Just as online retailers embrace catalogs, along come e-catalogs
By Andrea McKenna Findlay
It’s no longer news when an online retailer sends out catalogs. Even the most die-hard pure-play advocates—think Amazon and its newspaper inserts—acknowledge that e-retailers need paper to entice customers to order products.
But just as online retailing transformed how merchants sold goods, so it is transforming the venerable catalog. The latest twist: e-catalogs.
Still in their infancy, e-catalogs have yet to be put to a wide test. But initial results show that consumers like to get e-mail catalogs and, more importantly, that they respond to them in higher numbers than they do to text, HTML or video e-mails.
Late last year, Monterey, Calif.-based West Marine, a boat and boating accessories retailer, tested an e-catalog by Mobular Technologies Inc. of Huntsville, Ala. It sent an e-mail catalog to 2,000 test customers. The result was a 16% conversion rate of recipients to buyers in the first two weeks, 36% higher than West Marine’s previous experience with e-mail campaigns. An astounding 20% of recipients clicked through to view items vs. a more typical 10% or less of e-mail recipients. West Marine is planning to send the catalog to 250,000 customers this year.
A test by BMG Entertainment, the global music division of media giant Bertelsmann AG, mailed to 1.2 million customers using the Mobular Technologies system, generated 17% more revenue in the group that received the e-catalog vs. the group that received a traditional HTML e-mail.
With postal rates going up and the anthrax-in-the-mail scare still lurking in some consumers’ minds, direct marketers are less likely to use the mails than they have in the past. In fact, the U.S. Postal Service’s nearly 6% decline in mail volume last year indicates that merchants are already sending fewer catalogs.
The two barriers
Thus this technology happens along at the right time, say analysts. “The big catalog companies that know how this product can add value to their business are likely to lead the charge for this technology,” says Kevin Scott, marketing strategies analyst at AMR Research Inc. in Boston. “When they make it successful, other multi-channel retailers will catch on to it as well.”
At first, it seems that e-mail catalogs only compound the problems of bandwidth and consumers’ PC capabilities that HTML and video e-mail campaign managers fret about. But Mobular Technologies delivers its catalogs in a way that obviates those problems. For starters, it gives the recipient’s e-mail a set of instructions on where and how to access the e-catalog. Then it streams the material from a server to the customer’s machine, rather than delivering the entire message to the machine in one blast. With that approach, the marketer is no longer at the mercy of the machine and its operator to make the e-catalog do its job. “The two barriers to entry for e-mail marketing have been the inability to download e-mail information due to lack of software and the lack of modem speed,” says Stewart Obler, Mobular Technologies CEO. With Mobular Technologies’ Mobular Engine, both obstacles are eliminated, he says.
Mobular Engine employs algorithms to compress the catalog document to make it small enough—about 80 kilobytes—to send through the e-mail system. The patented technology decompresses the catalog with Mobular Engine software, which recipients receive through the e-mail.
Another advantage of sending the software with the e-mail connection is the ability of the consumer to conduct product searches in the e-mail. In fact, Mobular Engine evolved when founder and President John Horack noticed that the two biggest uses to which consumers were putting the Internet were searching and e-mail. “But I never saw the two uses—research and e-mail—put together,” he says.
Instant access
With the Mobular Engine, the end user has instant access to the e-mailed catalog even if the consumer’s PC is on a slow modem. Mobular’s technology cuts download time as well as improves the recipient’s ability to access messages, the company says. With other e-mail technologies—such as HTML—a browser is needed to connect to the message which resides on a web server. However, not all e-mail recipients can receive and view HTML documents: America Online, for instance, restricts them and some older terminals do not have the computing power to open such graphics. The difference with Mobular Technologies’ product is that it provides the software through e-mail so everyone can open the message.
The technology has been successful in delivering a fast experience to consumers. Recipients in Mobular tests who opened the catalog downloaded 64 pages in an average five seconds. And they took to the format: Recipients completed 1,850 product searches and viewed 32,000 pages. On average, recipients took 6.25 actions per e-catalog opened.
Such information about the actions of e-catalog recipients is important to retailers and is the kind of knowledge about customer activities that they cannot get from a paper catalog or even from traditional e-mail campaigns. For instance, each Mobular Engine sent to a recipient has a serial number. With the option to pass the catalog on to another friend via e-mail, the retailer can see viral marketing at work.
And because the catalog is downloaded to a user’s computer via e-mail or Internet connection, the retailer can keep track of which content the user is viewing and analyze what the user subsequently does with that content as long as the user is connected to the Internet, explains Horack. The retailer thus has the ability to determine where it might need to beef up stock or where there might be problems in product presentation that are preventing sales.
