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Low-Cost Phone and Promotions

Some networks offer inbound phone numbers for online shopping at costs of 8 to 12 cents a minute, about half what it costs to operate a standard WATS line. This can cause a dramatic increase in shopping volume. Greg Stone of Heath explains:

We purchase weekend access time at a good rate from CompuServe and give it free to our shoppers. We time the offer of a free weekend during big shopping weekends, like Labor Day. We feature several key items then. Our sales soar on free weekends. This is helped because we send out E-mail to announce it.

Each videotex service has a magazine or newsletter to supplement its online promotional activity. Get the maximum promotion to drive people to log in. Gerald O'Connell cites some of the online promotions to consider:

For some networks, anyone using the service can type in the name of another catalog and instantly access it. Often a catalog is listed on and can be accessed from several main menus, giving more exposure. Within a catalog the same item can be listed under different classifications.

Sponsoring an event is usually possible using the service's online conferencing software. This might be a product demonstration, a seminar, discussion with experts, or a public forum. Also look into other log-on promotions, including combining with other mall merchants for joint efforts.

Greg Stone says, "We get a lot of promotion in the Go-Mall section of CompuServe magazine. This always jumps sales." And Glenn Ochsenreiter of Walden Books says, "We take advantage of all promotion we can get from CompuServe. Each is a golden opportunity to get new customers."

 

Other Promotion Ideas

There is no shortage of promotion ideas. Be creative and aggressive in applying promotional features to your online catalog. For example, an online catalog can consist of a BBS announcing coming promotions, sales, free connect-time, shopping days, or any incentive. Gerald O'Connell points out,

Special online ads can be run in various parts of an online catalog. These might feature a hot item outside of its classification or any kind of promotion or savings.

When a product is ordered, a complementary product can be instantly displayed for cross-selling. Often it is possible to have several customer forms in an online catalog, one to order products, another to qualify leads, another to request more information.

In the Direct Micro catalog, products are cross-referenced under several categories.

A large part of J. C. Penney online orders are placed by consumers reading the Penney print catalog. By encouraging this type of online ordering, Penney and many other catalogs reduce the costs of providing and staffing an 800 service line. Sears has an online order-blank capability which allows an online shopper to order any item listed in any current Sears print catalog. Greg Stone of Heath notes, "There is a small mention in our print catalog that customers can order online, and some people prefer to. But many order online who never would have from print."

Hammacher-Schlemmer has pulled over 10,000 requests for catalogs from Prodigy. Some of these people order from the print catalog, whereas others get the catalog and then order online. CompuServe's Electronic Mall has a "Catalog of Catalogs" that lists catalogs that can be ordered online.

Get all the free PR possible. Send a simple release announcing your online catalog to your trade publications and to online news services. Mention your online catalog in all your ads, mailings, package enclosures, and billing enclosures. Direct Micro runs print coupons in computer magazines. The coupons are redeemable online.

 

Online Catalog Items

What Items Pull Best Online?
Jeanine Sek of Hammacher-Schlemmer remarks that sometimes a product that's a loser in the print catalog is a winner online. But many items sold online continue to do well: electronic items, personal care items, and auto accessories. The best items use the online advantages of a particular I&E network, such as color and graphics, or appeal particularly to computer and (even more so) to modem owners, such as computer software and peripherals.

How Many Items in Your Online Catalog?
As few as 15 to more than 1000 items featured in an online catalog have worked for various marketers. Online gift catalogs often feature few items, whereas specialty catalogs feature a greater variety. The Penney catalog on CompuServe contains over 100 items. The Sears online catalog on GEnie offers over 1500 products. Hammacher-Schlemmer's online catalog on CompuServe has about half the 192 items featured in a typical H-S print catalog. The OnLine Store has 1500 computer-related items.

The trend is to cut the number of items and describe them in more depth. Greg Stone runs the Heath catalog on CompuServe. He says, "We used to offer over 1000 items online. Then we cut that number to 100 to 125 items, taking our most successful print catalog items. We call the online catalog the 'Heath Electronic Shopping Center.'"

How Much Copy per Item?
Hammacher-Schlemmer's online copy for each item is identical to its print catalog copy–about 50 words. Greg Stone of Heath says, "We use ample copy but short copy blocks. Per item, we average 3 paragraphs of about 7 lines each with 7 or 8 words a line, or about 55 words a paragraph and 165 words an item."

One Specialty or Many?
Most online catalogs have one specialty. The Chef's Catalog has mostly kitchen gadgets. The TSR Games Shoppe online catalog just offers games–older classics like Star Trek, Dungeons & Dragons, and Buck Rogers, to more recent ones like ElfQuest and Hunt for Red October. Publishers Clearing House has a catalog of magazines by classification from travel to computer. Direct Micro and Computer Express each has an online catalog of computer supplies and accessories.

The trend is to specialize more. Penney has eight categories to choose from that span athletic footwear to toys. Sears features online products in home electronics, home office, videotapes, video games, and special value promotions. Each month, Sears features online about 50 items emphasizing home electronics and office equipment with special offers from its print catalogs. H-S has nine categories in its online catalog, about 12 items in each.

