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.!

Catalogues and all that stuff, part 1, Strategy Magazine May 17, 1993

According to various sources, there are about six hundred Canadian catalogues. Six hundred!? Have you had even a dozen different catalogues drop through your mail slot in the past year? Even counting American catalogues? Probably not. So, where are they all? Simply put, they’re invisible to the public eye. Unless, of course, your name crops up on a mailing list, then, presto, changeo, there they are! But, it’s still not a deluge. Why don’t we get more catalogues in our mail? The price of entry for one thing. Starting up, and more importantly, building up, circulation, is an expensive proposition. Some experts would say that, unless you can raise a million dollars to work with, don’t bother trying to start a catalogue. That said, I’d guess 80% of the six hundred in Canada were conceived through the mating of a brainwave and a shoestring, born on a kitchen table and are being raised in a basement or garage.

According to a survey conducted each year among Canadian cataloguers by Catalog Age magazine, over 60% of Canada’s catalogue companies report annual sales of less than $1 million. A survey, commissioned by the Canadian Direct Marketing Association in 1990, put the total size of the Canadian catalogue industry at $2.2 billion dollars in sales. Compare that to the U.S. estimate of $74 billion in consumer and business-to-business sales in 1991 Applying the 10% rule, provides ample potential for the Canadian catalogue business to more than triple.

So what’s getting in the way? Economies of scale for one thing. Look at it this way. Suppose it costs $1 million to produce a catalogue to be mailed to all adults aged 35 to 54. That’s about 7 million people, according to Stats Canada. Suppose half of the cost is fixed (design, copy, type, photography, film, print set-up, etc.) and half is variable (mailing lists, paper, printing, postage). That makes the per unit cost of this hypothetical catalogue 14 cents (seven cents in fixed cost and seven cents in variable cost). In the US, there are about 59 million people in the target group. The per unit cost to mail them all would be 8 cents (one cent in fixed cost and seven cents in variable cost). In other words, mailing a Canadian universe that’s 88% smaller, costs 43% more per unit. Now think about profitability. Let’s set parameters that catalogue cost is 18% of gross sales, margin (sales minus product cost) is 40%, operating cost is 12% and the before-tax profit target is 10%. In the Canadian scenario, it takes 44% more in sales to cover the catalogue cost of 14 cents each and achieve the 10% bottom line. Is it any wonder there are so few “visible” Canadian cataloguers? Likewise, is it any wonder American cataloguers see opportunity in mailing to Canada? Their additional fixed costs are minimal and the remainder of the cost is variable. Besides, they tell me they get higher response rates and larger orders here than they do at home.

There’s something else at work in Canada. That’s a lack of mail/phone order catalogues from retailers. Catalogues designed to produce sales in their own righ as well as drive additional traffic to stores. Why not? There might be an attitude problem. The president of the Retail Council of Canada was quoted recently as saying, “(Direct mail) suffers from not being able to live up to the instant gratification aspect. It has to obviously be a planned purchase, not an impulse purchase and you don’t really know when the product is going to arrive. For many people, that’s too long to postpone the satisfaction.” Instant gratification? Wasn’t that an 80’s thing? Aren’t people now looking for genuine value, convenience, better, more personalized service, ways to reduce stress in their lives? Or, is that a mythical tale spun by the seers of the future? Faith Popcorn and her futurist cohorts predicted the “stay-at-home” nineties. Whether you call it burrowing, barricading or boredom, supposedly, the resulting shopping trend is out of the mall and into the mail box. US retail mall traffic is now less than half what it was in 1986. In 1992, 52% of adult Americans had placed an order by mail or phone in the previous 12 months. According to a study done for the National Task Force on Cross-Border Shopping in March 1992, the comparable Canadian number is 26% of which 3% ordered from the US. This means over 5 million of our sample target market of adults 35-54 are still waiting to either receive a mail order catalogue and/or one that excites and incites them to order. That’s

Ten tips for catalogue success 01/16/94

  1. A plan for where the catalogue is going. Unless you’re clairvoyant, a plan for the future is essential.

With proper planning, the chances of success over the catalogue’s first three to five years could be enhanced by a factor of 100.

  1. Adequate financing to sustain the business through the early years.

It’s the same old story. You have to have money to make money–or get money.

