The catalog and mail-order house industry, or non-store retail industry, is comprised of establishments primarily engaged in the retail sale of products through television, catalog, and direct mail. Such organizations include companies that sell book club memberships, magazines, and retail consumer and business products. These establishments deliver products and services through the mail. This classification does not encompass direct-mail advertising firms or stores that are operated by catalog companies for the purpose of on-site retail sales.
454110 (Electronic Shopping and Mail-Order Houses)
According to the U.S. Census Bureau's Statistical Abstract of the United States, there were 11,800 electronic shopping and mail order houses in the operation in 2000. The industry generated approximately $68.1 billion in revenues, up significantly from just $19.3 billion in 1990. The industry experienced great growth during the 1980s when mail-order selling activity leaped more than 300 percent. From 1990 to 1996, mail order sales grew at a rate of more than 9.9 percent per year, about 1.7 times the average growth of general merchandise, apparel, and furniture store sales.
The catalog industry saw renewed opportunity with the growth of Internet shopping in the late 1990s. While some new Internet sales companies seemed to pose a threat to established nonstore retailers, the industry soon reacted by adopting the new technology. As of 1999, an estimated 90 percent of catalog sellers who were members of the Direct Marketing Association were online in some way, and 60 percent of them were selling over the Internet. Catalog retailers' Internet sales represented a high growth area in the late 1990s, with some major companies reporting the doubling and tripling of online sales growth annually. Sales were slowed in the fourth quarter of 2001 following the September 11 terrorist attacks, when the entire U.S. economy plunged into recession. Although business rebounded during 2002, war with Iraq in 2003 kept a damper on the economy.
Catalog and direct-mail sellers also saw some blurring of the lines in the industry at the beginning of the twenty-first century, as retailers launched catalogs, catalog sellers opened stores, and many merchants explored the option of selling via the Internet. The industry also went through a period of consolidation through a host of mergers and acquisitions. And a new line of business opened as some direct marketers found they could sell management expertise to newer companies, especially Internet merchants who lacked the know-how to distribute products smoothly.
The catalog and mail-order house industry encompasses companies that sell products through all "non-store" retail channels, including radio, television, and computers. Although larger retailers, such as J.C. Penney, typically maintain an inventory warehouse, most industry participants keep little, if any, inventory on hand. When a customer orders a product, the retailer contacts a wholesale company that ships the product to the retailer or directly to the customer.
Because they refrain from traditional retail purchasing, manufacturing, and inventory management activities, many nonstore retailers are essentially marketing companies. Some catalog companies, for instance, simply assemble a group of complimentary products manufactured by other companies and try to market those items in a catalog to the customers they think would be most interested in them. Similarly, many direct mail and broadcast media retailers essentially act as middlemen, selling products that are manufactured and stored by wholesalers.
The three major categories of nonstore retailing include business, consumer, and charitable sales. Throughout the 1990s, consumer sales accounted for approximately 50 percent of industry revenues, while business and charitable sales each garnered about 25 percent of the market. About 60 percent of consumer nonstore sales were products, while the remaining 40 percent were services. Of nonstore consumer product sales, more than 80 percent were derived from specialty items that were not commonly available in stores. The remaining approximately 20 percent came from sales of general merchandise. Of nonstore sales of consumer services, about 40 percent of revenues were garnered from financial services.
One tremendous advantage that companies in this industry enjoy, however—whether they secure sales via catalogs, direct mail, the Internet, or television home shopping—is the elimination or severe curtailment of two expenses that have a tremendous impact on the bottom line of traditional retailers: rent and sales workforce. Another advantage is that even small to mid-size companies can use mail order to grow the business and/or give current business a larger presence in the market without expanding overhead costs.
