Catalogers’ Crossover to Web Delivers Broader Sales
Old-line catalogers are embracing the same technology that some thought might be the death of mail-order firms: the Internet.
With systems for taking and shipping orders already in place, familiar mail-order companies such as Sharper Image, Lands’ End, Williams-Sonoma and Chef’s Catalog have had an easy transition to the Web. And rather than worry about cannibalizing mail-order sales, the catalogers expect to save on paper, printing and postage as some customers switch to the Web. In addition, the companies say, more ways to buy often means more sales, not just a change from one way of buying to another.
Catalogers claim about 3.5% of total retail sales in the United States. On the Internet, once giant Amazon.com is factored out, they grab about 20% to 25% of total online sales, said direct market analyst Kevin Silverman of ABN Amro in Chicago.
“Why? Because this is so easy for them to adapt,” Silverman said.
The top e-commerce sites are business-to-business sellers, such as No. 1-ranked Cisco Systems, with $8 billion in online sales in 1998, according to Catalog Age magazine. But in the online retail ranks, after Amazon.com comes many of the traditional mail-order companies.
Among retail sites on the Web, catalog companies Spiegel Inc. and Fingerhut Cos., a unit of Federated Department Stores Inc., tied for second to Amazon, with $100 million in annual online sales in 1998, according to a ranking by Catalog Age. Besides its namesake catalog, Spiegel owns retailers Eddie Bauer and Newport News. Fingerhut sells under its own name, Bloomingdale’s and Macy’s by Mail.
Lands’ End and L.L. Bean ranked above shopping powerhouse EBay, bringing in $61 million and $50 million, respectively, last year compared with EBay’s $47.4 million.
Catalog companies were among the first retailers to go online. Sharper Image and Chef’s Catalog, with their sophisticated customer base, went on the Web in the mid-1990s, though the sites could not process orders, which had to be phoned or faxed.
“Having built up brand recognition and customer trust and efficiency, going on the Internet was a really easy and smooth transition,” said Tracy Wan, president and chief operating officer of San Francisco-based Sharper Image. “Not only is the Web not robbing from our catalog, we’re finding it a very efficient way to offer our unique product to a broader audience.”
Sharper Image, which began as a cataloger but which grew to 92 stores nationwide, anticipates 1999 online sales of $25 million to $30 million, five to six times greater than last year. That compares with $162 million in net sales for stores and $71 million in net catalog sales.
Chef’s, meanwhile, said that its online presence is one of the reasons that Neiman Marcus bought the company in 1998. The Web is also at least part of the reason for the company’s increased recognition, Chef’s says, as demonstrated by five-year growth from about $30 million in the mid-1990s to more than double that now.
Especially during the holiday season, the mail-order houses have an advantage over pure Internet retailers that depend on third-parties to do their shipping for them. Accustomed to last-minute orders, many catalogers are guaranteeing Christmas orders received as late as Dec. 22. Many Internet sellers, by contrast, no longer are guaranteeing deliveries.
There are pitfalls, however, in adjusting marketing tactics to a new medium.
Lands’ End suffered an 18% drop in November sales compared with a year earlier. Although analysts were quick to focus on unseasonably warm weather throughout much of the country, which hurt many apparel sellers, Lands’ End cited catalog reductions as one reason for the slide.
Catalog sellers also must learn new ways to gain customers, explained Laura Beaudry, editorial director for Catalog Age. Many have turned to affiliations. Lands’ End has a presence on more than 1,000 other Web sites to draw people to its online store.
Williams-Sonoma attracted attention first through its popular bridal registry site, which it opened before launching a full online store.
The company, which went online last month, recorded $1 million in sales during the first three weeks of November and another $1 million in the 10 days after that.
Those numbers, however, are just a fraction of Williams-Sonoma’s in-store and catalog sales. For the 13 weeks ending Oct. 31, the company sold $189.7 million in its stores and $134.4 million through its catalogs.
