Are postal catalogues finished?
One respected industry analysis firm estimates that one in four UK mail order companies are now operating at a loss. Of nearly 900 mail order companies analysed, over 200 are currently rated by Plimsoll as being ‘in danger’. Jotham Danquah MD of Zmags (UK) explains more.
Many of the industry’s problems are converging at exactly the same moment – high inflation in raw materials, printing costs and transport are all combining with an economic downturn which was reflected in June’s record 3.9 per cent drop in retail sales (the highest drop ever recorded).
The key question therefore is whether postal mail order as a business model is doomed? Bloomingdales, the famous US retailer seems to think so. The company recently announced that it sees no future in postal mail order and is quitting it altogether in 2009. Given that Bloomingdales is owned by Macy’s, the second largest US retailer, such a move is not insignificant.
What has driven Bloomingdales’ decision? Online mail order. After all, why spend millions printing and distributing catalogues when the internet is readily available at a fraction of the cost? Bloomingdales expects USD 1 billion in internet sales this year alone which is not far behind its high street retail sales figure.
The internet is now transforming the mail order industry as demonstrated in the UK by Littlewoods Shop Direct (the UK’s market leader) where one in three sales are now made online. In fact, Littlewoods expects online orders to represent half of all sales by 2009. This is the future.
A key part of this transition to the internet is the growth of online digital page-turning software. These solutions, of which Zmags is one example, are downloaded quickly, are fully functional and offer a few advantages over postal catalogues. One example? Page-turning software can incorporate still photos that come to life and move as embedded video when clicked-upon.
Furthermore, catalogues are easily transferred online using pdf software conversions. It’s a straightforward process that transforms a postal catalogue into a digital page-turning version within the space of a few minutes. Free trials are readily available through most providers.
In short, digital catalogues offer an especially powerful way of tapping into the power of the internet and harnessing its ability to generate catalogue sales.
What are the cost advantages? Well that depends on factors such as list costs, email broadcast etc but as a rule digital catalogue versions cost 10 per cent of the postal catalogue costs. With the mail order industry working to 2% pre-tax margins that’s a critical cost saving.
The postal catalogue is not finished – far from it because people will always want to read a hard copy from the comfort of their sofa. However, postal mail order is coming under severe pressure from two sides: catalogue production/distribution inflation on one side and the rise in internet sales from the other. For the above reasons, I expect postal catalogues to continue their decline with digital catalogues taking their place.
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