The latest statistics indicate that, on the consumer side, only two or three new startups in 10 make it to the third year.  Knowing these statistics, how would you view a new catalogue startup if you were your corporate financial officer ? And, the early years are the critical ones.

  1. A clearly defined niche for your merchandise or its creative.

Nothing is more important than–or can come before–the product. While the catalogue is a blend of presenting the right merchandise to the right target audience, the process must start with the product. And the whole strategy must mesh tightly with the retail store positioning. Never put one channel in competition with another.

  1. Understand who your customers are and what their needs are.

Second only to product and positioning, the most important aspect of your catalogue’s success is knowing who your potential customers are and what they want to buy.

  1. Understand the creative and production subtleties of producing a catalogue.

Because your creative poeple know how to put effective traffic building advertising programs together doesn’t mean they have the skills necessary to produce a successful catalogue. The creative functions cannot be taken for granted, regardless of whether the design, copy and production are being done in-house or outside by a professional freelancer or agency. Just look at this checklist of questions relative to creating your new catalogue:

. Does the design of the catalogue reinforce the market niche you’re trying to own?

. What is your target customer’s aesthetic expectations? And, how do you convey them?

. What is the relative cost of producing the catalogue yourself versus using outside professionals?

. What are realistic in-the-mail costs for the catalogue, including design, layout, copy and production, photography, colour separations, printing, list rentals, merge/purge of the lists to eliminate duplicates, cost of addressing and preparation for mailing? Do you know people who can answer these questions?

. How can you take maximum advantage of postage discounts available from Canada Post?

Theses are just a few of the many important considerations involved in creating an effective catalogue sales tool.

  1. Understand the importance of and the time it takes to build the customer list.

Building the customer list is a major cost element. Some cataloguers find one or two rental lists that do better than break even, or perhaps a space ad that’s profitable in certain magazines, but, generally, there’s a cost involved in obtaining each customer.  Small startups have fewer dollars to devote to aggressive prospecting, and, therefore, use inexpensive media such as small space ads, co-op ads, referrals and public relations in growing their customer list more slowly.

  1. Maximize sales (and profits) from the customer list.

The challenge for retailers new to catalogue marketing is to maximize sales from existing customers. If prospecting means cost to a catalogue, then customer list mailings mean profits. Every mailing to the customer list should produce profitable sales…and drive additional traffic to stores.

  1. Excellent fulfillment and customer service.

Few catalogue startups have systems in place for processing and tracking orders or facilities from which to ship product or receive returns. And yet this activity–closing the loop with the customer–is one of the most improtant ones in building and keeping loyal customers. The activities that a new cataloguer must come to grips with in fulfillment include:

. order receipt (by mail, phone and fax)

. order processing through an appropriate computer system

. establishing the prospect and customer list in a database and maintaining current information on addresses and purchasing activity.

. warehousing, picking, packing and shipping the product

. processing of returns

. credit/payment processing and control

. customer service to answer all types of questions

  1. Sound inventory control.

As well as having a special product selection and the other decisions relative to merchandising, you have to answer these questions:

.Who will be the final judge on the product to be included in the catalogue?

. How will buying, rebuying and inventory control be managed?

. How will product sales results be analyzed?

. How will your dispose of excess inventory?

  1. Adequate financial and analysis skills.

The first catalogue you plan and mail is hardly the end product–it’s the starting point. Always remember that every catalogue builds on the previous one. Effective financial planning up front and,m even more important, effective analysis of program results allows the cataloguer to:

. improve the mechandise mix, product cateogries and price points

. reduce the cost and improve the efficiency of new customer acquisition

. maximize sales from each customer

. improve efficiency and/or reduce costs in fulfillment and customer service, and

. enrich the creative presentation, test new offers and ultimately improve sales per page

Analyzing each catalogue/mailing effort is the most important activity in improving it.

Charles de Gruchy remembers how it was

Once Upon a Serviette… 02/16/94

February 9th, 1994 may be remembered around much of Canada as one of the coldest days in history, but there are nine people who might also remember it as the date when, five years ago, they attended the first ever meeting of the Canadian Catalogue Council Executive.

