Looking Up

June 1, 2012 12:00 AM

Catalog retailers are getting better at driving traffic to their web sites and converting visitors to buyers, the 2012 Top 500 Guide shows. And the emergence of tablet computers like the iPad could provide a new way for catalog retailers to enhance their increasingly Internet-based business.

Monthly visits to the sites of catalog and call center retailers increased 7.6% from an average of 263.69 million in 2010 to 283.75 million in 2011, compared with a 9.9% percentage increase for all Top 500 retailers, from 2.82 billion in 2010 to 3.10 billion in 2011.

Unique visitors to catalog sites also increased significantly, in line with the increase for the Top 500 as a whole. In 2011, monthly unique visitors to catalogers' e-commerce sites rose 11.4% to an average of 114.3 million from 102.6 million a year earlier. For all retailers in the Top 500, the increase in monthly unique visitors was 19.2%, to 1.15 billion in 2011 from 965 million in 2010.

Weight Watchers International (No. 61), led catalogers in online sales growth in 2011 when the retailer generated $399.5 million in online sales. That's a 67.3% increase from $238.8 million in 2010.

Part of Weight Watchers' online growth came from a marketing campaign targeting men, beginning in the spring of 2011 with another push in the fall, David Kirchoff, Weight Watchers president and CEO, told analysts during an earnings call. "During those periods, we saw the relative mix of male signups to Weight Watchers online rise from historic rates of 8% to 10% to 15% to 20%, Kirchoff said. "Based on this success, we elected to build upon this strategy."

After Weight Watchers, the catalogers that grew the fastest in the Top 500 rankings this year are Green Mountain Coffee Roasters Inc. (No. 83) with a 58.0% gain; Peruvian Connection Ltd. (No. 424) up 54.2%; Softmart (No. 319) ahead 42.0%; and J&P Cycles (No. 300) up 35.0%.

Personalized e-mail marketing and sophisticated web site features like a product-comparison tool are part of what's driving growth at Keurig, a unit of Green Mountain Coffee Roasters that sells its own line of coffee-brewing machines and single servings of coffee to use with them.

Keurig draws on its database of 5 million customers to develop customized e-mail marketing programs, says Dave Manly, Keurig general manager of consumer direct. "We can reach out to Meredith Ann in Des Moines via an e-mail campaign when the temperature drops below 35 degrees and suggest it's time to stock up on hot cocoa," he says. "Our digital channel lets us have a virtual greeting, like a handshake, with our customers and a direct connection to engage with them."

Even when the consumer does not buy directly from the web site, drawing her to the site for information pays off in store sales and future purchases, Manly says. "About 80% of those who buy a Keurig brewer come to our web site first. They line up two to three brewers and compare. Then they go into a retail store and purchase the product." Once the consumer has found the Keurig site while searching for a brewer, they then return to find coffee, he says.

Direct sales, including catalog and web, account for no more than 15% of Green Mountain's revenue, with the rest coming from sales of Keurig products through other channels and licensing fees. But Manly says direct marketing pays off in ways beyond sales. "The consumer-direct business generally returns high margin and provides an ideal forum through which to introduce new products and get a pulse on customer interest and adoption that can be shared across all channels," he says.

For most catalogers, direct sales still includes a print catalog, even though the volume of catalogs mailed delivered by the U.S. Postal Service has steadily fallen since 2008. Catalogers last year mailed only 22 billion catalogs, down 23.1% from 28.6 billion in 2008.

The largest group of catalog retailers—8,302—both print a catalog and sell online, according to Media Finder, an online database of printed products. That compares with 704 retailers that sell exclusively through print catalogs and 2,399 that only present their catalogs on the web.

Many catalogers argue that they benefit by reaching consumers both with a glossy catalog as well as an effective e-commerce site. "We recognize that although customers may purchase in one channel, they shop all channels," Laura J. Alber, president and CEO of Williams-Sonoma Inc. (No. 24), told analysts during an earnings conference call. The housewares and home furnishings retailer sees its stores and its catalogs as billboards for its brands, she says. "Our catalogs drive web sales and differentiate us from our competitors."

Consumers with catalogs in hand are more likely to convert when they get to a cataloger's web site than online shoppers in general. The average conversion rate for Top 500 catalogers in 2011 was 4.74%, a nearly 5% increase over the 4.52% conversion rate in 2010. By comparison, the overall Top 500 conversion rate increased only 1.26% from 3.18% in 2010 to 3.22% in 2011.

And the catalog and call center retailer category is the only one among the four primary Top 500 merchant categories—including retail chains, web-only and consumer brand manufacturers—to post an increase in average ticket. At $189.00 in 2011, catalogers' average sale increased 4.42% from $181.00.

The next area of growth for catalogers could well be in tailoring their content for tablet computers, particularly Apple Inc.'s iPad.

"Catalog apps complement catalogs and allow catalogers to reach a wider audience," says Tanya Hansel, founder of Hansel Group Marketing, a catalog consultancy. Apple recognized the growing trend earlier this year, creating a catalog category within its iTunes app store, which by spring offered 120 catalog apps. "As more and more consumers embrace tablets, we'll see tablet shopping represent a large piece of sales in the future," Hansel says.

Tablets, mainly the iPad, already account for a significant share of e-retail revenue. A recent study of 75 retail sites by web site personalization vendor RichRelevance Inc. in March 2012 found that 4% of revenue came from purchases made on the iPad. The study also found that 68% of mobile shoppers accessing e-commerce sites used iPads, and that the iPad accounted for 90% of all revenue from consumers accessing retail sites from mobile devices.

Many of the early catalog apps are attempting to replicate the visceral experience of thumbing through pages of a print catalog and circling items for later consideration, though they can't yet do it all, says Yory Wurmser, director of marketing and media insights at the Direct Marketing Association, a trade group. "Circling products and bending a corner of a page is much harder to do with an app," Wurmser says.

But in some ways a catalog on an iPad can do more, because it can be connected to content hosted elsewhere on the web. For example, in the iPad app from Restoration Hardware Inc. (No. 105), consumers can click on a product to learn more and bookmark their favorite pages.

It's just a start. But examples like that provide new hope that catalog retailing can remain a vibrant part of e-commerce.




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