Paying a premium

First there was Amazon Prime, then came Asos Premier, now M and M Direct has launched its Premier service, offering customers free express delivery, free returns, priority mailings and exclusive offers.
Amazon Prime, Asos Premier and M and M Direct Premier are membership programmes that charge customers an annual fee for added-value services. Amazon’s service costs £49 a year; Asos currently charges £14.95 and M and M Direct charges £14.99 as an introductory price. But do they represent good deals for the merchant and the consumer?

I looked at joining Amazon Prime, but could not see any immediate benefits as a consumer. Sure, I could get “free one-day delivery on millions of eligible items sold by Amazon.co.uk”, but what about the items sold by third-parties on the site; not all of those are eligible. Not to mention that most items are eligible for Amazon’s free super-saver delivery anyway. I may have to wait up to five days to receive my purchase, but if I wanted it sooner I’d pay the one-off delivery charge. For most items I am happy to wait a few days. Although my family buys a lot on Amazon, I don’t think our shipping costs rack up to £49 a year. Thanks, but no thanks. This offer clearly works out better for Amazon and if people are willing to pay £49 when they could get a very similar service for free, Amazon is definitely the smartest marketer out there.

The Premier offer from apparel etailer Asos is instantly more enticing for consumers. It offers free next-day delivery as well as a returns collection service. I can see the immediate attraction of not having to trudge to the post office to return a parcel. Another benefit, at least for a catalogue nut like me, is that Asos will mail its customer magazine to Premier customers each month. I have bought from Asos a couple of times over the past year or so, but they’ve not sent me a magazine for several months. I was told by a customer services rep that “we send out the magazine every month to a random selection of people who have ordered from us in the last six months. This means that if you keep ordering from us you will receive the Asos magazine,” she directed me to the online version, but it’s just not the same. For £19.95, or even the full price of £24.95, the Asos Premier deal is much better than Amazon’s. As Asos already offers free delivery with no minimum order value, albeit not next-day, I guess the Premier service is a way to reclaim revenue from deliveries. It’s also a great way for Asos to communicate directly with its very best customers. Plenty of online retailers can segment their databases to find out who among their customers buys the most often. But using a service like Premier, Asos knows exactly who its most engaged customers are. To use a much-bandied term, the people who subscribe to a service like Premier are likely “brand advocates”, willing to pay extra for a service from their favourite retailer. Impress these people and they will tell their friends, who may then also join the service, who will tell their friends, and so on.

M and M Direct’s offer is very similar to Asos. It includes free express shipping, free returns, “priority mailings” and exclusive offers. Already, M and M says 50,000 people have signed up to the programme since March. Again, like Asos, M and M calls out receiving regular catalogues as a key benefit. Its non-offer price is £19.99, cheaper than Asos’s full price. The real added benefit here is that M and M Direct normally charges £6.99 for express delivery and £3.99 for standard delivery compared with Asos and Amazon where customers can opt for free delivery on most items. That means that the service essentially pays for itself after just two orders. For regular shoppers, that’s a very tempting deal.

If I genuinely shopped that often with a retailer, paying for a premium service would definitely appeal. It’s a concept that would work for anything purchased regularly--pet supplies, vitamins and supplements, home-office supplies, childrenswear and baby products, and so much more. If margins permit, we may see many more of this premium services crop up. After all, there’s nothing customers love more than being treated like VIPs.--MT

You'd better smile

Readers of a certain age would remember a song called Smile by the Supernaturals. The word smile is repeated 15 times during the chorus. I was reminded of that tune when I saw this spread from a recent Bravissimo catalogue. Now, we’re told smiles sell, but I think Bravissimo could tone it down a little…--MT

July Catalogue Log

In July 2009 we received 149 catalogues. In July 2010 we received 91 catalogues. Last month we tallied just 64 catalogues—a decline of 30 percent on last year and 57 percent down on two years ago.
Up until now, catalogue volume had been mostly in line with 2010, but July’s crop took a nosedive. A quick look at the data shows we’ve slipped off a number of lists including apparel retailers MandM Direct, Cashmere Centre and Peter Hahn. On the other hand, this year we’ve received mailings from clothing catalogue Peruvian Connection, childrenswear boutique Marie Chantal, and personalised apparel specialist Spreadshirt—so plenty of new names to top up our catalogue stocks.

