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Latest Issue: Nov/Dec 2018

An instinct for order and stability

I’m going to be blunt – if you are a small to midsize catalogue company, you will not survive the next five years on your own. You are going to need help from others. Most catalogue companies have an instinct for order and stability. To survive, you must throw that sense of security out, and you must develop a desire to blow up the system, and work with other companies. You also need to swallow whatever pride you have in going it alone.

So how about this idea – how about joining forces with some non-competitors? I put this idea forward in 2015 when I said that catalogues should join forces and do joint fulfilment.

Kevin Hillstrom mentioned a similar concept last month when he wrote about “the ‘Portfolio of the Willing’ … a family of non-competitive brands that share their practices in an effort to help each other grow.”

It is safe to say that not a single catalogue feels that the sky is the limit anymore with regards to growth. It is not necessarily doom and gloom for everyone, but every catalogue is feeling some heat. Some more than others.

So, think about this. What makes you unique? It’s your product – your merchandise. As I wrote a few weeks ago, you must have UPOD – unique product or die. You must control the merchandise and it must be what defines your company. Your ability to develop unique products will be the major thing that defines your success.

But what about your fulfilment? That does not define you. Nor does your marketing. For 80 per cent of you, neither does your creative or your website. Those are all functions which every catalog and eCommerce company does, but which do not define the customer’s reason for shopping with you.

Evidently, at some early point in its history, Lands’ End used to include clothes hangers with your purchase of pants or shirts. I know this because every “catalogue branding” article I read from 1985 to 2015 mentioned this fact and cited how it built goodwill “because it was so special”. The articles always lamented that not only did Lands’ End no longer do this, but no one else did either.

Perhaps back in 1970, the seemingly simple inclusion of a few coat hangers defined Lands’ End fulfilment as special. But no one’s fulfilment today is special – except Amazon’s. No one’s circulation planning is special either. Or their retargeting efforts. Or their use of the co-ops. Everyone does these things a little differently, some better than others. As someone who has worked with over 100 different catalogue companies in the past 25 years, I can tell you that no one has a secret sauce anymore. Everyone pretty much follows a similar routine. Some are simply more efficient than others.

Be honest – does it really make sense for every catalogue to be doing its own order fulfilment, maintaining the cost of a warehouse and call centre? Is that the best use of your time and resources? The same question could be asked of your marketing and creative efforts. The first thing the big catalogue conglomerates do when they acquire a new title is merge all the “backroom” functions from the acquired company into the parent company’s umbrella of services. It’s what is efficient.

Why not find five or six other non-competitive catalogue and eCommerce companies and join forces on the functions which each of you do separately, which make no difference to your customer? Your performance and response rate might even increase simply by adopting some practices that others routinely do. What have you got to lose?

As you read this, here are the objections you are probably turning over in your mind as to why this won’t work:

  • Tommy and Cindy, along with over 20 other employees, have worked in your warehouse and call center for over 20 years. None of those other companies have such devoted staff. You’d consider doing this if YOUR warehouse was the one that survived. If yours was not the one chosen, you would not be interested because you could not let those people go – they are like family.
  • You just negotiated a new contract with UPS that your UPS sales rep said was the lowest discount she could provide, and why should you share your “negotiation skills” with others? Well, maybe the prospect of having triple the number of packages go through one account would earn even greater discounts. (This same concept could apply to contracts with printers, co-ops and even your merge/purge service bureau).
  • Integrating systems with five other companies would be waaaaay too much work. And for what? How much would costs really be reduced? Well, you won’t know until you do some math.
  • It has taken your IT department years to perfect your internal reporting. You just don’t want to go through all of that again.
  • What if one of the other companies goes out of business? What if they are the one doing one of these “joint functions”? What happens if their bank puts a padlock on the warehouse door with your goods inside? No, this will never work.

Those are just the objections that you thought of. Others in your company will have hundreds of additional reasons why this concept won’t work.

Yet, here is the alternative. You have limited cash for growth. You can’t develop proprietary products because you haven’t the resources. However, if you could squeeze 10 per cnet out of your current costs, you could hire a new product developer. You could make more trips to the Asian markets. You could do the things that matter and that make a difference with unique products.

Ask yourself what you would rather have – five to ten more years of a viable business, where you pool and share resources and ideas with a few close partners, reduce your costs, and improve your game? Or would you rather suffer through the next few years on a tight budget, clinging to a sales report that IT perfected for you?

As I said at the beginning of this posting, most catalogue companies have an instinct for order and stability. Obviously, there will be tough obstacles to overcome developing a partnership with other companies, not the least of which is the adage that the “worst ship is a partnership”. But, you can no longer afford to do alone that which you could share with others.

by Bill LaPierre Datamann USA