The primary disadvantage of mail and broadcast retailing is high advertising costs. The cost of producing and delivering catalogs, fulfilling orders, and servicing customers often leaves retailers with slim profit margins, or losses, if the response to a promotion is poor. The cost of mailing a simple letter and brochure typically ranges from 40 to 65 cents per piece, and the retailer often expects only .5 percent to 3 percent of the recipients to actually purchase a product. In fact, a 2 percent response rate is considered highly successful in the mail-order business. Although response to a catalog is often higher, usually between 3 percent and 6 percent, production costs often exceed $3 per catalog. Mean response rates from catalogs peaked at 8 percent in 1996, and the drop to 5 percent by 1998 was seen as a possible portent of slowing in the industry.
Nonstore Consumers. Nonstore retail industry consumers differ from store customers in several ways, which affects the method companies use to reach the target market. Catalog shoppers, for instance, are better educated, are more likely to work in professional and managerial capacities, earn more money, are more conservative and traditional, and are more comfortable with modern technology and financial instruments. Catalog shoppers are also more likely to be women—58 percent to 42 percent, versus an even percentage of store shoppers. A greater percentage of nonstore customers are also divorced and middle-aged. For example, 25 percent of catalog shoppers are 35 to 44 years old, versus only 17 percent of store customers.
Many demographic differences bode well for non-store merchandisers. Dual-income households, for example, are more likely to shop through catalogs. As a result, more than 50 percent of households that regularly shopped through mail-order earned $30,000 to $99,000, versus 38 percent in that range that never shopped by mail. Catalog shoppers are also more likely to listen to media advertisements and typically expose themselves to more news and financial media. Catalog patrons also spend more money on grocery items ($65 per week versus $55 per week for non-catalog patrons), and are more likely to develop brand loyalty.
The history of mail-order is said to go back to the 1490s, just after Gutenberg's invention of movable type. The first known catalog dates from 1498 when Aldus Manutius of Venice offered 15 books by Greek and Latin authors for sale. Mail-order operations have existed in the United States since colonial days. In fact, Benjamin Franklin is believed to have initiated the industry with the first direct-mail offer ever presented to the public. Not until the latter part of the nineteenth century, however, did mail order assume a significant role in the economy. The main impetus for merchandisers to offer products through the mail was the inaccessibility of the massive rural consumer market. Companies knew that they could benefit by getting product information to farmers, who represented the majority of the population.
Although a few firms successfully promoted products to the rural population through catalogs and mail, Richard Sears achieved the most notable success. In 1886 Sears began selling watches in the mail. Eventually, the Sears Roebuck, & Co. catalog became a staple of American life, delivering access for millions of Americans to general merchandise that was locally unavailable.
During the late 1800s and early 1900s, several developments contributed to the emergence of a nonstore retail industry. Most importantly, the construction of a continental rail network provided a vital distribution channel for East Coast mail-order houses. In addition, the U.S. postal service began offering special rate structures for mail-order businesses that encouraged the dissemination of advertising papers and catalogs. Furthermore, in 1913 the postal service developed the parcel post system. These factors provided a relatively inexpensive alternative to products sold by controversial middlemen, who often garnered huge profit margins from the sale and delivery of goods to rural customers.
Three of the largest mail-order houses that gained prominence in the early 1900s were: Sears; Montgomery Ward and Company, founded in 1872; and Spiegel, Inc. These companies, like others of that era, generated huge profits by offering general merchandise at low prices. They often made their own products and benefited from large-scale advertising and high-quantity sales.
Although mail-order houses continued to experience sales growth throughout the mid-1900s, particularly during the post-war economic boom of the 1950s and 1960s, the role of catalog and mail-order sales in the U.S. economy was changing. As the population shifted from primarily agricultural to predominantly urban and suburban, the importance of delivering general merchandise to remote consumers waned. Instead, mail-order companies began emphasizing shopping convenience and access to specialty products.
Despite industry growth, nonstore shopping still represented less than 1 percent of all retail sales by 1960. Even by 1967, U.S. mail-order sales had only reached $2.4 billion. During the 1970s, moreover, mail-order houses realized only modest gains in combined sales.
The 1980s. A variety of developments in the 1980s combined to result in explosive growth in the catalog and mail-order house industry. Technological advances, demographic changes, and more efficient financial markets were the predominant forces behind this phenomenal growth.
