November 14, 2013

Dear Catalog CEOs: The Deeper Meaning Of Amazon And USPS

Dear Catalog CEOs:

Well - you and the vendor community sure enjoyed this rant (click here), after the USPS agreed to deliver Amazon packages on Sundays in NY/LA this year, more markets next yearThis article is trending toward a top-10 readership level for 2013. In other words, you are interested in the topic.

You understand, of course, that there is a much deeper meaning than just Amazon and the USPS, that there's so much more to this story that their relationship?

In 1993, cataloging was at the top of the food chain. Your vendors were there to support you. You had the power, they needed your money.

In 2003, Google and search and all pre-social, pre-mobile activities were peaking. Your vendors worked hard to coin the phrase "multi-channel", encouraging you to keep mailing catalogs, so that they could still remain relevant.

In 2013, with catalog in-mail volumes down 40% from 2007 (no, that's not just the Great Recession, that's the realization that the world is changing), your vendors are now searching for their path to the future, independent of you.

Think I'm wrong?

I was in a meeting recently where the marketing director told me she couldn't reduce circulation because their paper rep locked them into a six month, non-negotiable supply of paper. Obviously, the paper rep isn't thinking about what is best for the cataloger (though I bet the paper rep could find more paper if the cataloger needed it). No, the paper rep is trying to put food on the table, and can now do that for another six months.

I was in a meeting recently where I learned all sorts of interesting things that some co-ops are doing with your data. They realize that your mail volume will decline another 40% over the next six years, so they are busy using your customer acquisition investments to research how to best integrate offline transactions with social/mobile/local data, to provide a 360 degree view of customer behavior that can be sold to "brands". Pay attention to how this works - you contribute data for free - they make you pay for access to data, then they use your money to create products that allow "brands" to pay to access the data a second, a third, a fourth, an eleven-thousandth time.

Big Data!

In other words, this co-op no longer cares about you, the cataloger - if they did, they'd put experienced reps and modelers on your account and actually protect your data as a competitive advantage for your continued loyalty to them. You are just a data input. Remember back in the mid 1990s when the co-ops begged (yes, begged, I was there) for you to participate with them? When's the last time your co-op begged you for anything? No, your co-op has moved on, and is charting a path to a future where you are nothing more than a data input to them. It's been that way for some time, to be honest.

The USPS is charting a path to the future, and hint, it only includes the merchandise you sell, not the delivery vehicle that creates the sale (the catalog) ... hence, a partnership with Amazon.

I was in a meeting recently where a printer-backed start-up told me that their marching orders were not the product they were selling to catalogers, but the data that the catalog customer would create for them. This is coming from a printer-backed start-up ... a printer ... a printer looking for a path to the future. The printer realizes that it must find a path to the future, and that path will be less and less dependent upon you, over time.

Your search vendor, your email vendor, your database hosting company, those who work in your affiliate program, or retargeting, your matchback vendor, your attribution vendor, they're all using your data as a short-term bridge to help them get to the future. 

That future, of course, is Mobile + Data + Social + Local = Youth + Revenue.

Your vendors are leaving you. Notice that they aren't firing you. 

They need your money so they can invest in Mobile + Data + Social + Local = Youth + Revenue.

You are funding their future.

This is the deeper meaning of the Amazon/USPS relationship. The USPS is using your postage to invest in a future with e-commerce brands needing to deliver merchandise in real time.

Twenty years ago, Amazon didn't exist, and your vendors needed you.

Today, Amazon is on the verge of crushing most standalone direct marketers. Your vendors need a path to the future that likely does not include you.

The multichannel experiment failed miserably, for if it were successful, Amazon would have lost and the USPS would be giving you incessant discounts to keep your business - or the USPS would be offering you Sunday delivery. The customer chose Amazon. The USPS chose Amazon. Multichannel lost.

It's time for you to do two things.
  1. Choose vendors who help you get to the future.
  2. Choose your own path to the future.
Can we (our industry) have a meaningful discussion about our shared future? I'll help facilitate this discussion. Email me ( with your thoughts.

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...