In actual fact, it all began several months earlier when David Taylor, then chairman of Taylor Tarpey Direct Advertising, and Barbara Canning Brown, then director of marketing at Regal Greetings & Gifts, met for lunch. Who knows how some conversations begin or how many good ideas start out as scribbles on paper serviettes, but that’s just how it happened! In talking, during that lunch, about how many catalogues there might be in Canada, David and Barbara came up with a list of 50 significant catalogue businesses and, from there, the idea of forming a special interest group within CDMA to service cataloguers’ needs took shape.

With the help of Steve Gilpin, then a consultant with The Telemedia Results Group. a proposal to form the Council was submitted to the CDMA Board of Directors.

The February, 1989 issue of the Communicator newsletter announced the good news…”The Board of Directors of the CDMA has approved the formation of a Canadian Catalogue Council with a mandate to serve this fast-growing segment of our industry.” The rest, as they say, is history! And, an activity-packed history it’s been.

Given the board sanction, an Council Executive Committee was formed. As well as Barbara, the Council’s first chairmen, David, and Steve, in attendance at that first February meeting were Tony Gilroy then with CDMA staff, Peter Hill from Moore Business Products, Terry Jukes from Microbits, Paul Parr from Litho Plus, Sandy McDonald from Regal and Janice Partington from Consumers Distributing.

Being good marketers all, one of the first decisions reached was to research the “market” and find out what potential Council members would want in the way of events and services. Over the next few months a list of 450 Canadian cataloguers was built  and, at the 1989 CDMA annual convention in Vancouver the fledgling council took flight . Response to the first research survey had indicated a very high interest level on the part of 60% of responders. Guided by the survey response, the Executive Committee proceeded to plan quarterly events such as the, now annual, half-day seminar and dinner. “Catalogue Council Launch Seminar Sold Out” was the follow-up headline.

The Council went on to formulate a code of ethics and standards of practice for Canadian cataloguers. The first comprehensive research of the Canadian catalogue industry was conducted with the assistance of the council. Participation in lobbying efforts has led to a more level playing field between the U.S. and Canada for Canadian mailers and council activities have helped increase attention to environmental and privacy issues in the industry. Successful seminars have been held in Montreal, Vancouver and Ottawa in keeping with the Council’s objective to have national focus.

Over the years, the roster of seminar speakers reads like the Who’s Who of catalogue marketing…Katie Muldoon–U.S. guru and author, Lawrence Grodecki of A.E. McKenzie, Robert Cameron from Revere Seton, Don Sexton, now general manager of Rockwood Gardens, Anders Ourom of Mountain Equipment Co-op, Leonard Lee, owner of Lee Valley Tools, Tricia Eaton from Patagonia, Clair Karnofski of Eddie Bauer, Allan Neuman from Seventh Generation, Harold Swartz, president of Joan Cook, Jack Shmid, leader of the annual workshop for several years…and many more.

From the beginning, the council’s success has been founded on the dedicated interest and attendance of its membership. Plus, all along the way has come many hours of donated production time and generous sponsorship dollars from industry suppliers and service providers without whose willing support the Council would not have earned its reputation, for several years, as the only profitable council!

Today, under the energetic leadership of chairman, Alain Doucet, the Council Executive continues to meet on a regular monthly basis (That’s been 60 meetings in five years, give or take a couple!) to plan up-coming events, discuss current issues and help guide the future of cataloguing in Canada.

All in all, not a bad record for having started from scribbles on a humble serviette!

Charles de Gruchy remembers the way it was

Catalog acceptance in Canada — yes or no Direct Marketing News, February 25, 1993

Five years ago, if you had asked me how many catalogs there were in Canada I would have said, “maybe a dozen”.

In the fall of that year, 1988, a colleague and I, over lunch, came up with a back-of-a-serviette list of about fifty, decent-sized Canadian consumer and business-to-business catalog companies.

Within a couple of months following that lunch, with the help of some fellow direct marketers, we built a list of four hundred catalog companies.

That’s not very many by U.S. standards, but the real question is: are Canadian consumers receptive to shopping by catalog?

Robert Cameron, general manager of Revere-Seton, believes so. “Canadians love to receive catalogs. But, to be successful, you have to take ALL the risk out of buying. There can be no strings attached. The Canadian consumer is much more cynical and skeptical of catalogs and direct mail…They just aren’t used to doing business this way.”

