Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
Paper catalogs are no longer good enough for some multi-channel retailers. Today they’re sending out e-mail catalogs. And customers are clicking away.
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.
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.”