"I Don't Like This Business Model"

Catalogers telling Amazon they are "doing catalog wrong" has me thinking.

Let's go back to the end of the catalog era at Nordstrom (which, as it turned out, was the beginning of the end of catalogs, period). My team tested the living daylights out of catalog mailings, and at "best", the entire $160,000,000 endeavor was a break-even proposition. Why would you generate $160,000,000 of sales that generates $0 of profit?

Yes, I get it, the market share gurus will retort. Market share folks don't always have to worry about the uncomfortable constraints of profitability.

A decision was made to create a new "catalog", one driven by our retail marketing team. There would be a monthly catalog, and for $27,000ish a vendor could purchase a spread and advertise their products. Circulation = 2,000,000 (by the way, the holdout test sample was 200,000 customers ... yeah, 200,000 ... and we sure did learn stuff by having a proper holdout test in each mailing ... we could slice-and-dice as we wished).

People with a catalog heritage thought this strategy was an abomination.

"They're doing it wrong."

"That crap will never sell."

"You can't have a hodge-podge of creative shot by individual brands and then cobble it together recklessly, the presentation won't be cohesive."

"You're letting the foxes run the hen house."

"This is damaging to the brand."

Catalog staffers suffered through the first in-home date, mocking the abomination as it reached mailboxes all over America.

Sales results tricked in ... and the word "trickled" was appropriate. The new catalog generated 1/5th the sales that the discontinued catalog generated.

"I told you these fools have no idea what they're doing."

One problem.

It was my job to run the p&l for the "abomination", and compare it to a comparable group of customers receiving the old-school catalog that the catalog professionals loved. These are actual-ish results, right here, at a comparable customer segment level.

The old-school catalog would generate $3.00 for every catalog mailed (on average). We'd run the p&l and show that we were getting $0.09 profit per catalog mailed (this was for a comparable segment of customers that also received the new "co-op" funded catalog ... not the break-even proposition of the catalog in total).

Please read down the "Co-Op Catalog" results column.

Which catalog was more profitable?

The "abomination" was more profitable!

No matter how I looked at it, no matter how many abominations we mailed, the no ad-cost co-op funded version was more profitable.

Every time.

In fact, at $0.08 per book across twelve mailings across 2,000,000 in circulation, the abomination was $1,900,000 more profitable on an annual basis. The tactic drove less top-line sales and more bottom-line profit.

And with that, the catalog professionals jumped ship.

One by one, they were gone. They took their "parting shots" on the way out the door, telling people how "stupid" the decision was (to eliminate the old-school catalog and replace it with an abomination that was more profitable). 

One of the final phrases my Circulation Director issued before jumping over to the e-commerce division was this sentence.

• "I don't like this business model".

Finally somebody was honest! Thank God!

It's ok to not like a business model. Leave. Go work for a business model you appreciate.

It's also ok for a company (like Amazon) to execute things in a way that you might find sloppy or inappropriate. People generally don't want outside experts to fix things. Do you think the professionals at a catalog agency want outsiders coming in, telling them that "you need to pivot to AI?" Cause that's where we are in 2025. An outsider would look at a catalog agency and say "you're doing marketing wrong". The outsider would be right. And the outsider would have zero chance of being hired by the catalog agency.