American catalogers, such as Cabela’s, would concur that Canadians are receptive. Cabela’s has been mailing to Canada for 20 years and implemented a concentrated marketing effort about four years ago. “For our merchandise line it is, indeed, fertile ground,” says Sharon Robison, marketing director, “and any cross-border problems are quickly offset by good response rates and strong average order amounts.”

Dave Zentmeyer, vice president, international, for Lands’ End agrees with Sharon, “A lot of the same issues are at work that have caused American catalogs to be successful…convenience, quality of product, pricing…use of leisure time. These factors are just as much at work in Canada plus my sense is that mail boxes are not as full of catalogs as in the US.”

A survey of adult Canadian consumers, conducted on behalf of Canada Post Corporation in 1990, indicated 57% welcomed catalogs from mail order companies and 74% welcomed retail “catalogs”.

But do they buy?

The same year, a Gallup ConsumerScan Omnibus found that 59% of the adult Canadian population had made a catalogue or mail order purchase in the last 12 months, of which 42% had ordered from a retail catalog and 25% ordered from a mail order company’s catalog.

A more recent major consumer study, conducted in early 1992 on cross-border shopping, was focused primarily on retail shopping behaviors. However, one question was asked about direct mail. It revealed that 26% of respondents had used mail order at least once a year and 10% reported 3 uses or more. Use of mail order from the U.S. was reported by 5% overall with 2% reporting 3 or more uses.

The 1993 Catalog Age Report indicated 72% of Canadian catalogs get above 5% response from their house files and 74% average 2% or less on outside lists. Only 61% of their U.S. consumer catalog counterparts get more than 5% from house files with 27% getting 3.1% outside list response. It appears response is good from the 25% of Canadians who do purchase by mail, however persuading new prospects to respond is more of a challenge.

Being a fairly busy person, I entertain fantasies of being able to do all my shopping, particularly at Christmas, by catalog. This past year, I was determined to pull it off. First, since catalogs hadn’t been pouring into my mail box since the end of August, I had to make a concerted effort to find and get current issues (Canadian and US) with the products 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. 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 in any way indicative of what other Canadians are experiencing trying to shop by mail, then it’s no wonder only 25% of Canadians are masochistic enough to try it!

In my opinion, catalogers in  the Canadian market must provide, not only extremely attractive offers to break down the Canadian mail order “resistance”. but they also must deliver absolutely impeccable customer service! That may not be easy, but anything less is a set-up for failure.

Interestingly, Canada is the most attractive expansion market to 75% of U.S. catalog companies surveyed in the 1993 Catalog Age Report.

Also, according to the Report, catalog marketers in Canada have an optimistic outlook on their revenue growth for the next 12 to 24 months, as 42% of respondents expect to grow at a faster rate in the next two years than the previous two; 77% plan to increase circulation in the coming year; 34% said they expect to grow at the same rate as in the past 24 months.

What’s the bottom line?

I asked Tony Keenan, president of Regal Greetings & Gifts, who recently formed a strategic alliance with two Walt Disney companies to take their catalogs into Canada. Regal, the second largest Canadian mail order cataloger, has been selling greeting cards, gift wrap, gifts and household items by mail for the past 65 years. For Disney, Regal handles mailing the catalogs, warehousing, shipping and customer service from within Canada.

“I’ve never been more excited about the catalog business potential in Canada,” says Tony, “All the reasons are there that will drive people to buy from catalogs. Retail still hasn’t figured out how to tackle customer service. Going to a mall is time consuming, costly and incredibly aggravating. People want good quality goods at a reasonable price and, if they can get that product with a full guarantee, within a few days, then that’s the way they’re going to go. The catalog business in Canada is extremely under-developed and this is the additional opportunity.”

In conclusion, I think Canada is a potentially responsive catalog market and offers considerable opportunity for those willing to make the effort.

What was that I just heard? Was that a catalog dropping through my mail slot? Excuse me, I think I’ll do some shopping now…

Charles de Gruchy remembers the way it was

Getting Across Direct Magazine May 10, 1995

The last few years have seen an increasing number of American catalogers expanding into the Canadian market. In fact, 75% of respondents to last year’s Catalog Age Report survey mention Canada as the most attractive international market. Similar demographics, geographic proximity, underdevelopment in mail order and good response rates are just a few of the reasons expansion into Canada makes sense. Appearances can be deceiving as those who’ve tried and failed found out. The market is not as predictable as rumoured and Canadians are not necessarily waiting with baited breath for the next edition of your catalog to land in their mail box. So, get that stuff right before you worry about postal and fulfillment issues. But, inevitably, in any discussion about “doing Canada”, the subjects come up, and rightly so…what about Canada Post? what about fulfillment?

