Why catalogs are making a comeback

Despite two decades of email and social media marketing and the digitalization of the customer experience, catalog mailings have steadily increased since 2015. Additionally, consumers are surprisingly enthusiastic about receive them – catalog response rates have increased by 170% over 2004. through 2018. The effects are not limited to digital laggards not going online – in fact, there is evidence that Millennials are particularly interested in the catalogs they receive by mail.

Is the catalog back?

Retailers in some categories seem to think so. Many brands and retailers, such as Nordstrom, Patagonia, Crate and Barrel, Restoration Hardware, and leisure services such as vacations and cruise lines, are investing heavily in physical catalogs. Even purely online retailers that once prided themselves on creating efficient, digitized customer experiences, such as Wayfair, Bonobos, Birchbox and Amazon, are now printing catalogs.

What happens to that age-old analog marketing tool that email and social media marketing were meant to replace? Is the “catalogue effect” here to stay? How can e-commerce companies benefit from it? We used recent trends in retail technology, decades of research in consumer psychology, and our recent experience in the field to answer these questions.

Evidence of large-scale field experience with a luxury e-commerce retailer

To test the effectiveness of catalogs, we partnered with a US-based specialty luxury watch and jewelry e-commerce retailer with a global customer base and no physical store presence. The company generates annual revenue of $60 million and operating profit of $12 million, with a database of approximately 28,000 customers.

The company acquires new customers through online search and other online platforms, so all customers are comfortable with e-commerce and digital communication. More than 75% of the company’s revenue comes from repeat purchases. Relationship building efforts are therefore essential. When a customer’s first order ships, the company obtains permissions for future marketing contacts, then uses weekly email marketing campaigns to promote repeat purchases.

Following our advice, the company launched a new bi-monthly catalog campaign featuring professional and artistic product photography with high quality printing. The company conducted the field experiment using randomly 30% of its US-based customers. Of these customers, 5% of them did not receive an email or catalogs for six months, 55% of them received a weekly marketing email and 40% of them received the new catalogs fortnightly in addition to the weekly email marketing. To control for content effects, over 90% of products were the same between emails and catalogs. The same set of photos and descriptions were also used in both media. We then tracked purchases and product requests across all three groups.

The results showed that the “Email + catalog” group experienced a 15% increase in sales and a 27% increase in inquiries, compared to the “Email only” group.

Compared to the control group, the “Email + catalog” group saw a 49% increase in sales and a 125% increase in inquiries. In comparison, the “Email Only” group saw only a 28% increase in sales and a 77% increase in inquiries compared to the control group. Increases in sales and inquiries from catalogs nearly doubled those from email marketing. Additionally, among customers who received the catalogs and also inquired about the products, surveys conducted by company staff found that more than 90% of customers browsed the catalogs and retained them for seven days on average. The opening rate was much higher than that of the email campaign, which was around 26%. During the six-month trial period, customers in the email-only group purchased an average of 0.3 additional products.

A quick calculation of ROI indicates that a 15% increase in sales on an average order size of $6,700 due to the catalog campaign, at a gross margin of around 30%, results in additional profit $90 (or $180 additional annual profit) per customer. The average shipping cost with the front-end design cost factored in is $5, which yields a direct ROI of 600%, not to mention the additional customer engagement resulting from increased requests. If this campaign is rolled out to the entire customer base, similar response rates would translate to an additional annual profit of over $5 million, a 40% increase from its current profit level.

Finally, we surveyed 500 random customers from each of the “email only” and “email + catalogs” groups and measured their perceived liveliness of emails versus catalogs. We told them that we were evaluating and improving catalog design and asked them the following two questions:

1) Is it easy for you to imagine wearing the product? (scale from 1 to 7, 1= not very easily imaginable, very easily visualized)

2) How clear are the product descriptions in the email (or catalog)? (scale of 1 to 7, 1=not lively, 7=very lively)

Those in the email-only group gave an average score of 4.3, while those in the catalog state gave a score of 5.6, and the difference is statistically significant. These results prove that catalogs can increase sales and consumer engagement through improved product liveliness and ease of product imagination.

Why Catalogs Still Work

When we marry our research above with an examination of retail trends and consumer psychology, we see how catalogs stand out from increasingly crowded digital inboxes and social media feeds. As physical products, they can linger in consumers’ homes long after emails are deleted, increasing consumer awareness.

But their real power lies in how, for some products, they increase the liveliness of a product by improving the consumer’s ability to visualize and imagine experiences of using the product. Liveliness has a great influence on consumer behavior as it can increase consumers’ involvement and joy in the buying process, ultimately influencing preferences and sales. Liveliness is particularly important for hedonic (vs. utilitarian) products and services that are purchased for enjoyment, enjoyment, and enjoyment, and which contain richer experiential aspects.

Finally, physical stores are expensive. For e-commerce retailers, especially those in hedonic categories that don’t have or want physical stores, well-designed catalog campaigns allow them to make product presentation more lively, tactile, and memorable. The potential results are increased customer engagement, loyalty and sales, all without the geographic constraints and expense associated with stores.

Creativity, aesthetics and empathy will determine the competitive advantages of modern e-commerce

Based on our research, we recommend that e-tailers who sell products that people buy for fun, enjoyment, and excitement consider investing in aesthetic designs and experimenting with catalog mailings. Whether other retailers should dive into catalogs is a subject for further research; psychological liveliness theory suggests that visually rich categories such as luxury goods are more responsive to liveliness, and utilitarian and functional products such as household tools, cleaning products, home security systems would not benefit catalogs.

Just as the retail landscape has changed, so have catalogs – they should no longer be a rambling collection of product pages reminiscent of the heyday of Sears. Instead, companies should focus on designing stunning imagery and creative product presentation to evoke emotion (e.g. Celebrity Cruise Lines, Nordstrom), mixing these product images with literature that embodies the higher-level values ​​that the brand represents (for example, the literary lines and art magazines published by the French luxury brand Hermès), and recounting the experiences of others so that consumers can almost live vicariously through catalogs (for example, wine retailer KLwine.com sends out printed newsletters with staff tasting notes and wine tours)

As the convergences of logistics and manufacturing outsourcing level the playing field, operational efficiencies can no longer serve as meaningful differentiators in e-commerce as they have over the past decade. Creative and aesthetic capabilities and the ability of businesses to empathize with consumers and evoke emotional connections will be crucial competitive advantages in modern e-commerce. Catalogs can be a powerful way to reach them.