 

So what’s the reason for the decline? It could be that, as we’ve suspected before, we’re dropping off more lists than we are added to. No-one wants to waste money regularly mailing a prospect that hasn’t bought in longer than 24 months. Another reason, mentioned by our publisher Jane Revell-Higgins recently, was that there seem to be fewer inserts in national media. We noted only a minor difference of five catalogues, but it is nonetheless, a decline.

Another potential reason is that we are at the height of the summer sale season. Perhaps a tighter control on margins means fewer markdowns and less stock to shift in the sales? You tell me.

But back to the stats. Of the 64 catalogues we logged, just 20, or 31.3 percent, made no mention of a special offer on the cover. That makes July our most promotional month to date, beating February’s record of 32.7 percent. The most popular promotion was a sale or discount, touted on 54.7 percent of all the covers we looked at. Fashion brand Fat Face, apparel and home retailer Laura Ashley and homewares catalogue Peacock Blue all sought to tempt us with money off our order.

Free delivery was the second most popular promotion, offered by 21.9 percent of the catalogues we tracked. Again, this was one of the highest percentages we tracked—significantly higher than June 2011’s 12.3 percent, and just a whisper away from February’s 22.1 percent. Many catalogues elected to set a threshold for a free delivery offer, including charity mailer RNLI, which required customers to spend £25 before qualifying, and educational toys cataloguer the Happy Puzzle Company, which made free shipping available to those who spend £40 or more.

Also more popular, albeit marginally, was a free gift with purchase. It was promoted on 10.9 percent of catalogue covers in July, compared with 9.8 percent in June. My favourite was an offer from Laithwaites Wines, which teamed with Pong Cheese to offer buyers of its Italian wines a selection of free Italian cheeses.  I was also quite taken with apparel cataloguer Long Tall Sally, which mailed me a £20 gift voucher to put towards whatever I liked—no minimum spend, no strings attached. That was definitely an offer too good to miss for the consumer, but it makes me wonder how Long Tall Sally can afford to give every name on its database £20 for free.--MT

Cover story

What would you say are the most important messages to convey on a catalogue’s front cover? Essential, in my opinion, are brief how-to-order details such as a telephone number and website URL.

Most catalogues then opt for including some sort of special offer or benefit, for example “100 new products!” or “Free delivery when you spend more than £50”.

Furniture retailer Furniture Village does all that—a prominent web address and a flash in the top-right corner informing customers they can save up to 50 percent in the Furniture Village sale. But here’s something I’ve not seen on a catalogue cover before: “all stores fully air-conditioned”.

Is this an important selling point? Does it imply that other furniture stores are uncomfortably stuffy? Would the lure of climate control sway a catalogue recipient who perhaps ultimately orders online?

It has been a while since I needed to buy a sofa, but I don’t recall air-conditioning helping me make a buying decision. It seems an odd choice for a cover line, but maybe Furniture Villages knows something we don’t and we’ll finally get the barbecue summer we’ve been promised.--MT

Cross-Atlantic's top 7 of 2011

Cross-Atlantic Insight is our enewsletter delivering international news direct to your inbox every fortnight. If you’re trading in overseas markets, or you simply want to stay abreast of what UK, European, and American direct marketers are doing beyond their own borders, you need to be on the list. Click here to sign up to receive the free enewsletter.

Curious to know what you've missed in the year to date? Catch up here with our seven biggest stories of 2011 so far, as measured by click-throughs

1. Targeting the Nordics—with a mature ecommerce market, efficient postal system, and a good availability of prospecting data, Scandinavia presents an attractive opportunity, but there are several other points to consider too
   
2. Compare and contrast Best Buy—analysing the differences between Best Buy's US website and its UK counterpart
   
3. Compare and contrast Clarks—Clarks' overseas business is said to be booming with sales up 19 percent in the USA. So just what makes it so popular with American consumers?
   
4. European online sales overtake the US—European online retail sales now exceed those in the US, according to a new report
   
5. EU parliament adopts amended consumer rights rules—members of the European parliament (MEPs), the Committee on the Internal Market and Consumer Protection and the Council of the European Union agree amendments to the EU Consumer Rights Directive.
   
6. Catalogues drive international sales for Next—Next doubles international sales and plans for more growth
   
7. International study indicates huge potential for mobile retail—a report on mobile shopping shows that UK consumers are willing to shop by mobile and closing the gap on their US cousins--MT

Mid-year catch-up--best of Insight so far

We’ve passed the midpoint of 2011, so what better time to reflect and take a look at what’s been most popular with our readers to date.