Technological advances that catapulted many competitors to success in the 1980s included computers and software, which increased marketing efficiency and improved customer service. The computer systems that became popular in the early 1980s allowed companies to manage and manipulate large amounts of consumer data. As a result, companies were able to cull from a customer list only the best prospects for a particular product or catalog, thereby reducing unnecessary marketing expenditures. Furthermore, by storing customer information in databases, companies were able to efficiently market new products to existing customers.
Computers were also used to track and manage inventory. When a customer ordered a product, the mail-order house could electronically alert its warehouse, or its supplier, and ship the product quickly. Similar information management systems allowed merchandisers to integrate money-saving, just-in-time inventory control, and customer service systems. Furthermore, inexpensive desktop computer systems allowed small, specialty non-store retailers to compete more easily with larger firms on a national scale.
In addition to computer technology, the nonstore retail industry benefited in the 1980s from pivotal demographic changes affecting American buying patterns. One of the most important changes was a rise in the percentage of working women and dual-income households. Between 1980 and 1990, the percentage of women involved in the labor force climbed from 42 percent to 46 percent, or from 107 million to about 125 million. Because dual-income households did more shopping by mail, this change increased nonstore merchandising revenues. A rise in the number of elderly Americans, who were also more likely to shop through the mail, prompted industry growth as well.
Another factor boosting mail-order growth in the 1980s was the development and public acceptance of new methods of paying for and financing products purchased through the mail. Credit cards allowed both retailers and consumers a safe and efficient means of paying for mail-order items. By the mid-1980s, more than 600 million credit cards were held by Americans. The proliferation of toll-free "1-800" (and after 1996, "1-888") numbers also generated a large increase in sales. Many catalog companies reported increases of more than 60 percent in sales as a direct result of utilizing toll-free order numbers.
The effect of these and other advances was a 300 percent increase in nonstore retail sales between 1980 and 1990. Indeed, from just $72 billion in 1980, sales in mail-order houses skyrocketed to $211 billion by 1990, representing average annual growth rate of more than 11 percent. By the end of the decade, catalog and mail-order shipments were responsible for about 10 percent of all merchandise sales, more than 3 percent of retail sales, and 1 percent of consumer services sales. Furthermore, trade in the industry represented nearly 2 percent of U.S. gross domestic product.
However, U.S. mail-order sales growth declined in the early 1990s as a sluggish economy suppressed revenues in all retail sectors. By 1992, industry participants faced heightened price competition that reduced profit margins. In addition, many analysts believed that the catalog and mail-order industry was maturing and had passed its stage of high profits and dynamic growth. Several trends supported this theory: the industry was becoming more consolidated; sales growth was leveling off; advertising costs were escalating; and failure rates were up. A major cause of higher advertising costs was media saturation. Because consumers were being bombarded by increasingly larger amounts of mail-order advertising, response rates for promotions, on average, were declining. The average consumer received more than 21 pieces of mail per week in 1995. Households that regularly purchased items through the mail, however, often received much more.
In addition to declining sales growth and slimmer profit margins, catalog and mail-order houses were battling state and federal regulatory efforts that sought to eliminate an important industry advantage—the absence of sales taxes on products sold to out-of-state consumers. Companies narrowly averted disaster in 1992 when the Supreme Court ruled that states could not force mail-order retailers to collect or remit state sales taxes unless they were physically present within the state. An opposite decision would have cost the industry at least $3 billion, in addition to lost sales. Many states continued to seek methods of taxing out-of-state sales, however.
In response to the relatively inclement business environment of the early 1990s, catalog and mail-order houses scrambled to increase sales and profit margins. Companies emphasized customer satisfaction by gathering data on preferences and wants, and then carefully tailoring products and promotions accordingly. Companies also eliminated large, general audience catalogs and relied instead on specialty niche promotions. In 1992, for instance, Fingerhut Companies Inc. joined forces with Montgomery Ward and Co. to develop a set of 10 specialty catalogs.