Online Catalog Cost?
A catalog of 50 items on GEnie might cost well under $10,000 plus several thousand dollars of equipment. A year's contract is required. Usually even a simple catalog of 50 items or so requires substantial time from at least one person to change, update, check results, and manage.

The Online Store gave CompuServe $10,000 to start with 1500 items. However, with all the additional software that had to be created, its online entry cost jumped to at least $35,000 not including management's time.

The I&E networks are growing so fast that these costs can only increase by the time you read this. On the bright side, the sales per dollar of expense are rising faster for those who create on-line catalogs. All those I've interviewed say that the cost of entry for the cataloger is nominal compared with the investment of the network in time and promotion to make the catalog a success.

 

Tips for Success

Use Your Strengths.
Do what your firm is good at. McGraw-Hill has had an online catalog on CompuServe for more than five years. The company started by offering many kinds of books but then decided to concentrate on offering its line of computer and business books. Likewise, Software Discounters of America offers online just the software in which its great volume allows for big profit margins and where it has expertise. But Glenn Ochsenreiter of Waldenbooks says selling software online doesn't make sense for his company. He explains,

Software is a direct-response business which requires very aggressive pricing. I wanted higher margins. I decided to target customers I could give our best service to, so I converted the online services to offering all our computer books.

I've marketed computers, managed book stores, run Walden Software, and been a computer book buyer. I believed in the online catalog and knew what it required: (1) new products, (2) organization, (3) customer service.

I asked for and was given a chance to turn it around. By 18 months after I took over, we had over 1000 computer books online. I think of it as a store. We wanted to be the place to rely on for computer books.

We offer for sale and perusal a list both by titles and by authors. We give each book a page of description, about 50 to 75 words. That's more than in our print catalog. It's a very well organized, new structure. The first menu offers 10 choices by computer program. It's a very simple breakdown.

We offer free access every weekend. We feature various giveaways. We doubled our business. We quadrupled our annual rate of sales in four months.

New Online Look Improves Success.
Greg Stone, of the Heath online catalog, says,

When I took over, we listed all products by name, weight, price. We had been running for three and a half years on CompuServe and making money. Most people used the online catalog first and then went to the print catalog to get more information and to order.

We redesigned the online catalog to help customers. We divided it into sections. One was a "What's New" section. Another was the "Blockbuster Specials" section, designed to sell excess inventory without affecting normal sales.

In the first two years of the new format, sales jumped about 65 percent. Our costs were lower because the second year we cut down to a smaller plan.

One reason more people don't buy a product they're interested in is that they still have questions. Provide these online shoppers with more information as they ask for it. Prodigy can highlight product features with options for more detail than any catalog. There can be as much copy for each feature as in an entire mailing piece. It's there if they ask for it.

Increase Your Average Order.
Here's how Waldenbooks On-Line increased their average orders. Glenn Ochsenreiter says,

Eight hundred and fifty of our online computer books are basic and widely available. But 150 of our books online are more specialized and not widely available.

The real excitement is toward these higher-end books. Often they are advanced books available only in textbook stores, such as a book on connectivity or chip architecture. These books run $60 to $80 and on average have better margins. Obviously I want to sell a lot more advanced books.

Although the average Hammacher-Schlemmer sale online is about $85 versus $110 in print, H-S has sold slot machines online profitably at $375. Meanwhile, the Heath average sale online is about $190, close to that of its print catalog. Overall, the average sale and annual sales per customer varies with the type of goods sold and the medium used. They are lowest for consumer catalogs on I&E networks.

Encourage Buying by Modem.
When people order on a bulletin board, they themselves are filling out the data by ordering. All the information that is going into your computer is what they're typing out. For this reason, Sears, J. C. Penney, and many national catalogs are equipped to take orders on modem and promote that ability. CEO Stan Snyder of The On-Line Store says, "Our repeat orders come more and more on a modem. This is our higher-profit business; I handle more business with less people. We now clear the credit cards entirely electronically. We're entirely automated."

Update Catalog and Promotion.
Gerald O'Connell says, "Nothing's worse than a stale, stagnant, out-of-date information center or catalog. Keep your online catalog lively, dynamic and up-to-date. Modem Media clients that have been most successful use monthly specials, newsletters, giveaways, and message boards."

Greg Stone of Heath says, "We have a list of over 10,000 CompuServe members who have bought from us online, with their E-mail box numbers. It costs us nothing to send an E-mail message to them. We keep an E-mail letter to 50 words or so–a little memo, short enough to be read on one screen. The memo highlights upcoming Heath promotions. People appreciate it."

Direct Micro uses E-mail to promote quantity discounts. And Sears acknowledges online orders by sending E-mail to the subscriber's online mailbox.

Some Catalog Reminders

Feature Your Guarantee.
The OnLine Store has a 90-day lowest-price guarantee to meet or beat any regularly advertised price.

Tie-In with Your Retail Store or Chain.
Any online Sears order can be shipped UPS or picked up at a local Sears store.

Feature Credit Card Payment.

Consider Co-op Money.
Glenn Ochsenreiter of Waldenbooks says, "Co-op money is important. All our books are promoted cooperatively, with publishers contributing."


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