E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
The technology behind e-catalogs is evolving and radically transforming how consumers shop online.
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.
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.
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.