Part of the customer satisfaction strategy included the integration of advanced database management techniques. By gathering and storing consumer information on a computer database, retailers were able to determine what, when, and how to market to each of their customers. For many companies, database marketing became an exact science that allowed them to maximize the efficiency of every advertising dollar. Indeed, many companies offered products to potentially new customers at a loss so that they could gather information on the consumer and generate profits from follow-up sales.
In the mid-1990s, the business-to-business division of Dell Computer Corporation spent more than $1 million to clean up its database, using a comprehensive telemarketing campaign to add more than 150 fields of information to its database; at the same time, the company eliminated more than 50 percent of its existing list. As a result of this $1-million expenditure, Dell doubled the response rate from its remaining customers, and by reducing printing and postage costs realized an approximate $4 million in annual savings.
Firms also beefed up inventory control systems in the early 1990s. Just-in-time management techniques, whereby warehousers kept minimum stock on hand and relied on prompt delivery by suppliers, became standard for most successful large mail-order houses. Value pricing, too, became an important strategy for many firms. By improving the quality of merchandise, increasing service, and reducing prices, many successful competitors were able to overcome reduced margins by increasing market share and sales volume and taking advantage of follow-up sales opportunities.
In addition to internal efforts, a flurry of mergers and acquisitions characterized the industry in the early 1990s, as companies sought the benefits of economies of scale and greater access to investment capital. Aaron's Furniture Warehouse, Donnelly Marketing, Burpee, Ticketron, and Conde Nast were just a few of the companies that were absorbed by other mail-order houses. One of the largest mergers involved the sales of Murdoch Magazines to K-III holdings for $650 million.
The Rise of Electronic Retailing. Although the Home Shopping Network was founded in the late 1970s, this retail medium was stagnant for a number of years. Dismissed "as a downscale medium whose average viewer was a far cry from the urban and suburban sophisticates that merchants hanker after," as Business Week observed, electronic retailing was given little attention by major retail companies. The arrival of former FOX Network executive Barry Diller as a part owner of QVC, however, lent the concept an increased credibility.
At the same time, retailers increasingly recognized that, given the moribund performance of many of the stores, electronic retailing had its charms. As an analyst at UBS Securities observed in Business Week, electronic home shopping is "a low-cost distribution system. You don't need thousands of stores, and you don't need thousands of pieces of inventory in each location."
The Direct Marketing Association reported that in 1995, 77 percent of the U.S. population had viewed direct response television in an infomercial, a direct response television spot, or a home shopping program. More than 22 million adults had watched home shopping programs, and approximately 8 million bought merchandise from a television offer. One of the fastest growing areas of television sales was the infomercial (an in-depth promotion of a product, replicating a television show), which increased from $350 million in 1988 to $1 billion in 1994.
The next big event in the history of nonstore shopping was the arrival of the Internet. Though some commerce had been tried over the Internet earlier, on-line shopping became a recognized presence on the American scene in 1997. The success of some early on-line ventures, such as 1-800 Flowers and Amazon.com, led to a plethora of on-line sales sites. Many of these were small start-up ventures without the marketing sophistication of brand identity of either traditional retailers or catalog vendors. But by 1999 the majority of catalog houses had some presence on the Internet, and many traditional retailers also published online catalogs. Major sellers on the Internet were books, computer products, recorded music, gifts, and financial services.
In the late 1990s, the catalog and mail-order industry was both growing and changing. The doldrums of the early 1990s ended, and sales grew at levels hovering around 8 percent annually at the end of the decade. Though earlier analysts had thought the mail-order industry was saturated, by the late 1990s it seemed that the traditional retailing industry was saturated too, and catalogs were an easy way to expand. The president of the Direct Marketing Association, H. Robert Wientzen, explained in a September 22, 1999 New York Times article, "[T]here aren't a whole lot of places left to put stores." So for example Federated Department Stores bought venerable direct-marketer Fingerhut in 1999, and Fingerhut then ran the catalog and online divisions of Federated's stores. Staples, a giant chain of office supply stores, acquired the catalog office supply vendor Quill in 1998, and Office Depot, another sprawling retail office supply chain, also acquired a catalog vendor, Viking. Yet this trend worked in reverse at the same time, as catalog marketers decided to open stores in the late 1990s. L.L. Bean, which had had only one retail store in its almost 90-year history, announced in 1999 that it would begin to open a chain of stores. These mergers and changes showed the catalog and mail-order industry was still volatile at the end of the 1990s. In many cases, this volatility meant lower profits. Many major direct marketers had flat or declining sales as they struggled to adjust business strategies. For example, in 1998 sales remained level or shrank for Lillian Vernon, J.C. Penney, and Land's End, all industry leaders.
