June 02, 2013

Dear Catalog CEOs: Aquafresh

Dear Catalog CEOs:

You probably don't sell Aquafresh ... it's not exactly a "catalog must have", is it?

Imagine if you did sell Aquafresh in your catalog.

How, in the name of J. Peterman, would you be able to compete with Amazon?

Once I paid my $79 fee to Amazon for Amazon Prime (or whatever the heck I paid, I don't even care anymore) I essentially get everything delivered to my house, for free, in two days.  A simple list of must-have necessities can be plopped into a cart with a click, purchased with a click, and delivered in two days for free.  Omnichannel cannot compete with simplicity and low prices.

Meanwhile, over in catalog land, we're offering free shipping with $100 orders - sometimes - otherwise, it's $12.95 for shipping with a $2.99 handling fee (customers love that), and we can't price match Amazon or we'll be bankrupt in no time.

In 2013, I'm analyzing a meltdown of merchandise productivity, across the board - this is something I haven't witnessed in a very long time.  Increasingly, it's Amazon that is to blame ... we can't offer new items because Amazon will knock 'em off and sell 'em cheaper ... or one of our competitors will sell the item online (and on Amazon, for good measure), so the number of new items introduced annually are being scaled back.  Scale these items back for three or four years, and you don't have as many winners left to generate profit.  When you don't have many winners left to generate profit, customers get bored ... and move on to ... wait for it ... wait for it ... AMAZON!

Well, at least that's what Jennifer does.

Did you know that Amazon accounts for something like 25% of total e-commerce sales?  They didn't employ a catalog / retail / e-commerce multi-channel model to dominate the world, did they?

Call this the "Aquafresh Effect".

We could have seen this coming a decade ago - but we invested in multichannel instead.  We now know that didn't work, while we researched the link between a printed catalog and an e-commerce transaction, Amazon figured out what customers wanted, mulching us in the process.  It's too late, now.  Amazon won.

There are varying levels of competition with Amazon.
  • Crutchfield ... you're battling 'em head-on.
  • Cuddledown of Maine ... any innovation can be knocked-off instantly, sold on Amazon, cheaper.  Frustrating.
  • Paula Young ... sell something unique and different, something Amazon doesn't care about ... until you visit Amazon and realize they sell comparable products too, oh boy.
We lived through the "Aquafresh Effect" in retail ... the mom 'n pop store (or Kresges or Gimbels or Montgomery Wards) dominated downtown retail until Wal-Mart brought low prices to the Interstate Highway interchange.

We're going to live through the "Aquafresh Effect" in e-commerce, on two fronts.
  1. Amazon / Jennifer
  2. Mobile / Jasmine.
Our job is to think ahead, and to plan a response.  It's time to start planning, don't you think?

Merchandise Forensics, of course, is a good place to start.  Click here to contact me for your own, customized project.