Since becoming a crown corporation, Canada Post has been busily living down its reputation for being difficult to deal with and going on prolonged strikes at most inopportune times. Part of the new and improved strategies that have gone along with a more

As of January this year, Canada Post has introduced changes to addressed admail (bulk third class) discount standards and rates as well as an address accuracy program. The address accuracy program called for 95% accuracy as of January 1, 1993 or, if eligible, a 3-month extension to March 30 in which to bring mailing up to the requirement. Failure to achieve the 95% level was to result in  a 5 cent per piece penalty charged on all invalid mail. Since the national average accuracy rate was less than 50% at the time, it goes without saying that implementation of the program has been less than flawless. It’s been said that the current situation in Canada is similar to that experienced when USPS took similar action several years ago. In arriving at the Zip+4 solution, USPS may have served as a model.  Meanwhile, mailers who ask for  further extensions are getting them , mailers who haven’t asked aren’t being penalized and additional charges are not being imposed!  The operative phrase is “stay tuned”.

Speaking of USPS, the introduction of Value Post seems an effort to capture market share of  mail that has been prepared then trucked across the border and dropped into the Canada Post mail stream. At least it’s a more attractive rate than the previous alternative–first class. But, at 26 cents per piece for letter mail, in most cases, large bulk mailers are still saving money in trucking to the border and getting a 23 cent pre-sort rate with Canada Post.

Prior to last July, consumers ordering from US mail order companies ciould avoid paying duties and taxes on a single order valued at less than $40. That cutoff has been dropped to $20, plus a $5 fee is payable to Canada Post for handling collection. Since the change, individual orders that are mailed to Canada are released through Customs if the value is under $20 and, if over $20, they are inspected as to the claimed value and duty payable. Customs assigns the duty, tax and GST charge, then it’s over to CPC who deliver to the customer upon receipt of the duty and tax charge plus their $5 handling fee. If the order can’t be delivered, a card is left and the customer has to go to a CPC facility to pick up and pay.

The change to has had a number of effects. According to Canada Post officials, a lot of parcels are being processed in ways designed to avoid charging customers the $5 handling fee. The most notable among these is a massive move to the non-resident commercial stream to import goods.

In some cases, US companies pick and pack individual orders in their own facility, then bulk ship them to a Canadian cusoms broker . In fact, a whole new business for customs brokers has sprung up from this.  The customs broker pays the duty and tax through an EDI system to Canada Custom s. Meanwhile, the US cataloguers have charged  the customer up front for duty and taxes based on the harmonized coding system and remit that payment to the broker. Once entered into the system, the parcel becoms a domestic parcel and can be delivered through CPC or courier without additional hassle on the customer’s part. Customers are spared paying the $5 handling fee. Brokerage and shipping charges are amortized over larger shipments and, due to the package volume, lower parcel post delivery rates can be had from Canada Post .

In other cases, orders are picked in bulk by the US company, cleared through Customs as a commercial shipment and delivered to a Canadian fulfillment service who sort, pack and drop to Canada Post for delivery. The problem here is the additional cost for double handling to pick and then, separately, sort and pack the orders. But, again, it gets around the $5 handling fee and has less impact on the US business.

The Non-Resident Customs Accounting Program is designed to allow eligible foreign companies to assume responsibility for reporting and accounting of goods into Canada and is liable for all duties and taxes owing on those goods. The objective of the program is to improve Customs processing efficiencies by removing high volume/low dollar value items from the commercial stream. The If implemented, this system would allow an eligible American cataloger doing business in Canada to collect applicable duty and tax as part of the customer payment and then remit payment to Canada Customs on a monthly basis. This is instead of the Canadian customer paying for the order, then paying Canada Post the applicable duty and tax plus the $5 handling fee.