Catalog and mail-order sales as a whole expanded in the late 1990s, but the area of the most explosive growth was Internet sales. Some major catalog retailers reported rapid expansion of their Internet sales, even if overall sales were flat. Online sales for J. Crew, a major apparel catalog, quadrupled in 1998, reaching $20 million. Total sales for J. Crew were $816 million, so Internet sales represented only a small percentage. But Internet sales at the company continued to rise over the next year. Though Land's End, another apparel catalog company, reported a steep drop in earnings in 1998, its Internet sales nevertheless grew from only $18 million in 1997 to $61 million a year later. The stagnating company planned to move more aggressively into Internet selling, while abandoning some of its retail stores. But Internet selling seemed unlikely to replace catalog selling in the industry as a whole. According to a survey of major catalog retailers in the New York Times , direct-mail advertising and large catalog mailings were still considered the best way to reach new customers in 1999.
Some of the highest growth mail-order companies in the late 1990s were computer retailers. Dell had sales of $18 billion in 1998, an increase of 33 percent over the previous year. CDW did almost as well, with an increase of 26 percent in 1998, leading to sales of $1.7 billion. Gateway was another stellar computer retailer, with $7.5 billion in sales and revenues increasing 16 percent.
Another new development in the industry in the late 1990s was the introduction of the hybrid magazine/catalog. These "magalogs" or "catazines" were mostly given away as store promotions. Leading retailers Abercrombie & Fitch, Nordstrom, and Neiman Marcus were early on the magalog scene. J.C. Penney created Noise , a free magazine for teens, in 1999. These publications were a skilful blend of feature articles and photos that touted store brands without explicitly saying so. The appeal of this kind of catalog seemed to be that it stood out from other mailings. As the number of catalogs mailed increased in the late 1990s, the hybrid version was hoped to be more arresting than the run-of-the-mill direct mail offering.
The catalog industry had a rough start to the twenty-first century after a decade of exceptional growth. According to Catalog Age's, "Benchmark Report on Critical Issues & Trends" survey, 24 percent of the survey's respondents reported missing profit goals by more than 10 percent for 2001. Additionally, 29 percent missed the mark by 1 to 10 percent, meaning well over 50 percent of the industry did not make their profitability goals. Whereas downtrends in 2001 can be blamed on the aftermath of the terrorist attacks that had devastating effects on the fourth quarter, the industry did not rebound completely in 2002, and sales once again fell off in the fourth quarter of 2002.
One of the most important concerns for catalog retailers is the rising cost of catalog distribution and shipping merchandise. Postage and paper costs as well as United Postal Service and FedEx charges are variables that can and have had a negative effect on the cost-effectiveness of catalog campaigns. As a result, some companies are employing money-saving measures such as cutting down on cold-call mailings (sending out unrequested catalogs), reducing page count of the catalogs, substituting a catalog drop with a postcard or e-mail that promotes special offers, and reducing the number of specialty catalogs targeted at specific customer segments. Despite the difficulties caused by a recessionary economy, the catalog and e-commerce sectors are expected to continue to expand as the U.S. population continues to increase its Internet use to purchase products.
