It's not a good idea to pay people to shop, and it's easier on the eyes to flip through a catalog made out of paper and ink than to view images on a PC screen. Seems simple, right? If only e-retailers would catch on.
But there's nothing like some bad financials to clue a company in that perhaps old economy retail practices make sense after all.
E-retailers are realizing that "free money," in the form of coupons and discounts, does not a marketing strategy make. Instead, they're a marketing tactic, says Business Week's Ellen Neuborne in her E.biz column, and one that's caused more harm than good. "As long as they were roping in the customers, few e-retailers put in the serious work of developing a good, solid message to keep shoppers coming back," she notes.
One tactic in particular that backfired is the pay-to-surf idea, which has come close to wiping out AllAdvantage.com. The site pays members 53 cents an hour to surf the Web, while ads are displayed on screen. The company planned to turn a profit, reports the San Francisco Chronicle, by collecting data on its 2.9 million active members and then selling highly targeted ads that jibed with members' interests. "What looked groundbreaking then seems foolhardy now," says writer Carrie Kirby. AllAdvantage has taken in only $14.4 million but paid out $49.8 million, and it has lost $102.7 million altogether. Not surprisingly, it's withdrawn its IPO.
It may be too late for the likes of AllAdvantage, but Business Week's Neuborne says other online businesses can wise up in time for the critical holiday shopping season by focusing on service - BarnesandNoble.com's same-day delivery comes in for praise - and selection. Don't forget print catalogs, adds the New York Times' (NYT) Bob Tedeschi: "a new item on the low-fat marketing menu."
Catalogs cost 50 cents to $1 to print and mail to each household on your list, while an e-mail campaign comes out to about 25 cents per message. But those messages get deleted pretty darn quick, while catalogs have shelf life. Print catalogs also let you attract the 50 percent of households who don't have Internet access. And many e-retailers have high-resolution photos and creative designers already at their disposal. Potential hurdles to catalog marketing are inventory management, effective mailing lists and customer service - "an area of study that most e-tailers seemed to have slept through in previous semesters," according to Tedeschi. Start studying for your December midterm.
For E-tailers, the Price-cut Paradigm Doesn't Pay
Business Week
Pay-to-Surf Not Paying Off For Web Sites
San Francisco Chronicle
Online Retailers Try Printed Catalogs
New York Times
