Monday, May 2, 2016

Mail Order Catalogs Outperform eMarketing by Far

Marketing online costs about 4 times as much (and likely far more) to gain sales than mail order catalog. Here are the numbers:

Total USA retail sales for 2014 about $4.5 trillion.  (Retail flat for 2014)

About 6 billion dollars spent on mail order catalogs in USA in 2014.

Mail order sales total 2014.  $125 billion

About 57 billion dollars spent on online advertising in 2014.

Online sales total 2014,  $300 billion.

So, at first glance, it looks like it takes nearly ten times as much money to generate about 2.5 times the sales.  But actually it costs far more...

According to USCensus, that is about 7.4% of all USA sales.  According to pro-online marketing,  5.8%.
While brick-and-mortar sales still command a vast majority of the retail market—nearly $4.27 trillion in 2013—ecommerce sales are increasing much faster, contributing significantly to retail’s overall growth throughout our forecast period. eMarketer estimates that US retail ecommerce sales will increase 15.5% in 2014 to reach $304.1 billion, up from $263.3 billion in 2013. That growth will represent more than 20% of this year’s $199.4 billion increase in total retail sales.
Ecommerce still represents a small portion of overall retail sales—a mere 5.8% last year.
First note the varying figures or percents, whichever one you accept, rather proves online marketing is a fools' paradise. Why market where only say 8% of your market exists?  Why not market where 92% of your market shops?  Why market where and when is costs so much more to gain a customer? But as to the uncertain numbers, here is one reason why people have such a disastrously misinformed view of online marketing:
The past year online was another good one for Nordstrom Inc. as the web now accounts for 19% of total sales.
Not a single mention of the fact that Nordstrom sends millions of catalogs a year driving people to purchase, who then elect to use the self-service check out online.  It was not the web marketing that got the sale, it was the mail order catalog.  The article makes "lemonade out of lemons" by saying the high return rate due to EZ ordering brings people into the stores where they make returns.  Well if the return is for the right size of what they ordered online, that is hardly worth the added cost of online sales maintenance.  This is just one article of millions in which people not trained to test claims become socially conditioned to accept sheer nonsense.

Victoria Secret does $1.5 billion online and sends out 400 million catalogs per year.  Yet that gets counted for "internet sales."  it would not happen without the catalog, yet people assume it is just a website and google ads.  Pure socially conditioned nonsense.

Here is an article with some insights on retail and online:
In today's edition of the print-isn't-dead argument, global and online-only retailers are reporting that mailed catalogs still drive sales like crazy. WSJ reports that 2013 witnessed the first upward trend in number of catalogs mailed since 2007, and retailers show no signs of slowing down.
While email marketing gives retailers just the space of a subject line to attract potential customers, stylized lifestyle catalogs that could nearly double as fashion magazines have proved to be wildly popular in an internet-driven culture. Pat Connolly, the chief marketing officer at Williams-Sonoma, admitted that the catalog was still an extremely important part of Williams-Sonoma's overall marketing plan. According to WSJ, the retailer has a database of 2,000 privately owned houses that it uses for catalog photo shoots and over half of Williams-Sonoma's marketing budget is spent on catalog production and mailing.
Do you think Williams Sonoma minds is internet pure-play customers struggle to survive and do not represent demand for catalog creation houses? And this from the same article, regarding pure play internet ecommerce sites:
Online-only menswear retailer Bonobos has also witnessed the ability of the mailed catalog to drive sales. Craig Elbert, the VP of marketing for Bonobos, said that 20% of first-time customers placed an order after receiving a catalog and they spend 1.5x more than customers who didn't receive a catalog first. Bonobos tested the concept over a year ago and has been putting out catalogs ever since, increasing the circulation each time.
British retailer Boden has calculated the power that the catalog has to keep a customer's attention much longer then an email blast or iPad app. Shanie Cunningham, head of U.S. marketing for Boden, told WSJ that shoppers spend up to 15 to 20 minutes with the catalog, while only spending around eight seconds with a Boden email and five minutes with the Boden app.
Plus, the catalog is cost-effective to produce. The article reported that the average catalog costs less than a dollar to make, while typically resulting in about $4 in sales for every catalog mailed. The moral of the story: even with the internet, we still really like to look at pretty pictures for prolonged periods of time and then try our best to cop the look. Who knew.
Who knew?  Well anyone with an organic true economy business, and not one where you just borrow massive malcredit and play at business.  These guys are making it because they took the time to see online marketing is not effective.  They want to stay in business.

The claims of efficacy of online advertising are always the most tortured circumlocutions.  Here are random findings from studies.  Note no one asks or answers the basic question above.

In the 1980s the big fear was mail order catalogs were going to wipe out brick and mortar:
The effect of these and other advances was a 300 percent increase in nonstore retail sales between 1980 and 1990. Indeed, from just $72 billion in 1980, sales in mail-order houses skyrocketed to $211 billion by 1990, representing average annual growth rate of more than 11 percent. By the end of the decade, catalog and mail-order shipments were responsible for about 10 percent of all merchandise sales, more than 3 percent of retail sales, and 1 percent of consumer services sales. Furthermore, trade in the industry represented nearly 2 percent of U.S. gross domestic product.
The wipe out of brick and mortar by mail order catalogs in the 1980s never happened.  And if online sales were ever going to grow above 8% it would have by now.  It will never happen.  And if and when people properly define terms and categories, and not ascribing to ecommerce what is really mail order catalog sales, then online marketing will look even more doubtful. If ecommerce marketing worked, wouldn't Apple be doing it?

Nothing has changed with the internet, except massive expansion of false economy, FIRE.  A rather expensive self-checkout option is available, and gee-whiz!  Reflecting sanity among small business owners, most USA businesses have no web presence at all.

I do, mostly to test claims and try out my own ideas.  I wish it were true that eMarketing worked.  And I would never say just because I cannot get it to work, neither can you.  I quote those actually trying the work says it does not work, they say so themselves. I provide the facts from the hard numbers. If you plan to have an "internet only" business, say buy on alibaba and sell on Amazon or any other combo, it won't work.  You'll need a paper ad mailed out to your customer base to reach absolute minimal performance.  Selling to brick and mortar remains the only viable means to thrive in business, to reach your potential.

If you want the absolute most cost effective means of mail order marketing (with a website check out?) the USPO has a new service.  You can mail cheap to exactly your demographics at the carrir route level.  Check it out, and nose around.  The USPO sent me a catalog on this and I spoke to a salesperson on the phone.  1975 all over again.

Feel free to forward this by email to three of your friends.