An Interesting Way To Talk About Catalogs

Leslie Linevsky, founding partner of Catalogs.com, hosts a blog called "Confessions of a Shopaholic". She mixes aspects of her personal life with periodic observations about the merchandising strategies of various catalogers. It's an interesting off-ramp from the blogosphere superhighway.

... like it's 1999

On December 5, 1999, I was learning about all those little computer programs that were going to fail on 1/1/2000, causing the end of the world as we knew it. Meanwhile, a veritable plethora of COBOL programmers were busy writing the necessary code to fend off the apocalypse. I had the opportunity to get tickets to Wisconsin's trip to the Rose Bowl. I chose to stay home, just in case the world ended. My bad.

Anyway, as I was looking through my contacts, trying to track down a co-worker from 1999, I noticed that a bomb literally went off during the past seven years. Few of my contacts continue to work at the companies they worked at in 1999. What the heck happened during the past seven years?

If you used to work with me in some capacity, use the comment section, or e-mail, to let me know where you landed. If you didn't work with me (that's most of you), use the comment section to tell me if this has also been your experience. What happened to you and your co-workers, during the past seven years? How did your career evolve? How did your company evolve? How did your industry evolve? How did you stay in touch with people? Please share your thoughts.

A Little Love From DMNews

An article about forecasting your online business.

Blue Nile, Chicos, PetSmart and NASCAR

A few tidbits from recent investor conference calls, courtesy of 123Jump.

At Blue Nile, management states that it measures market productivity by summing sales in a market (San Francisco), and dividing sales by the number of people living in the market. In markets like San Francisco, they claim to generate $2.00 sales per person. In rural markets, they claim to drive maybe $0.30 per person.

At Chicos, management discussed a change in advertising strategy, yet another one that benefits compiled databases, and spells doom for television and magazines. A quote, "the company was not able to quantify any real positive effect from television advertising". Management also states that coupons are the number one driver of sales for the company.

At PetSmart, the business generated 5.5% EBIT on sales of just over $3 billion dollars, through nine months. Management stated that they spend 2.4% of sales on marketing. That sounds small until you realize that, though nine months, the total is over $60 million dollars.

Ever wonder if NASCAR is a cash cow? International Motorsports, which owns many of the tracks NASCAR races at, earned $182.4 million in operating income on net sales of $544.9 million, through nine fiscal months. My goodness. How do I get a job there? That's simply stunning.

Honor Roll for December 4, 2006

As you know, from time to time, I will feature various links in the "Honor Roll". I only have two requirements for the Honor Roll. First, the post must have quality content. Second, the content needs to be presented in a selfless manner that does not directly benefit the individual sharing the content.

Hugh at Gaping Void shares this article from Forbes magazine about giving away content. It's an interesting account about giving away the books he writes as e-books.

A brief discussion about how Microsoft uses its 3,000 bloggers, 500 of which are actively blogging, to write about a topic simultaneously, resulting in better search results. Someday, more businesses will figure out that this free marketing channel called blogging is powerful.

A VC talks about the concept of "de-portalization". I don't use portals anymore. I subscribe to whatever I want to read via Google Reader, and use Google (I frequently complain that Google is about to take over the planet, yet I use them like anybody else) to search whatever else I'm interested in. I have maybe two dozen bookmarks for other sites I visit, sites that don't have convenient RSS feeds. What do you think, is the internet being "de-portalized"?

Avinash Kaushik has an interview with web analytics guru Jason Burby of ZAAZ. Analytic folks, read this carefully. You'll learn about a person who has figured out what the secret of analytical success is ... and it has nothing to do with the analytics.

What Is More Important, Sales Increases Or Increased Profit?

In a recent comment, Ray S. asked if it is acceptable to have an advertising campaign that increases net sales, but does not increase profit.

Let me pose two scenarios to you.

Campaign Result, Scenario #1: Net Sales increase by $100,000 verses last year's campaign. Profit is flat, compared with last year's campaign.

Campaign Result, Scenario #2: Net Sales decrease by $100,000 verses last year's campaign. Profit increases by $25,000, compared with last year's campaign.

Ok, you are the CEO of this company. Which of the these two scenarios is preferable to you?

Coldwater Creek: The Little Engine That Could

Coldwater Creek provides a great example of how management transitioned a catalog company into a retail company with an online channel, and a catalog advertising arm.

After reading comments from Coldwater Creek's third quarter "conference call", it is obvious management continues to transition this business model into one dominated by the retail channel. During the third quarter, retail sales grew by 48%, and now represents 65% of the total business. Online sales grew by 29% from last year, and now represent 67% of the sales within the direct channel. Catalog now represents just over 10% of the total business. Wow.

Over the past six years, management shifted their corporate strategy. As the company began to invest in stores, management began to tear apart the tradtional catalog marketing strategy. During the call, management stated that the catalog now primarily drives traffic to the stores, not to the catalog channel, not to the online channel. More important is the comment that the internet is independent, and has other ways of using marketing to drive sales to the online channel.

Once again, we learn that the multichannel environment is a big ecosystem, one with inter-dependencies, and interactions that pundits do not understand very well.

In the case of Coldwater Creek, a brand was built via the catalog channel. As management shifted the focus of the business from a catalog company to a multichannel company, several things occured. Customers transferred out of the catalog channel to the online and retail channels. Catalog advertising drove business to the retail channel more than the online channel. The online channel has marketing channels that it can leverage to drive its own business, independent of catalog marketing. Magazine advertising, coupled with discounts and promotions, drive business to Coldwater Creek stores. The catalog/telephone-channel has been reduced to about 10% of the total business.

Executives at multichannel retailers would be well-served to study the evolution of the Coldwater Creek business model. I'm not suggesting your business will evolve exactly like the business evolved at Coldwater Creek. But it will probably evolve in a way that is different than the pundits tell us it will evolve.