According to the U.S. Census Bureau in 2000, the latest statistics available, electronic shopping and catalog houses accounted for 19.1 percent of all retail activity in the United States, with sales valued at $21.4 billion. Book and magazine revenues sold via e-commerce totaled $2.1 billion, or 49 percent of all sales. Computer software sold via the Internet totaled 31 percent of all software revenues. Online sales of toys and music/videos each held slightly under one third of their category market shares. E-commerce sales of consumer electronics and appliances also garnered 31 percent of the category's total revenues. Online computer hardware sales totaled $6.1 billion, 23 percent of all computer sales, and 28 percent of all e-commerce revenues.
The largest catalog retailer in the United States in the late 1990s was J.C. Penney, the department store chain. The catalog has always figured heavily in its retail mix, but that was not the sole source of the company's business. Fingerhut Companies, Inc., of Minnetonka, Minnesota, moved up from being the ninth largest mail-order firm in the country in 1995 to being the second largest firm in 1999. Fingerhut sold more than 15,000 different products, including various housewares, electronics, and domestic items, to a customer database of more than 13 million people. In 1999 Federated Department Stores, a conglomerate that owned several department store chains including Bloomingdales and Macy's, bought the company. After the acquisition, Fingerhut found a new niche for itself handling the catalog and online sales of some of Federated's divisions. In 1999 it inked a contract with the world's largest retailer, Wal-Mart, to manage its Internet sales. In July 2002, Federated sold Fingerhut to FAC Acquisition.
Provell Inc. (formerly Damark International) was another consistent leader in the catalog and mail order industry in the 1990s, but it struggled in the 2000s. The company's 2001 sales stood at $138 million, resulting in a net loss of $79.3 million. Damark ran a massive catalog operation, mailing out some 150 million catalogs annually. It offered computers, home office equipment, sporting goods, electronics, and other consumer goods at discount prices. Damark also ran direct mail shopping clubs. In the late 1990s it had nine such clubs with approximately 1.7 million members. Club members paid roughly $60 a year to join and were then able to buy the company's discounted entertainment, travel, health and fitness and restaurant services.
One of the fastest growth mail-order companies in the late 1990s was Dell Computer Corporation. It was one of the largest catalog operations by revenue in the late 1990s and early 2000s, and led the world in direct mail sales of personal computers, software, and peripheral equipment. Being a computer corporation, it was natural for Dell to move heavily into Internet sales. Dell reported a net income of $2.1 billion on revenues of $35.4 billion in 2002.
The phenomenon of the late 1990s nonstore retailing world was Amazon.com. It was arguably the company that made Internet shopping a comfortable option for American consumers. By the close of 1998, more than 6 million customers had purchased books, music, or videos from its online store. It branched out from its position as a virtual bookstore to become a virtual shopping mall. Amazon.com did this by acquiring the online auction house e-bay and stakes in a host of other online vendors including drugstore.com, HomeGrocer.com, and Pets.com. The Wall Street Journal named Amazon.com as its best one-year performer in 1999. Despite its overall success Amazon posted a net loss of $149.1 million on $3.9 billion in revenues for 2002.
Employment in the catalog and mail-order house industry was expected to grow faster than employment in most other U.S. retail sectors in the early 2000s. Advances in automation and information systems, however, could curtail job growth as companies eliminate labor-intensive positions. Despite expected growth, the catalog and mail-order industry offered relatively meager employment opportunities in relation to businesses with similar sales volumes. The greatest job growth was expected to occur among computer programmers and information systems professionals, who were needed to integrate and streamline customer, inventory, and financial information. Most computer positions required little prior training, allowing opportunities for many entry-level information specialists.
Jobs in sales, photography, layout, and design were likely to increase between 50 percent and 65 percent. Labor and blue-collar positions were forecast to expand as well—by about 50 percent. Positions in management, finance, and information systems were also expected to realize growth rates of 50 percent to 60 percent by 2005.
According to the U.S. Department of Labor, Bureau of Labor Statistics, in 2001 the industrial category of nonstore retail employed nearly 380,000 workers. Of this total, 41 percent of jobs were related to office and administrative support duties. Customer service representatives totaled 42,670, or 11 percent of all jobs, and had a mean annual salary of $21,490. Other major in-category positions included order clerks, shipping and receiving clerks, stock clerks, and order filers. Sales positions accounted for 19 percent of the industry's jobs, with 70,710 jobs. Mean annual salary for sales-related jobs was $25,520.
