Enterprise -- Marketing: MAIL ORDER
HAVE I GOT A CATALOG FOR YOU
Business is booming--and publishers welcome small companies' wares
After taking a retirement buyout from Polaroid Corp. in 1993, sales executive Mary A. Zellem thought she had come up with the perfect products to launch herself as an entrepreneur: dinosaur-emblazoned charts for recording children's growth and Pillow Playmates in the shape of puppies, polar bears, and other cuddly creatures. But while merchants and marketers admired the samples she shopped around, no one placed any orders. After "hundreds" of rebuffs, Zellem says, she turned to her last resort: a catalog publisher. "I had real mixed feelings," recalls the former national accounts manager. "I didn't know anything about catalogs."
She liked what she learned. For a fee of about $3,000, Good Catalog Co. photographed her samples, wrote ad copy, and showcased her wares in its Westbury Collection, a gift catalog with a circulation of 300,000. The dino charts bombed, but the pillows boomed: Zellem sold $16,000 worth that first year, $180,000 in 1995, and $120,000 in 1996. Now, her products appear in bigger books--the Sears Roebuck and Touchstone catalogs--and sell at toy-store chain Zany Brainy. Her company, Executive Accents in Walnut Creek, Calif., has added tapestry pillows, footstools, and an executive toy box to its line--all to be hawked by catalog. "Catalogs give you high visibility in a place where you know people are looking for the kinds of thing we sell," says Zellem.
As anyone with a mailbox can attest, catalogs are sizzling. Sales hit an all-time high of $78.6 billion in 1997, according to Direct Marketing Assn. in New York, which projects that they'll top $95 billion by 2000 (chart). With more than 8,000 titles devoted to everything from gardening to gargoyles, a fair amount of that expansion has been fed by small businesses seeking national exposure and distribution for new products. And with competition heating up, catalogers are more eager than ever to welcome small operators. "At least half of our 200 offerings per catalog come from small vendors," says John R. Ollmann, general merchandise manager for Signals and Circa, two highbrow gift catalogs that grew out of the Prairie Home Companion radio show. "Part of the catalog's uniqueness comes from finding people like that."
WIDER ARRAY. Navigating the catalog bazaar is far from simple. The possibilities range from behemoth retailers such as J.C. Penney through yupscale dream books such as Sharper Image to gift assortments such as Lillian Vernon. Then there's the ever wider array of specialties--Baths From the Past, for instance, a purveyor of reproduction vintage plumbing. The DMA says there's no comprehensive catalog of catalogs and admits its lists are incomplete: Only members are covered. Still, the DMA is not a bad starting point. For $3, it offers a "Great Catalog Guide" that lists 270 titles in 32 product categories.
But the easiest way to meet your catalog match may be to let it find you--at a trade show. Consultants say that about 75% of catalog merchandise comes from these industry get-togethers. "Catalogers are always looking for what's hot, what's new. [They want] to be first on the block with a new product," says Robin Glat, director of marketing services at AGA Catalog Marketing & Design, a New York consulting firm. That's why James A. Nolen, president of BioSensory Insect Control Corp., was happy to spend $12,000 last year to show his two products--a $250 industrial mosquito zapper and a $30 device that masks the human scent that attracts mosquitoes--at a hardware trade show in Chicago. Nolen, who also did a follow-up mailing, has landed the lower-priced product, Mosquito Cognito, in three catalogs--two tiny ones and the powerhouse Amway. He is now dickering with Sharper Image over his higher-priced Dragonfly device.
The best bets for catalog exposure, experts say, are new products that photograph well and stand out amid the clutter. Since this is a visual medium, says consultant Glat, sometimes a catalog carries something "just because it looks so cool." (After all, Neiman Marcus Group didn't expect to make a killing from the special-edition BMW Z3s in its pages.) To apply to publishers, producers should send a sample--not a prototype, since it may not be returned. Those who can't afford to send a sample should sink what they can into hiring a photographer who can take a great shot. Attach a cover letter describing your production arrangements and suggested price, but don't call--buyers find phone calls annoying until they have all this information in hand. Also, cite any special credentials. "If someone retired from the software industry after 30 years and has a software product, I'd listen to them," says Leila Griffith, an Atlanta freelance buyer for a number of catalogs.
Proper timing is crucial, since catalogs buy six to nine months prior to a season. "People try to sell us Christmas items in June, when we are already done with Christmas months before," says merchandise manager Ollmann. Neophytes should also guard against production snafus. Catalogers will usually buy 10% to 20% of the number of units they think will sell, then count on fast delivery of future orders, sometimes within a week. The ability to fill orders is even more essential than it is when dealing with retail establishments, says David Hochberg, a vice-president of Lillian Vernon Corp. If retailers run out of an item, customers aren't continually tempted to buy it, he notes--but "we mail 175 million catalogs a year, and once that picture's in there you can't take it back."
Underpricing is another mistake novices make. "They'll come to us with a product and sell it for $25, and we'll sell hundreds," says Barbara A. Todd, CEO of Good Catalog. When the company tries to reorder, though, "they say to us: `We're losing money."' Often, she finds, producers "only had a five-dollar markup in there. We probably still could have sold hundreds at $39.95." Todd, whose company publishes 10 catalogs, recommends a markup of about 60% over manufacturing costs. Prices should also be appropriate for the target catalog. "I wouldn't go to a Lillian Vernon with a $200 item, but I might go to Horchow," says Joan Burden Litle, a catalog consultant in Lowell, Mass., who has advised Avon Products, Hallmark Cards, and Warner Bros.
There are other pitfalls. Catalogers' circulation claims, for example, should be questioned carefully. The numbers can be deceptive because one household may get several editions of the same catalog during the year. Unfortunately, there is no independent source on the figures. About the best you can do is call vendors who have a track record with the catalog for a reference.
GOOD TERMS? The deal you strike with a cataloger can vary widely, too. While many buy products outright, some sell on consignment, and some "drop ship," meaning they forward the orders to the vendors, who handle shipping themselves. Some list for free; others charge a 10% advertising fee to defray the cost of production. Still others charge flat fees up front, plus 20% of each sale, to cover processing and customer service. Other companies charge as much as 50% of sales. In almost all cases, though, arrangements are negotiable.
In return for the expense, entrepreneurs can hope to win attention from retailers looking for new products in addition to making sales. They may even get some market research out of it. "Let's say you have three blenders," says Todd. "You can put all three on one page and find out which blender people want, and put that one out on the retail market. It's like a focus group."
A focus group? Amazing what you can find in a catalog.By Roy Furchgott in BaltimoreReturn to top