Catalog and Mail-Order Houses

SIC 5961

Companies in this industry

Industry report:

The catalog and mail-order house industry, or nonstore retail industry, is comprised of establishments primarily engaged in the retail sale of products through television, catalog, and direct mail. Such organizations include companies that sell book club memberships, magazines, and retail consumer and business products. These establishments deliver products and services through the mail. This classification does not encompass direct-mail advertising firms or stores that are operated by catalog companies for the purpose of on-site retail sales.

Industry Snapshot

The catalog and mail-order house industry encompasses companies that sell products through all "nonstore" retail channels, including radio, television, and computers. Although larger retailers typically maintain an inventory warehouse, most industry participants keep little, if any, inventory on hand. When a customer orders a product, the retailer contacts a wholesale company that ships the product to the retailer or directly to the customer. In the mid-2000s, the most successful product categories in this industry were computers, consumer electronics, and office supplies. For instance, Dell and IBM were perennial leaders in the Multichannel Merchant 100 (formerly the Catalog Age 100) for catalog and Internet sales, and Office Depot and Staples were mainstays in the top ten. The top ten companies in the 2006 list of catalog/Internet revenue were all business-to-business merchants.

Catalog and direct-mail sellers saw some blurring of the lines in the industry in the 2000s, as retailers launched catalogs, catalog sellers opened stores, and many merchants sold via the Internet. The industry also went through a period of consolidation through a host of mergers and acquisitions, which was still going strong well into the late 2000s. More than $27 billion in direct sales consolidation took place in 2004 alone. A new line of business opened as some direct marketers found they could sell management expertise to newer companies, especially Internet merchants who lacked the know-how to distribute products smoothly.

Because they refrain from traditional retail purchasing, manufacturing, and inventory management activities, many nonstore retailers are essentially marketing companies. Some catalog companies, for instance, simply assemble a group of complimentary products manufactured by other companies and try to market those items in a catalog to the customers they think would be most interested in them. Similarly, many direct mail and broadcast media retailers essentially act as middlemen, selling products that are manufactured and stored by wholesalers.

In the late 2000s, "Companies just trying to survive the economic meltdown that started in late 2008 were learning to do more with less--fewer staff, lower circulation and reduced marketing budgets," according to findings released in the Multichannel Merchant 100 in July 2010. Catalog and Internet revenues of some of the largest companies that made the list saw their bottom lines shrink in 2009. Of the top 10, all but, dental, medical, and veterinary, Henry Schein experienced a decline in revenues. Those companies that eliminated catalogs all together felt the most pain, while Internet sales were able to cushion somewhat they were still below 2008 levels. Some companies fared better than others such as Staples who grew its direct sales revenue by nine percent, while Dell who was the leader in both catalog and Internet sales, reported the largest declines.

Organization and Structure

The three major categories of nonstore retailing include business, consumer, and charitable sales. Throughout the 1990s, consumer sales accounted for approximately 50 percent of industry revenues, while business and charitable sales each garnered about 25 percent of the market. About 60 percent of consumer nonstore sales were products, while the remaining 40 percent were services. Of nonstore consumer product sales, more than 80 percent were derived from specialty items that were not commonly available in stores. The remaining almost 20 percent came from sales of general merchandise. Of nonstore sales of consumer services, about 40 percent of revenues were garnered from financial services.

One tremendous advantage that companies in this industry enjoy, however, regardless of whether they secure sales via catalogs, direct mail, the Internet, or television home shopping, is the elimination or severe curtailment of two expenses that have a tremendous impact on the bottom line of traditional retailers: rent and sales workforce. Another advantage is that even small to mid-size companies can use mail order to increase their business and/or give current business a larger presence in the market without expanding overhead costs.

The primary disadvantage of mail and broadcast retailing is high advertising costs. The cost of producing and delivering catalogs, fulfilling orders, and servicing customers often leaves retailers with slim profit margins, or losses, if the response to a promotion is poor. The cost of mailing a simple letter and brochure typically ranges from 40 to 65 cents per piece, and the retailer often expects only 0.5 percent to 3 percent of the recipients to actually purchase a product. In fact, a 2 percent response rate is considered highly successful in the mail-order business. Although response to a catalog is often higher, usually between 3 percent and 6 percent, production costs often exceed $3 per catalog. Mean response rates from catalogs peaked at 8 percent in 1996, and fell to just over 4 percent by 2005.

Nonstore Consumers.
Nonstore retail industry consumers differ from store customers in several ways, which affects the method companies employ to reach the target market. Catalog shoppers, for instance, are better educated, are more likely to work in professional and managerial capacities, earn more money, are more conservative and traditional, and are more comfortable with modern technology and financial instruments. Catalog shoppers are also more likely to be women--58 percent to 42 percent--versus an even percentage of store shoppers. A greater percentage of nonstore customers are also divorced and middle-aged. For example, 25 percent of catalog shoppers are 35 to 44 years old, compared to only 17 percent of store customers.

