November 26, 2023

Storm Clouds

Starters:  Read this word salad of nothingness. My industry is about out of gas. The needle is below empty.

If Amazon represents 37% of e-commerce, is it any wonder that some e-commerce brands are struggling? Do you ever stop and think about that metric? It's a whopper! Kohl's says that e-commerce is dragging them down. No kidding. You turn your stores into Amazon returns centers and you wonder why your own customers won't use your website? You told them not to! You told them to buy on Amazon and then you'll clean up the mess when the customer isn't happy with (checks notes) Amazon. It's hard to think of a bigger Management blunder ... except the industry cheers this on as an example of Omnichannel brilliance. Hint - it is the opposite of brilliance.

Of course, none of the content in the paragraph above is as bad as what vendors are doing to catalogers, who are dealing with 10% to 20% annual inflation thanks to the efforts of paper folks (constrained supply), printers (constrained supply), and the USPS (gotta make a profit). All three are conspiring, in unison, to create a "spiral to singularity". What does that mean?

  • Pretend you send 500,000 catalogs.
  • With 10% to 20% annual inflation thanks to your vendors, you reduce circulation to 425,000.
  • Next year, with circulation reduced to 425,000, your vendors increase prices again, causing you to reduce circulation to 350,000.
  • Next year, with circulation reduced to 350,000, your vendors increase prices again, causing you to reduce circulation to 275,000.
  • At some point, you will mail one catalog that costs $500,000 to one productive customer. That's the spiral to singularity.
You don't need to be a wizard to see what Amazon is doing to e-commerce ... to see what vendors are doing to end cataloging (and yes - some of you will say it ended 13 years ago and that's a funny line and all that, but that doesn't mean it isn't a profitable discipline ... it just means you can tell a joke).

Storm Clouds are brewing.

2024 is the year you are required to find clever ways to find new customers ... ways that do not depend upon the forces tearing your business model apart.


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