Delivering strategic and tactical advice to subscribers of the CataloguesCatalogues enewsletter every week, here are the top seven Insight stories of 2011, as measured by click-throughs.

1. Seven easy tips for creating better catalogues -- there’s a science and an art to creating hardworking catalogues, so here are seven tips to help you succeed.

2. Seven email marketing trends for 2011 -- what should your email marketing strategy look like in 2011? Some trends to watch.

3. The year in review -- a roundup of the biggest stories of 2010

4. May Catalogue Log -- of the 91 catalogues we received in May, just 34 made no mention of a special offer on the cover.

5. A practical guide to marketing your website -- originally published in 2010, this article on planning online marketing activity is still popular in 2011.

6. Seven rules to follow when using social media for lead generation -- today’s consumers—and by extension, corporate customers—are ignoring traditional marketing channels. However, one marketing channel continues to open up new avenues for business-to-business companies—social.

7. Three tactics to make the most of email in 2011 -- top tips to help you make the most of email in 2011.
--MT

June Catalogue Log

Talk about extremes. The June Catalogue Log recorded the highest ever percentage of catalogues offering a sale or discount on the cover, while also logging one of the lowest numbers of covers promising free delivery.

The summer sales started in earnest in June. Out of 81 catalogues received last month, 59.3 percent, or 48 catalogues, offered a sale or discount on the front cover. Further, only 29 catalogues had no offer on the cover at all—and of those, at least two had a special offer flyer inserted, or promoted a deal on the back cover. Clearly, cataloguers are being more aggressive in their promotional mail in order to boost revenues and shift stock in time for autumn.  But, this tactic comes at a price; at multititle group N Brown, which operates Simply Be, Jacamo, The Shoe Tailor and Marisota, for example, margin in the 18 weeks ended 2nd July declined by 0.2 percent due to discounting. Indeed, of 11 N Brown catalogues and inserts we’ve logged in just the past two months, all had promotional cover lines.
Up until now, July 2010 had been the most sales-dominated month, with 49.5 percent of covers promoting a discount--significantly lower than 2011’s 59.3 percent. For June 2010, 40 percent of covers featured a sale. The year before, discounting was even less popular, with only 34.1 percent of covers promising special prices in June. Does this signal that the sale season is starting earlier every year? Seems so; Marks & Spencer reportedly brought forward its sale by a fortnight this year, fuelling speculation that it was doing it to avoid losing business to other retailers, who were already discounting.

Evidently though, one offer is enough for June’s cataloguers. In a distant second place, the next most popular offer was free delivery, offered by a mere 10 catalogues, or 12.3 percent. This is broadly in line with last year (14.7 percent) and more than June 2009 (8.5 percent). I can only assume that as margins are taking such a hit due to slashed prices, retailers cannot afford to send the goods for free too. Of the catalogues that did offer free shipping, most did so conditionally, for example, free delivery for orders of £100 or more at audio-visual cabling cataloguer Russ Andrews, or free p&p when you shop online at Simply Supplements. Among the more generous offers we noted was a Wiggly Wigglers insert with our order from childrenswear brand Frugi—it featured a 15 percent discount and free delivery to encourage me to place my first order there.
The third most popular offer in June was a free gift with purchase, promoted by 9.8 percent of catalogue covers. This is lower than last year’s 12.8 percent, and significantly lower than June 2009 when we logged 17.8 percent of covers offering a freebie as a thank-you for buying in June.

Our first Catalogue Log blog post was published in June 2009, since then we've learned that:

• To date, 2011 has had the highest percentage of catalogues promoting a sale or discount, with an average of 46.1 percent of catalogues doing so every month.
  
• Free delivery was most popular in 2010, offered on average by 1 in 5 catalogues per month.
  
• Offering a free gift with purchase is normally a staple promotion on b-to-b catalogue covers. So far in 2011, an average 13.8 percent of catalogues a month feature a freebie on their front cover.
  
• Free shipping is not a popular offer in June.
  
• The most promotional month to date, offering a combination of sales, free p&p or free gifts, was February 2011, when more than two-thirds of catalogues featured some sort of special offer on the cover.
  
• We received an average of 125 catalogues a month in 2009 and 111 catalogues a month in 2010.
  
• In the first six months of 2011 we logged a monthly average of 108 catalogues.
  
• Overall, in terms of volume, we tracked 81 catalogues in June 2010, that’s 8 percent more than last year (75 catalogues), but 42 percent less than June 2009 (140 catalogues).--MT