Spare that Tree

Like most things associated with the Internet, the technology behind e-catalogs is evolving. Where once retailers simply posted exact replicas of print catalogs on their web sites, today they engage in more sophisticated applications. Those on the forefront can do daily updates of e-catalogs to replace out-of-stock merchandise with other items, update pricing on price-sensitive items, e-mail limited pages of catalogs targeted to specific customers and post or e-mail several versions of their catalogs to test which one does best.

And while some of these most advanced applications are still rare, retailers more commonly will post “overlays” on their online catalogs that can highlight limited-time sales or note that a particular item is out of stock.

Not complicated

Today, posting an entire catalog on a web site doesn’t have to be complicated or costly. Retailers say creating at least a basic version is a relatively simple task. In most cases, retailers use third-party companies that do all the work and host the catalog site. Then, all the retailer has to do is hand over the PDF files that were created for the print catalog to the service company and provide the necessary links to product pages to facilitate online purchases. The cost can be as little as $2,000 for a 50-page catalog on a completely outsourced basis.

“E-catalogs are really cost effective because they don’t require much investment in resources and we see incremental sales from both existing and new customers,” says Dana Bateman, director of Internet marketing for Hammacher Schlemmer, a catalog company that posts its catalogs on its web site.

Retailers say e-catalogs allow them to make their catalog offerings available to a wider range of customers than they can afford to mail print versions to. And they can make it easier for print catalog readers to find and purchase online items that they previously saw in print.

Most retailers say they are getting the payback required. Before putting all nine catalogs distributed by Lego online, for instance, the company did a limited test where it e-mailed a link to an e-catalog to half of its regular catalog customers. The others were not notified that an e-catalog existed. E-catalog viewers made significantly larger purchases and had higher conversion rates, according to Jarid Lukin, Lego e-commerce business manager, although he declines to reveal specific numbers.

The popularity of e-catalogs has soared as many major distributors of catalogs, including Neimen Marcus, Saks Fifth Avenue, Lego, Hammacher Schlemmer, Eddie Bauer, Burberry and Nordstrom, offer some, if not all, of their catalogs, online.

Augmentation

The key to making e-catalogs work, retailers say, is integrating the online offering with the print catalog. “We never advise retailers to replace their print catalogs with e-catalogs,” says Doug Mack, CEO of Scene7 Inc., a New York-based provider of e-catalog technology. “E-catalogs should augment the printed versions. They allow retailers to reach a broader audience and provide an opportunity for catalog shoppers to see the merchandise again and make immediate purchases.”

One retailer that can testify to the benefits of integrating the print version with the online version is Hammacher Schlemmer. E-catalog sales are significantly higher immediately after the print version hits customers’ homes, indicating that consumers are looking at the print version first, then going online to buy.

“Customers check out the catalog first and make mental notes of what they like,” Batemen says. “Then the next time they go online, they go directly to the items they were interested in. If we didn’t have the e-catalog version, we might have lost some of those customers because they wouldn’t have bothered to call in the order.”

It is essential that retailers make sure the e-catalog is ready when the print version hits homes, she says. Hammacher Schlemmer offers three catalogs online annually—about half of what it offers in print versions. Those catalogs average about 80 pages. The company uses RichFX Inc. to provide technology and host the site.

But more is at issue than just using the e-catalog to let customers complete transactions. “Customers often make a mental note of where the product they liked was located in the catalog,” says Christophe Crenault, vice president of marketing for New York-based RichFX. “If I’m a customer and I see something I like in a catalog, I remember it even if I don’t buy it right away. Then when I go to that company’s web site, I remember what I liked. I might have a hard time finding it on the regular web site because I can’t remember the manufacturer or how to describe it, but I remember what catalog it was in and I remember that it was on the right-hand page and was worn by a blonde model. I can find it quickly in the catalog and order it.”

A/B & E test

Today, most retailers are still simply replicating their existing print catalogs online. But some have ventured into new areas. Lego, for example, has used e-catalogs to test features that it is considering for its print catalog. For example, Lego wanted to know if its products based on popular movies and TV shows, such as Star Wars and Harry Potter, sold better with a lot of background pictures of the shows or if the pictures were distracting from the product. So Lego created two online catalogs and e-mailed hyperlinks to customers, directing half to each catalog. One version had a lot of background pictures from the movies while the other had a simpler background. Then the company conducted customer interviews. The conclusion was that kids like the backgrounds, but parents like the simpler version.

Because of this test, Lego uses more background on print catalogs directed toward children and less background on catalogs geared for adults. “We couldn’t have done that test with a print catalog. It would have cost too much to print two separate catalogs with the same products,” Lukin says.

Another retailer, a hardware chain in Canada, has integrated its 300-page e-catalog with the 57,000 product descriptions on its web sites. This way, when a customer goes to the e-catalog’s tool section, for example, the customer can click and get information on a full range of tools that is broader than what is in the print catalog, explains Mark Baldwin, president of ICM Group Limited. ICM is working with 15 retailers to develop e-catalogs, including this hardware chain. This chain does not allow customers to purchase the items online as the intention of the e-catalog is to drive business to its 1,100 stores.

