Importance of the web as true source of retail sales 'being exaggerated' says trade consortium

Member poll of Catalogue and Multi-Channel retailers reveals that the majority of all online orders are driven by catalogue mailings.

[UKPRwire, Tue Nov 13 2007] In a private poll conducted behind closed doors at the annual conference of the catalogue and multi-channel retail industry last week, key industry players revealed that a surprisingly low percentage of their online orders actually originate from casual web surfers. The Poll was conducted amongst members of The Catalogue Exchange, the trade consortium that represents both catalogue retailers and online retailing businesses.

With industry reports suggesting that online sales are growing by up to 30 per cent year-on-year, retailers are being lured into investing heavily in pay-per-click advertising by new media (online) agencies. “Savvy advertisers might do well to take a really close look at their figures however and whether they are getting a real return on their investment”, said a spokesman for the Catalogue Exchange.

This warning comes as online advertising is set to surge pre-Christmas. With catalogue retailers’ websites now accounting for between 20 per cent and 40 per cent of all sales, it’s easy to see what lies behind the mass migration of advertising spend from conventional media to banner ads, comparison sites, pay-per-click and other paid-for search advertising.

“Online advertisers need to understand the true source of their sales”, said Scotts & Co. Chairman and Catalogue Exchange Deputy Chairman, Nigel Swabey. “Unlike conventional retailers, our members can track the origin of their web orders by running a simple match-back exercise on their online transactions against their customer files, to establish how many web customers are responding online as a result of receiving a catalogue in the mail. The answer is an astonishing 70 per cent, with some members able to identify a staggering 80% of all their web customers as being existing customers who have already received a catalogue mailing.”

What this means of course, is that for true multi-channel retailers, between two-thirds and three-quarters of all web orders have been triggered by receipt of a catalogue in the mail. So although web orders might account for 30 per cent of a company’s sales in total, the number of customers the company has actually acquired online is probably less than 10 per cent. The rest are simply using the web as a convenient method of placing an order! Further web orders are stimulated by an off the page advertisement showing a web address.

Entering an order onto a company’s website is faster and more convenient than visiting a company’s store. Unlike posted orders, the customer doesn’t require a postage stamp to place an order online. Online ordering even wins out against telephone orders as direct shoppers can take their time browsing a site and filling their shopping basket without having to interface with a busy call centre.

That’s where the benefit ends however, at least as far as the retailer is concerned. The Catalogue Exchange member survey suggests that much of the vast expenditure being poured into search advertising may be wasted. Those companies who have abandoned their catalogues or reduced their mailing volumes have seen online sales plummet. Mark Binnington, Marketing Director of niche fashion retailer J P Boden, reported that in the U.S. market, a reduction in the circulation of their printed catalogues resulted in an immediate downturn in web response. On a separate occasion, when men’s apparel was taken out of the Boden catalogue as a trial, sales of menswear dried up on the website.

When asked, most of the Catalogue Exchange’s 100 or so client-side members reported that many of their web customers placed their orders online with a copy of the company’s catalogue placed in front of them.

Mark Dugdale, Chairman of The Catalogue Exchange and Chief Executive of Flying Brands Plc, had this to say about last week’s revelations at the conference –

“Our own testing ties in very closely with what members are reporting. Nevertheless, it is good to see the figures confirmed across the board amongst true multi-channel retailers. This does seem to suggest that the relative importance of the web as a source of recruitment of genuine new customers may have been over-played in recent months. IMRG does a splendid job of publicising the year-on-year growth of their members’ online sales. What we now know however is that catalogue mailings are the real drivers of traffic for our members’ own websites. Catalogue retailers reduce their print runs and switch their expenditure to online advertising at their peril, and the same applies to press advertising.”

The conclusion reached by the twelve-man board of The Catalogue Exchange at their annual meeting last week was that there is undoubtedly an assured future for the print catalogue. During the current pre-Christmas buying frenzy, when so many customers are opting for the convenience of shopping direct from a gift catalogue, catalogue retailers were not surprised to hear that the main driver of direct shopping in the UK is still very much the catalogue business.

The Catalogue Exchange is a not-for-profit organisation, run by its members for the benefit of the catalogue and online industry as a whole. The 195-strong membership includes an estimated 80 per cent of all catalogue retailers in the UK with major players like N Brown Investments, The Webb Group, Redcats, John Lewis, Boden, Scotts & Co., Charles Tyrwhitt, Hotel Chocolat, and M and M Direct all represented.

For further details, contact the press office at The Catalogue Exchange on 01271 855545. Individual comments on current trends are available from:

Mark Dugdale, Chairman of The Catalogue Exchange (Flying Brands) on 07785 346935.

Nigel Swabey, Deputy Chairman of The Catalogue Exchange (Scotts & Co. on 07836 666688

Mark Binnington, Member of the Advisory Board of The Catalogue Exchange (J P Boden) on 020 8453 1345.

Jane Revell-Higgins, Member of the Advisory Board (CatEx Management) on 01271 866112.