Catalogues and all that stuff, part 2, Strategy Magazine April 21, 1993

Last month it was noted that only 26% of Canadian adults have shopped by mail in the last twelve months versus 52% of Americans. Part of the gap was attributed to the difficulty in achieving economies of scale in Canada and the lack of mail order catalogs coming from Canadian retailers. Meanwhile, a survey conducted by Canada Post Corporation in 1990 indicated 57% of adult Canadian consumers actually welcomed catalogs from mail order companies and 74% welcomed retail catalogs.

So, what’s the difficulty? Why isn’t the catalog business in Canada booming?

According to a study prepared for the Canadian Direct Marketing Association, industry growth between 1977 and 1985 was a relatively healthy 7% annually, but since 1986 had stagnated at a compound annual rate of only 3.2%. In 1986, in order to reduce the demands on customs officers, Revenue Canada introduced the Postal Remission Order/Courier Remission Order (PIRO/CIRO). Under the PIRO/CIRO, any item shipped into Canada by mail or courier with a value under C$40 entered duty free and tax free. According to the study, the impact of PIRO/CIRO acounts for the growth gap. And, that’s not all. The change in the import remission policy also: cost Canadian catalogue firms an estimated $260 million in sales; resulted in the loss of over 4,000 job and created a competitive disadvantage for Canadian catalogue firms in the under $40 price point market. On the other hand, Canadian consumers benefited by getting a price break on goods under $40. As of July 1992 that all changed. The $40 cutoff was dropped to $20 and a $5 fee is payable to Canada Post for the collection of any duties and GST. A senior federal official was recently quoted in the Globe & Mail saying that “Dutiable mail-order cross-border shipping would appear to be down at least 25 per cent in the past year.” That’s good news for Canadian cataloguers and none too soon. But, there’s one other problem. That’s what’s going on south of the border. “Catalogue glut” is the term most commonly used. “Saturation” is another. So, where are American cataloguers’ looking for growth? You guessed it! International marketing programs. According to a study conducted annually by Catalog Age magazine, 37% of them already are active or are testing overseas marketing programs plus 20% are considering it.  In 1992, 75% of them saw Canada as the most attractive market! The change in the remission order may have slowed their momentum, but, in the long run, it isn’t going to stop the charge. For all kinds of reasons, Canada is simply too attractive as an expansion market.

I think my own exprience with catalogue shopping illustrates the challenge Canadian cataoguers face. Being a fairly busy person and a self-confessed catalogue junkie, I entertain fantasies of doing all my shopping, particularly at Christmas, by catalogue. This past year, I was determined to pull it off. Since catalogues hadn’t been pouring into my mailbox since the end of August, I first had to make a concerted effort to find or send away for current Canadian catalogues in the product categories I wanted. Just to be safe, I placed most of my orders in early November, some by phone, most by fax. The results? Well, let’s put it this way. I think I could now write an off-Broadway play about mail order customer service in Canada. Only thing is, I can’t decide whether it should be a comedy…or a tragedy! All I can say is, if my own adventure is indicative of what other Canadians are experiencing trying to shop from Canadian catalogues, then it’s no surprise to me only 26% of us are masochistic enough to try it!

What’s the problem? Canadian cataloguers just don’t seem to know how to do it right. In one case, they charged my credit card for the whole order, only delivered half the items and never let me know when,if ever,I would receive the rest(until I called to find out). In another case, I was told up front which items were not available but wasn’t shipped the items that were in stock. Calling the week before Christmas to find what was happening, I was told the whole order had been lost and nothing I wanted was left in stock.  That wasn’t all. There was more of the same.

What should Canadian cataoguers (or marketers contemplating mail order) be thinking about? Service, service, service! And, they shouldn’t wait for the Americans to show them how…because, they will.!

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