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National Mail Order Association

 5 Predictions for the 2000’s 

by John Schulte

Read John's Book on Starting a Small or Home Business

June, 2000

Making predictions on what is to happen is always a risky proposition. If you’re right…you’re a genius and the world loves you. If you’re wrong…well, you know. But the way I look at it…No Guts…No Glory. So, here are 5 of my predictions for the 2000’s.

Prediction 1
European Firms to Steal U.S. Catalogers’ Share.

A rash statement? Paranoid thinking? Maybe, maybe not. Let me share a bit of my thinking and insight with you. Everywhere you read there is talk about the great potential for US mail order companies wanting to enter Europe. You hear all about how Europeans love American products and catalogs and the growing number of companies experiencing great success. After all, it’s a huge market, soon to be improved for direct marketing with a single united currency, the Euro.

That’s all true and good. In fact, I think the majority of US mail order companies don’t realize all the great opportunities there are for them in Europe, and for some reason they’re putting off learning until later. I predict this will prove disastrous for many of them.

What really seems to be missing in all this is the opposite fact: While we’re looking at the European market with dollar signs in our eyes we’re blinded to the fact that Europeans see the US as a mighty fine market opportunity. So good, in fact, that European mail order companies are buying data on the U.S. mail order market like I’ve never seen before.

In the last 12 months, the NMOA’s International consulting services are at an all time high, the clients: European direct marketers! Orders for "The Guide to Mail Order Sales" covering the United States are also booming. Orders from Europe that come into the NMOA for these data are more than three times the amount received from US companies requesting European mail-order data. It’s clear to me that European mail order companies are gathering marketing intelligence on the U.S. mail order market for one reason...to plan their attack!

And it makes perfect sense. Our market is also huge. We have great delivery services. We have a single currency. We basically all speak the same language. Our economy is good and we have money to spend. We have easily accessible mailing lists segmented down to a gnat’s eyebrow.

In fact, Europeans will have an easier time coming here then we will have going there.

Let’s not forget that Europeans are no dummies in the world of mail order marketing. After all, it started there. They will be extremely tough competitors. Right now European marketers are studying every possible niche in the US mail order market for weaknesses and potential. They are having samples of YOUR catalogs shipped to them for study. Remember, for every market niche we have...there is someone in Europe that can compete with you.

Another important point to think about is that there is BIG money in Europe...and they have a good supply of venture capitalists that are looking for things to invest in. And direct marketing is one area they are very interested in. And unlike US venture capitalists, Europeans are not afraid of taking chances on mail order start-ups or expansions. They actively solicit and listen to new ideas.

What should we do? The starting point is fairly simple: education and action! Learn all you can about the mail order marketplace in Europe and who the key catalogs are. Get samples of their catalogs and study them to see what’s selling and how it’s being sold. Order information from service providers across Europe. Look into testing your products in Europe.

When it comes down to it, will you be one to act now and put yourself in the way of opportunity or one to react later—when it may be too late?

By 2002, the Euro will be in full use all over Europe. Centralized bilingual call centers are already set up. European catalogs will become bigger and more powerful, and they will enter the U.S. market... your market. Consider yourself warned.

Prediction 2
Web-only retailers will die out in large numbers and Mail Order/Catalog firms that incorporate the Internet in their marketing strategy will be the BIG winners.

What is Internet/Web marketing? It’s Direct Marketing. Don’t forget it. If you take away the new mystical words "Internet" and "Web" and just describe the process of a sale of a product you will see that the Internet/Web is nothing more than a new direct marketing medium in which to promote products and services and take remote orders.

I know what you’re thinking, "the Internet can do a lot more than that," and that is true, but for simplicity's sake this is the basic process I want you to think about: (A person looks at a picture of a product and reads the words associated with this picture. If this information provided with the product is sufficient to make a purchasing decision then an order is placed.) Sounds like shopping from a catalog doesn’t it? And when the smoke clears, that is exactly who is going to be the leaders when it comes to making money using the Internet/Web.

Traditional mail order catalogers are going to be the winners over strictly Internet/Web companies. Traditional catalogers will supplement their printed catalog with new electronic catalogs. They already have a mature and satisfied customer base, product supply contacts, experience in processing and fulfilling remote orders, and in keeping a sophisticated customer database and the experience and capability of processing returns.

Prediction 3
Millions spent by web companies on "Branding" turn out to be a waste.