The U.S. catalog and mail-order industry is the largest and most advanced in the world. There are two basic reasons for this industry's continual growth: a large population and a relatively high-income level. Although other countries may be more densely populated, they lack a large enough number of people who have the income to buy.
Mail-order retailers in the United States benefit from several other advantages. Most importantly, U.S. retailers enjoy access to the largest industrialized, relatively homogenous market in the world. As a result, multiple economies of scale exist for domestic merchandisers. An entire U.S. mailing list industry has emerged, for example, allowing retailers to efficiently attack specific market niches.
Another very important advantage for the U.S. mail-order industry is relatively low postal rates. U.S. bulk and first-class postal rates are the lowest in the world—much lower, in fact, than rates in most of Asia, Europe, and South America. Postal rates in much of Europe, for instance, are twice as high as U.S. rates, making it difficult for companies to successfully promote products through the mail. Higher shipping charges further dilute profit potential in overseas markets.
In addition to these factors, most foreign mail-order markets are characterized by relatively limited media availability; much tighter government regulation of advertising content and product approval requirements; a lack of public understanding and acceptance of mail order; language and cultural barriers; low credit card penetration; and a lack of toll-free numbers. Furthermore, in some European countries many types of mail promotion are banned for environmental and social reasons. The European Community mail-order industry also suffers from a lack of uniform postal and business standards. Some of these mitigating factors were disappearing in the late 1990s, and the growth of the Internet also served to break down geographical barriers.
Cross-Border Sales. Foreign sales by domestic catalog and mail-order houses have traditionally been limited by language and cost barriers. Despite the inefficiency of nonstore retailing in many overseas markets, however, several U.S. and foreign firms have successfully penetrated other markets. Cross-border sales between the United States and European Community (EC), particularly steadily increased throughout the 1990s, spurred in part by increasingly uniform EC markets.
The most exportable mail order products in the 1990s, in order of revenue size, were information, education, and collectible products. In addition, several U.S. firms successfully marketed specialty American products in some Asian countries. Some of the most successful offshore U.S. mail-order enterprises included Hanna Anderson, Austad's, Eddie Bauer, L.L. Bean, Black Box, Inmac, Myron Manufacturing, and Recreational Equipment Incorporated (REI).
The most successful catalog and mail-order houses increasingly moved computer systems toward client/server architecture with relational databases and distributed processing. Information databases would eventually allow companies to produce highly specific catalogs and marketing materials tailored to smaller groups, or even individuals. A company might be able to print a set of catalogs, for instance, each of which contained a different product mix and marketing message. Just-in-time inventory practices would assume a primary role in helping companies to maintain profit margins through lower fixed costs and better customer service.
New advertising media increasingly complements traditional broadcast, print, and telephone channels. The burgeoning multimedia environment will eventually integrate video, telecommunications, optical disk technology, and personal computers. Advertisers will be forced to adjust marketing techniques as consumers gain more control in choosing which ads and media they internalize. Advancements in recycled paper, printing technology, and ink would likely help the industry move toward reduced waste and lower production costs. At the same time, the proliferation of specialty cable television channels that reach more homogenous niche markets is expected to increase the efficiency of broadcast advertising.
The importance of new Internet technology was amply demonstrated by the catalog and mail order industry as it embraced online selling in the late 1990s. Some innovations included Catalog City, a Web site consumers could visit to request any of 17,000 catalogs. Partially owned by Bear Creek Corporation, parent of the mail-order fruit and gift firm Harry and David Orchards, Catalog City allowed small vendors without much Internet expertise to have a presence on the Web. Internet shopping also offered new opportunities for interaction between the consumer and the catalog. For example Land's End offered a "virtual fitting room" where women could construct a three-dimensional model of themselves on screen to find clothes that flattered their build.
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