But the social network’s advertising revenue grew 18.4% during the quarter.
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Egler and Catalog Spree decline to divulge exact costs, but Egler says they are minimal. "Because it's a byproduct of the paper catalog it's just the contract with Catalog Spree," Egler says. Catalog Spree charges a cost per thousand clicks on products. "The cost of the physical version of the catalog dwarfs any costs relative to the tablet. It's very favorable considering what we can do and the eyeballs that see the products on the app."
Pouncing on tablets
Like Filson, Redcats USA pounced on the tablet catalog app. However, the retailer, which operates numerous brands, decided rather than go with an aggregator it would build and promote apps in-house. And it did so fast. Its OneStopPlus fashion brand launched its iPad catalog app just two months after the tablet was released in April 2010.
So far consumers have downloaded the app 40,000 times, Redcats reports. The average time per session is 10 minutes. And the conversion rate for the app is double that of the digital catalog posted on the e-commerce site.
"We are learning a lot from this initiative and that is the most important thing," says Yann Tanini, vice president of e-commerce for the OneStopPlus Group. "It's great to have low investment and positive ROI, but what's most important is the learning we are getting on the technical and use sides and how customers want to interact with us to really define the mobile roadmap over the next few years."
OneStopPlus, like Filson, has all the digital creative assets for the tablet catalog because they were already created for the print catalog. The merchant's pre-press catalog vendor has the catalog pages; OneStopPlus sends the vendor a digital mapping table that connects images in the catalog with URLs on the e-commerce site. When a consumer touches a product such as a dress on a catalog page, a product details window pops up, from which she can add the product to a shopping bag. When she touches Checkout, a larger window pops up with the e-commerce site-based cart to complete a purchase.
"Mobile is one of our main strategies—more and more we see our customers embracing the channel and as a result that is clearly where we need to be," Tanini says. "The iPad version of the catalog is a really great way for us to improve the catalog experience. We can add more features like customer reviews and a lot of interactivity you can't have with paper. Tablets are a huge piece of our strategy in the next few years."
While tablets are indeed becoming a priority for many retailers, the future of tablet catalogs is anything but certain. Some m-commerce professionals and analysts think tablets and catalogs are a match made in heaven, others view tablet catalogs as the beginning of an evolution of electronic catalogs, and still others think tablet catalog apps may be a fad as the entire catalog format dies away and is replaced by some new form of direct marketing.
"The tablet catalog could be a stopgap measure where catalogs evolve into something completely new that doesn't look anything like a catalog does today," says Egler of Filson. "Today we have converted the physical catalog to digital and you are looking at essentially the same thing. But the format will change dramatically as the consumer pushes us to migrate to the latest technologies."
But printed materials may still reign supreme as catalogs continue to evolve, some industry observers say.
"It will be a hybrid approach between tablets and print because direct mail is so important, it's a trigger, it boosts awareness, it's nonintrusive, it gets in people's homes and breaks through the noise," says Mulpuru of Forrester Research. "In the Internet world where it's so noisy and there are no barriers to entry, direct mail catalogs stand out; there is less to compete with in the mail world than there is when you search for Ôholiday gift' on Google or have an overflowing e-mail box."
Marketers will not give up direct mail because it remains a powerful and useful tool for driving awareness and sales, Mulpuru adds. But, she says, the catalog may transform into something new, though still in printed form.
"Companies like J. Crew and Gap and Williams-Sonoma absolutely benefit from having direct mail as part of their core business," she says. "Maybe they won't have to send out 100-page catalogs or really expensive mailers anymore, but there is no question that for certain sections of the population, and for things like new customer prospecting, it is important to be front of mind in direct mail."
A mobile experiment
But tablet catalogs can help retailers become front of mind with a segment of the population—and an affluent segment at that. In October 52% of iPad owners lived in households with incomes of $100,000 or more, compared with 27% of smartphone owners. The median U.S. household income is about $50,000.
Because of the attractive demographics and low cost, more retailers may launch a catalog app as an experiment in mobile commerce.
"It's very similar to the reason why some retailers jumped into the early mobile shopping malls, like Digby before it changed to a vendor," says Nikki Baird, managing partner at Retail Systems Research LLC. "They are trying to figure out how to do it, leveraging a third party to help get the word out and see if they are attracting the kinds of people they want to attract. In the mobile mall space, retailers jumped into that and once they learned, they started building their own mobile sites and apps."
Forrester Research predicts there will be 80 million tablets in use by 2015.