You hear much about "Branding"; web only retailers are spending millions of dollars on advertising with the idea of "Branding" their web site. This thinking is based on the hope that they will gain market share that will give them a competitive advantage in the future. Will it work? Have you ever heard the saying that "You can’t buy class?" Well the same goes here. You can’t buy "Brand." It’s something that has to be earned.

We consider the word "Brand" to mean customer loyalty to a certain company or its products, which the ultimate goal must be because you can’t have consistent market share without customer loyalty, which in turn means repeat sales to the same people. People become loyal to a "brand" only after they have been satisfied with the product or their shopping experience with the merchant, and/or perhaps the way they are treated when a return needs to be made.

However, there is also the fact that customer loyalty is at an all time low. Many people simply shop where the price is the lowest. So you can also spend millions and gain many one-time sales, (many times at a net loss) and have a happy one-time shopper but still not have any loyalty or long-term market share on which profits can be built.

True, when you spend millions of dollars telling people about your company you can build notice of your "Brand" faster, however, if the experience shoppers get is poor, then you’re spending millions building the opposite, what I’ll dub "anti-brand". After last year's Christmas problems with order deliveries and returns you can see how this works. This also affects people that only read about the problems and come away with a tainted view of your company. You cannot buy trust or a loyal customer with advertising only. You can only get them to…try you!

Always remember, you can’t buy class and you can’t buy "Brand"…both must be earned.

Prediction 4
The niche marketer or "small guy" will not only survive…but also prosper!

Keep this quote in mind: Nobody owns a job, nobody owns a market, and nobody owns a product. Somebody out there can always take it away from you. Because that’s the way it works!

The small guy must understand this verse and understand that direct marketing is also niche marketing. And Internet marketing is direct marketing, so for the small guy to be successful he must focus on an area/segment of expertise. (Many of today’s successful direct marketing companies started with the owner’s hobby and interests.) You must become the known expert in your particular area or else you need to have something that no one else has, (this can simply be private labeled goods) and then you can compete. You will be able to capture a share of the market segment because large companies can’t service the customer like you can. This is where you have the best chance of building loyalty in an un-loyal market place.

So, can a small guy survive with all these so-called "big guys" spending millions promoting their company? Yes, it just takes longer. If you are knowledgeable about what you do and sell, you will build a loyal customer base. Your brand will build slowly but it will be strong.

Prediction 5
Rising postal and paper costs affecting catalogers will be helped by new printing strategies that lower the overall cost of printing catalogs.

I predict this because I have been contacted by a person that is working on a program right now that will prove to lower catalog printing costs by as much as 63% for smaller runs and about 16% for very large runs.

It has become increasingly evident that the inordinate rises in postal rates especially those about to be thrust upon us, and the continuing repetitious rises in paper prices are "getting-out-of-hand" and both are quickly becoming decided detriments to every catalog's future. It is our responsibility at NMOA to address the desperate situation as these have become, to enable the cataloger to maintain his economic "health" and to fortify his or her ability to grow.

"Counter-measures" must be drawn upon. It is this person's consummate knowledge of the printing process and its equipment, its unique production abilities, formatting abilities and a talent to configure producible printed product which will maximize production efficiency and BROADEN MARKETING EFFECTIVENESS beyond anything thought possible.

This person has developed a key strategy that will produce amazing savings for all catalog marketers. To give you an example of these savings possible when participating in our new plan consider the following:

This strategy will show how a 16-page catalog producing 25,000 copies will reflect a saving of more than 62% of the normal expenditure; or this strategy will show how a 48-page catalog producing 100,000 copies will reflect a saving of more than 28% of the normal expenditure.

To put these savings into a different perspective consider:

  1. This strategy will show how 25,000 copies of a 48-page catalog can now be produced for the same cost 25,000 copies of a 16 page catalog requires.
  2. Similarly, This strategy will show how the customary charge for 250,000 copies of a 16 page catalogs will NOW be able to produce 250,000 copies of a 48 page catalog.
  3. This strategy will show how 100,000 copies of a 32 page catalog can be produced at the same cost 25,000 copies of 32 page catalog has normally required.

All savings can be realized WITHOUT ANY ALTERATION OR DISTURBANCE TO THE CATALOG'S GRAPHIC INTEGRITY.

If you produce a catalog or have plans on adding a catalog to your marketing mix, this new program will be very important to you. If you are interested in learning more about this exciting breakthrough, get your e-mail address signed up at the NMOA web site.

John Schulte is a Marketing Consultant and Strategist. He is also president and chairman of the National Mail Order Association. http://www.nmoa.org/sponsors/jsconsl.htm

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