Retailers shift their ad spending from TV, radio and print ads to digital ads.
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At Altrec.com, CEO Morford already has a reason to feel confident about his move into catalogs: Sales from its first two catalogs, mailed in October and November, have already paid for the cost of producing and shipping them.
The 30-page catalogs, which went out in each mailing to under 100,000 Altrec customers, all drawn from the house list, were a seasonal selection representing less than 10% of the products online, but in addition to the 800 number, the URL appeared on every two-page spread.
The catalogs also had a purpose beyond immediate sales at Altrec, which sells high-end, high-tech outdoor apparel and gear. “Internet companies are still working on building credibility among consumers,” says Morford. “A deciding factor in doing the catalogs was to establish more credibility with the consumer and to do brand positioning as to who we are and what authority we bring to the table.”
To keep costs down, Altrec used stock and manufacturers` photography when possible. In-house staff did any additional photography or photo manipulation; list management also was in-house. In addition, the company filtered catalog distribution to customers who showed the highest propensity to purchase. “We really went after as many safe bets as possible and kept risk factors low. That impacted catalog performance and it also impacted our expenses,” Morford says.
Altrec measured catalog performance by sending the catalog only to selected existing customers on whom it had purchase information and then checking their frequency of purchase after they received the catalogs. As in TShirtKing’s case, specific information on additional sales that may have come from catalogs that were passed on by customers of record to new customers wasn’t captured.
The second catalog, in November, produced 30% more sales than the first catalog. Though Altrec attributes part of that increase to seasonal factors, it considers the catalogs so successful they will become a regular part of the marketing effort with a minimum of four catalog mailings planned this year, Morford says.
Only a sample
Morford notes that smaller, lighter catalogs showing only a sample of inventory on the web site are a contemporary adaptation of traditional catalogs that suit the marketing needs of web retailers. “A pure-play Internet retailer is really a direct marketer just using the digital environment,” says Morford. “You have to look at what is the most frictionless way to reach the customer at the least expense. In our industry, big stores are high-risk expenditures with limited exposure. Catalogs could go either way, depending on how you build them and what list you market to. This is an area for us to grow in and understand what our competitors have done for years.”
At an estimated fixed cost of about $25,000 with an additional per-unit printing and distribution cost that totaled approximately $80,000, BackcountryStore.com’s 24-page catalog, representing about 180 of BackcountryStore’s 15,000 online items, has more than paid for itself in sales, says Bresee. The company credits the catalog for November and December sales numbers that far exceeded earlier projections. November sales were up 166% over last year and December sales figures, still preliminary, are up approximately 200% year over year. Through the year, sales were within 5% of projections every month. Projections for November were originally 126% over the previous year, leaving a 40-point difference Bresee attributes to the catalog that reached customers’ homes in mid-November. “We essentially gave credit for anything over our projections to the catalog,” he says.
With a house list of 125,000-small by catalog standards-BackcountryStore did little filtering other than validating addresses lest it shrink the list to a size too small to deliver meaningful results. While the company deems the catalog a success, that doesn’t mean there aren’t some bugs to be worked out. It will have to go back to the drawing board on a tracking mechanism that captures customers’ precise path from catalog to web site and call center. The catalog provided specific SKU numbers that would bring up that item’s page in a product search. But instead of using it, customers were more likely to simply go to the web site, look around and locate the item themselves.
While offering a discount for using such codes is one way to motivate shoppers to do so, BackcountryStore decided against that, in part because it didn’t want to give away the margin and in part because manufacturer price controls on many products don’t allow that kind of pricing flexibility, Bresee says. Nevertheless, he’s certain it was the catalog that provided the extra lift. In addition to the November and December sales figures-after the catalog shipped-topping earlier projections, he notes that the web site saw a major spike on Nov. 15, the day the catalog was scheduled for in-home delivery. BackcountyStore also gauged the catalog’s performance based on information from the call center, where agents asked customers for a catalog referral number.
A natural extension
Beyond sales, a key objective for the catalog was branding. Until now, the 6-year-old company has spent marketing dollars almost exclusively on trackable sales. “It was a big step for us to realize that as we grow, we need to be thinking larger and building this brand, not just chalking up sales,” Breese says.
A catalog seemed like a natural extension of the web site given BackcountryStore’s category: high-end, high-ticket outdoor gear. Bresee compares its catalog to the concept of an automobile brochure. “A $700 pair of skis is generally not the kind of thing that you spontaneously purchase. You want to stare at that picture, think about it. Getting those specs in the hands of someone-the length, the side cut, the core material-can really stoke that passion and finally make a customer think, ‘I’ve got to have it.’”