E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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Blair continues to use catalogs as a way to prospect for new customers. The web fills out customer acquisition strategy with search and other online marketing that targets a younger audience as well as those simply more inclined to shop online. With a marketing database that provides a cross-channel view of customers, Blair is incorporating Internet behavioral data into how often and to whom it sends catalogs.
“How customers purchase online certainly can have an impact on how many catalogs they receive,” Parnell says. “Like a lot of catalogers, we are continually testing how the two channels relate. We haven’t taken a full plunge into dramatically cutting catalog circulation because the customer is a web shopper. But we’re experimenting.”
When web analytics capture online shoppers who appear to be solid catalog prospects, Blair sends them a catalog, just as it uses catalogs to promote its web site. “We are continually trying to create synergy,” Parnell says. “We realize significant opportunity resides in that multi-channel realm.”
Any early speculation among retailers and retail pundits that the web would bring paper catalogs to an end has evaporated: Catalogs not only are holding their own at multi-channel retailers, but formerly web-only retailers have moved to add catalogs to their lineup. If anything, the advent of the web has given catalogs new life with new roles such as a marketing vehicle pointing customers to the web, and by making them more cost-effective sales vehicles as merchants use web insights to target distribution and promotion.
For Internet retailers, catalog strategy today is “really about using catalogs to drive new customers,” Forrester’s Mulpuru says, “and to remind some of your best customers about the products that are there.”
A weighty issue
Recent postal rate increases will have an effect on catalog mailings, likely making catalogs smaller in size. That in turn will have a ripple effect on web sites-one more development in an evolutionary process that’s increasing the importance of a retailer’s online presence and turning catalogs into more of a web driver than a retail channel, says direct marketing consultant Don Libey of Libey Inc.
As catalogs continue to shift from a competing retail channel to a marketing and branding medium-a function of marketing evolution as well as ongoing postal rate increases-they’ll feature best-selling products, specials and other elements that will drive shoppers directly to a longing page that features the product and an offer, Libey says. That will hold true both in terms of new customer acquisition and customer retention, he adds.
So what does that mean for a retailer’s web site? “Web sites are going to have to understand the aftermath of the driving period,” Libey says. “As catalogs increasingly become web drivers, it’s not going to be enough to just get customers to the site-you have to get directly to the thing that is exciting the customer.”
Online retailers have time to increase the efficiency of those catalog-to-web connections. “This is not going to happen next week or next year or even in two years,” Libey says. Libey also cautions catalogers against “knee-jerk” reactions in shifting entirely online and abandoning prospect and customer mailings, noting industry statistics showing that 70% to 80% of online purchases are influenced at some point by a paper catalog. In fact, as catalogs become smaller and more narrowly focused, catalog mailings could increase, he says.
But that 70% to 80% figure is shrinking with time, he adds. “The postal rate increase is a watershed,” Libey adds. “The catalog will change, and the web has to meet how catalogs change and enhance that. I think we are going to see a tremendous allocation of dollars from other media into the online media. We are about to see the emergence of web 3.0, and within five years we will have a very different shopping scenario.”