Downloadable catalogs

In another advanced application, IBM e-mails a product catalog to b2c and b2b customers. Because the catalog goes to frequent purchasers, customers are encouraged to download the catalog to their hard drives where they can keep it for easy reference, says Douglas Rezabek, vice president of business development and e-marketing for Huntsville, Ala.-based Mobular Technologies Inc., which developed the system.

What is unique about the IBM catalog is that it is updated daily. Price-sensitive items are updated as prices change. Limited-time specials have dates listed so that the item automatically disappears and is replaced with a new item when the offering expires. Customers who keep the catalog on their hard drives can click to get their catalogs updated as needed.

But not all retailers want all these bells and whistles. Neiman Marcus puts its famous annual Christmas catalog online, but has not decided to put other catalogs online. And it’s not rushing to add a lot of features.

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“We’re pleased with the success of our Christmas book online, but tests with other books did not show a huge return,” says Brandon Hoffman, president and CEO of Neiman Marcus Direct. “Our site is so robust to begin with that we don’t think it is necessary to have all our catalogs online.”

However, Hoffman adds that he has seen considerable improvement in e-catalog technology in the last year and that might encourage Neiman Marcus to post more e-catalogs. He notices that the pages of his book turn faster this year and presentation quality has improved as customers can now click on a picture and get a larger version.

Usability not always tops

Most developers of e-catalog technology conduct usability studies to find out what shoppers want from their e-catalogs. However, RichFX’s Creanult says usability is not always as important as what improves sales. “We’re not always looking for what is most useable to the shopper as much as what sells the most product,” he says. “We’ve found that customers will sometimes say they don’t like certain features, but we often find the features customers say they don’t like actually sell the most product.”

Still, the direction of the industry is toward more functionality. Mobular, for example, was formed by NASA scientists in Huntsville who wanted to develop more advanced applications of presenting data found in financial reports, training manuals and catalogs. Many of the firm’s early catalog projects were in the more sophisticated b2b arena, but the firm is now getting interest from retailers who want more than an online replication of their print books. Mobular technology allows retailers to make continuous changes to the text and product listings and allows them to segment the e-catalogs to specific customers.

Continuous improvement

Retailers can outsource their e-catalogs to Mobular, which develops the technology and hosts the site, or can license the technology for internal use. IBM, for instance, wants greater control of its catalog and so has chosen to purchase the technology to run on its own servers. Either way, the cost of using Mobular services is between $1,500 and $4,500 per month, depending on the size, complexity and number of updates required, Rezabek says.

In most cases, ICM Group provides its services on a fully-outsourced basis. The company does not release specific prices, but Baldwin says the cost per book is based on the number of pages involved, functionality required and the volume of traffic. Again, retailers hand over PDF files and ICM provides the development, hosting and reporting of data. The company has links to the retailers so that catalog purchases are sent directly to the retailer for fulfillment. In a few cases, retailers have asked to maintain the catalogs on their own servers, Baldwin adds.

One of the pioneers in e-catalogs is RichFX, which has worked with more than 200 retailers. The e-catalogs it has developed range in size from circulars of four to eight pages to catalogs with more than 100 pages. A few b2b catalogs have more than 1,000 pages.

RichFX provides its service only on a fully-outsourced basis and will not license its technology. “If we provide the hosting, we can improve our platform at a fast pace without continuously sending clients upgrades that they have to install,” says Crenault.

RichFX clients pay $5,000 to $50,000 per year, depending on the number of catalogs, pages in each catalog and volume of traffic that RichFX has to handle on its server.

Overlays

While RichFX does not encourage retailers to make continuous changes to its product listings, it does allow for overlays on items so retailers can feature certain items for a limited time and note that products are out of stock. “If customers know an item is out of stock when they are still looking at the catalog, they are likely to keep looking and buy something else. But if they get to the checkout line and find out, they are not likely to buy anything else,” says a RichFX spokesperson. RichFX also allows retailers to rearrange pages from the catalog, check the cover and send limited versions to specific customers based on their shopping preferences.

Scene7 provides three options to its 250 retail customers. The first version is a fully-outsourced product where Scene7 develops the technology and manages the program. In the second version, customers license the technology and are trained by Scene7 to produce their own e-catalogs, but then the retailers upload the catalogs onto Scene7’s server. In the final version, retailers license the technology, produce their own catalogs and host them on their own servers.

The next progression

Scene7 charges full-service customers on a per-page basis that typically amounts to $2,000 to $3,000 per catalog, Mack says. The cost is lower for those who host their own catalogs. “Previously, we provided only full-service options, but we found that did not work for everyone,” Mack says. The decision on whether to outsource or keep the technology in-house varies by retailers and it is not a matter of big companies wanting to do it in-house while smaller companies go the outsource route, he adds. “It depends on what each retailer is most comfortable with,” Mack says.

Scene7 also allows customers to move pages or limit the pages they e-mail or post, but it typically does not get a lot of requests from retailers to change prices or products. “You can signal something is out of stock and highlight an item, but changing information is more complicated than most retailers want to get involved with,” Mack says.

Yet more complexity is what retailers are most likely to get in the future. Whether that means segmenting e-catalog offerings, updating and changing information on a regular basis or trying different approaches to presenting their products and text, each retailer is likely to try unique approaches to differentiate its e-catalog from the competition’s.

Lauri Giesen is a Libertyville, Ill.-based freelance business writer.

Click Here for the Guide to Providers of E-Catalogs Products & Services