Furthermore, a marketer can make a change immediately in the online catalog, says Horack. “Because it sits on a server it can be changed any time. So when customers access it, they get the most up-to-date version,” he says. The advantage here is flexibility and timeliness. “With a paper catalog or even an HTML e-mail, you can’t go back and add items if they’re in demand or fix a mistake on a page.”
The evolution
E-catalogs are, of course, simply the latest evolution in a process that has seen e-mail marketing progress from simple e-mail text messages, to e-mail with HTML graphics to video e-mails, each of which has boosted response rates from the previous generation. But as each stage has developed, retailers and marketers have not left the last stage behind. There is still a place in the marketing mix for the different kinds of e-mail promotions. Each retailer simply must determine the goal of the marketing campaign and use the appropriate approach, analysts and consultants say.
For instance, if a retailer is looking to promote short-term sales that draw in new or regular customers, HTML and even text e-mails may suffice because they cost pennies per e-mail. “The majority of retailers still see online marketing as a way to promote brand awareness and loyalty,” says Scott of AMR Research.
But if the goal is to convert catalog shoppers to online in order to save money, or to give customers access to a wide range of products in a format that is easier than browsing a web site, then e-catalogs are a good investment, they say. Furthermore, the birth of e-catalogs doesn’t mean the death of paper catalogs. “Our objective was to see if we could convert catalog customers to online shopping,” says Tony Gasparich, vice president of Internet for West Marine. “Half of the customers we sent the e-mail catalog to were catalog customers and half were online customers. We are finding that some catalog customers still like the catalog.”
BMG used Mobular Technologies’ Mobular Engine to deploy an e-mail campaign that presented nearly 500 featured selections with streaming audio, searchable by keyword, artist and other details. Recipients were able to browse and search the catalog through their own e-mail software. BMG says it increased the response rates from the e-mail campaign and saw a 17% increase in average order size compared to recipients who received HTML e-mails.
More deals
With unlimited distribution, a retailer would typically pay around $6,000 to have a Mobular Engine send e-catalogs. By contrast, printed catalogs cost several dollars each to print and mail. The company creates an ongoing revenue stream by charging retailers additional fees for tracking services.
Going forward, Mobular Technologies is working on technology that will allow e-catalog recipients to shop directly from the e-mail catalog, says Horack. E-mail vendors such as CyBuy have been marketing graphic e-mail products that have similar capabilities within the past year. Mobular Technologies says it may well partner with such a vendor in the foreseeable future, though no plans are in the works yet.
Mobular Technologies already is striking deals with major
e-mail marketing providers to assist in delivery of the catalog. Bigfoot Interactive,
a provider of e-mail marketing technology and services, announced a deal with
Mobular Technologies in October to create, deliver and track interactive e-mail
catalogs. Under the agreement, Bigfoot Interactive clients will be able to send
Mobular Engine-based e-catalogs as part of permission-based marketing programs.
Mobular Technologies also plans to announce a deal with Doubleclick, another
leading e-mail marketing company in the coming months. “Combining these marketing
technologies will increase the value of online marketing,” says AMR’s Scott.
An even newer take on e-catalogs downloads
onto consumers’ desktops
Although retailers are only just beginning to realize the potential of e-mail catalogs, vendors already are developing offshoots of the product to boost e-mail marketing power. Australia and New York City-based The Wotch Network began marketing downloadable mini-books during the Sydney Olympics last year and has been wooing retailers in the U.S. Wotch CEO Colin Fabig says response rates during the product’s test period were promising- ranging from 25% to 35%. Fabig says the Wotch e-booklets cost only about 87 cents each.
Retailers can use the Wotch product to send e-books, e-catalogs, or e-brochures to customers’ e-mails. The technology does not rely on the e-mail system of the recipient. Rather, it sniffs out the recipient’s browser capability and sends that person a message connecting through a browser. Retailers can choose to have that e-mail connect to their own web sites. The end result is a customized electronic presentation that looks like a book on the computer screen. The potential problem with this method is losing consumer interest during download time. Fabig say that while it takes from 3 to 10 minutes to download, test users went through with it.
The Wotch differs from others, such as Mobular Technologies’ e-catalog, in that the Wotch version sniffs out the e-mail capability of the recipient, while Mobular Technologies Mobular Engine provides software and a compressed catalog file regardless of the recipient’s web connection.
A recipient who downloads the e-catalog or e-brochure to a desktop can reconnect at any time to browse and shop. Fabig says 6% of those who tested the product used it to make purchases. The company plans to add a permission-based alert feature that would give the recipient a pop-up window with updates on featured products or sales. The product also generated viral marketing capacity of up to 25%, which means that 25% of requests to download the e-catalog or e-brochure came from recipients who had been forwarded the original e-mail, says Fabig.
