales whether they receive six or eight catalogs, but the cost of mailing the seventh and eighth catalog is hurting company profits.  In this example, alter your marketing strategy by reducing your frequency and use the cost savings to fund online acquisition initiatives.”

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