Alphabet Inc. today reports that Google’s advertising revenue rose 19.5% in the second quarter.
With Internet sales growing and catalog-to-call center sales on the decline, Disney plans to cease production of its paper catalog and focus on online sales.
In a move that counters the going conventional wisdom that paper catalogs are a key driver of online sales for multi-channel merchants, the Walt Disney Co. says it will drop its last paper catalog in April and put its direct-to-consumer sales completely online.
“We have looked at both catalogs and our growing Internet business, and based on what we saw this holiday in terms of how our guests are buying, whether at the call center or online, there was definite growth online and a definite decline on the catalog side,” says a Disney spokesman.
The spokesman says Disney dropped approximately 30 million catalogs last year, spending $18 million on production costs to do it. Nevertheless, Disney saw a 45% drop in phone orders over the past holiday season, he confirmed. He added that some of the dollars saved by ceasing catalog production would be transferred to search marketing and other online marketing efforts, and new technology to enhance the customer experience at the web site going forward.
The company’s decision to drop its catalogs has been criticized as short-sighted by some industry watchers and labeled a bold move by others. Given synergies between the catalog and online channels, “very few retailers have been bold enough to cut out their catalog,” says Mary Brett Whitfield, senior vice president, Retail Forward Inc. “Even when Sears got rid of its big book, it didn’t get out of the catalog business – it still did a lot smaller specialty direct catalogs. This is probably the first example of a significant catalog retailer that has totally eliminated its catalog.”
One challenge Disney will face in taking its consumer-direct business totally online will be making up for the exposure thus lost. “If they are going do more online marketing, there is a chance they will capture people in more places as they are spending time online. But it takes a long time for consumers to change their behavior,” says Whitfield, who is speaking at the Internet Retailer 2006 Conference & Exhibition June 5-7 in Chicago. “It could take more online marketing than Disney may expect to create the same kind of impressions online that the catalog did.”
Whitfield adds that while the catalog industry will continue to evolve and change as the retail landscape changes, she believes there will always be a place for catalogs. The Disney spokesman, meanwhile, reiterates that based on its numbers over the past few years, Disney believes it’s made the right decision for itself and that other retailers could be making a similar decision within the next few years.