Eligibility to participate in the program is based on meeting requirements such as:

having at least 500 shipments by mail or courier per year of goods valued at C$1,200 or less; posting security of not less than $5,000 and not more than $2 million based on the estimated duties and taxes of shipments for the three highest months of the previous year’s exports to Canada with Canada Customs; classify goods shipped to Canada according to the Canadian version of the Harmonized System and the Customs Tariff Act; agreement to the terms and conditions of the program such as stipulations about providing accounting information to Customs electronically on a monthly basis to the appropriate Customs region; calculating and declaring the value for duty based on the rate of currency exchange in effect on the date that the parcel is shipped to Canada; being liable for correct origin and tariff classification when goods arrive. In the interests of servicing Canadian customers in the same manner they would be dealing with a catalogue company domestically, this program appears to be a good idea. Because the program was announced a year ago and still not implemented, there’s some pressure coming from mail order companies. Meanwhile, Canadian companies are worried about the program increasing cross-border shopping. So, now it’s another political hot potato. As it is, implementation would involve a long, regulatory process that encourages public input, but, at this point, according to a government official, they are “reviewing the whole program”.

There’s another option. Local fulfillment within Canada. From the Canadian customer’s point of view the advantages are numerous–quicker turnaround times, no $5 handling fees, payment in Canadian dollars, transparent duty costs, normal taxes. Add to that local customer service assistance, hassle-free returns and the marketing advice and expertise available from the local supplier. On top of all that goes the positive impression that can be created among Canadians who see some effort to support, as opposed to only exploit, the local economy.

As in other areas of the catalog business, there are simply no great black-and-white answers to the cross-border dilemma. In the end, company variables such as product type, product mix, size of product line, total orders, average order value, percentage of returns, processing time, etc. will all contribute to the, ultimately, economic decision as to the best way to go.

The most responsible position for catalogers is to first settle on a Canadian strategy for your company and integrate that into your operational plan. At the very least, you should be fully exploring the options, keeping in mind, that, at the end of the day, isn’t delivering on customer expectations what  counts?

Charles de Gruchy remembers the way it was

What’s standing in the way of success for the Canadian catalogue October 8, 1993

Research studies show that more than 50% of Americans shop by mail order catalogue annually. The corresponding figure in Canada is about 25%. Setting the obvious impact of recession aside, what is it going to take for cataloging in Canada to develop to comparable levels?

  1. The first priority has to be product selection. Nothing comes before the product and mail order product merchandising is still a Canadian problem.

Canadian cataloguers, particularly large well-established companies, do not take merchandising risks.  As a consequence, the Canadian mail order market is flooded with banal and “me too” types of products that Canadian shoppers in most any market can find in a regional or national department store.

Given product merchandising is the first key to mail order, Canadian cataloguers have too often failed before having ever mailed.

  1. The cry of consumers in the nineties is “make it easy for me”. Where the American cataloguer has responded by putting increasing challenges in front of their delivery service partners, the Canadian cataloguer waits for someone else to provide the answer.

The American cataloguer is responding to the dynamics of their market — the noisy consumer asking for more service, faster.  Canadian cataloguers are not listening (or the consumer in Canada is just too polite).  While we struggle with shipping in the same week the order is placed, our American counterparts worry about delivery in the next (or sometimes the same) day.

  1. The disciplines of a well merchandised and well positioned catalogue product have never changed — establishing realistic objectives; analyzing the market and the competition; understanding your consumer or business target; positioning the concept; and building an effective merchandise strategy to deliver on customer expectations.

What’s missing?

Not a lot.  However, the traditional Canadian cataloguer is often not a marketer and is more often a retailer, a merchandiser or an operations person by experience or, in the case of many start-ups, from another world entirely.  Consequently, Canadian catalogue concepts often reveal the lack of experience in the dynamics of bringing product to life on the page.  While the product may be right, the visual presentation, copy and customer interaction is often weak.  The execution of the concept must be exciting and compelling. And, again, creative success sometimes means taking risks.

  1. Canadian consumers have not developed the routine of buying through mail order. For reasons already stated, the convenience, value and selection potential of mail order shopping has not built up enough competitive equity in the market versus traditional shopping methods. The value has not been demonstrated to the extent that people make shopping by mail a habit.

Until Canadian cataloguers start delivering unique product selections in a compelling manner, backed by excellent service standards, Canadian consumer dollars will continue to be spent in places other than Canadian catalogues.

Charles de Gruchy remembers the way it was