Many demographic differences bode well for nonstore merchandisers. Dual-income households, for example, are more likely to shop through catalogs. Catalog shoppers are also more likely to listen to media advertisements and typically expose themselves to more news and financial media. Catalog patrons also spend more money on grocery items and are more likely to develop brand loyalty.

Background and Development

The history of mail-order is said to go back to the 1490s, just after Gutenberg's invention of movable type. The first known catalog dates from 1498 when Aldus Manutius of Venice offered 15 books by Greek and Latin authors for sale. Mail-order operations have existed in the United States since colonial days. In fact, Benjamin Franklin is believed to have initiated the industry with the first direct-mail offer ever presented to the public. Not until the latter part of the nineteenth century, however, did mail order assume a significant role in the economy. The main impetus for merchandisers to offer products through the mail was the inaccessibility of the massive rural consumer market. Companies knew that they could benefit by getting product information to farmers, who represented the majority of the population.

Although a few firms successfully promoted products to the rural population through catalogs and mail, Richard Sears achieved the most notable success. In 1886 Sears began selling watches in the mail. Eventually, the Sears Roebuck, & Co. catalog became a staple of American life, delivering access for millions of Americans to general merchandise that was locally unavailable.

During the late 1800s and early 1900s, several developments contributed to the emergence of a nonstore retail industry. Most importantly, the construction of a continental rail network provided a vital distribution channel for East Coast mail-order houses. In addition, the U.S. postal service began offering special rate structures for mail-order businesses that encouraged the dissemination of advertising papers and catalogs. Furthermore, in 1913 the postal service developed the parcel post system. These factors provided a relatively inexpensive alternative to products sold by controversial middlemen, who often garnered huge profit margins from the sale and delivery of goods to rural customers.

Three of the largest mail-order houses that gained prominence in the early 1900s were Sears; Montgomery Ward and Company, founded in 1872; and Spiegel, Inc., which mailed its first catalog to women in 1905. These companies, like others of that era, generated huge profits by offering general merchandise at low prices. They often made their own products and benefited from large-scale advertising and high-quantity sales.

Although mail-order houses continued to experience sales growth throughout the mid-1900s, particularly during the post-war economic boom of the 1950s and 1960s, the role of catalog and mail-order sales in the U.S. economy was changing. As the population shifted from primarily agricultural to predominantly urban and suburban, the importance of delivering general merchandise to remote consumers waned. Instead, mail-order companies began emphasizing shopping convenience and access to specialty products.

Despite industry growth, nonstore shopping still represented less than 1 percent of all retail sales by 1960. Even by 1967, U.S. mail-order sales had only reached $2.4 billion. During the 1970s, moreover, mail-order houses realized only modest gains in combined sales.

The 1980s.
A variety of developments in the 1980s combined to result in explosive growth in the catalog and mail-order house industry. Technological advances, demographic changes, and more efficient financial markets were the predominant forces behind this phenomenal growth.

Technological advances that catapulted many competitors to success in the 1980s included computers and software, which increased marketing efficiency and improved customer service. The computer systems that became popular in the early 1980s allowed companies to manage and manipulate large amounts of consumer data. As a result, companies were able to cull from a customer list only the best prospects for a particular product or catalog, thereby reducing unnecessary marketing expenditures. Furthermore, by storing customer information in databases, companies were able to efficiently market new products to existing customers.

Computers were also used to track and manage inventory. When a customer ordered a product, the mail-order house could electronically alert its warehouse, or its supplier, and ship the product quickly. Similar information management systems allowed merchandisers to integrate money-saving, just-in-time inventory control, and customer service systems. Furthermore, inexpensive desktop computer systems allowed small specialty nonstore retailers to compete more easily with larger firms on a national scale.

In addition to computer technology, the nonstore retail industry benefited in the 1980s from pivotal demographic changes affecting American buying patterns. One of the most important changes was a rise in the percentage of working women and dual-income households. Between 1980 and 1990, the percentage of women involved in the labor force climbed from 42 percent to 46 percent, or from 107 million to about 125 million. Because dual-income households did more shopping by mail, this change increased nonstore merchandising revenues. A rise in the number of elderly Americans, who were also more likely to shop through the mail, prompted industry growth as well.

Another factor boosting mail-order growth in the 1980s was the development and public acceptance of new methods of paying for and financing products purchased through the mail. Credit cards allowed both retailers and consumers a safe and efficient means of paying for mail-order items. By the mid-1980s, more than 600 million credit cards were held by Americans. The proliferation of toll-free "1-800" (and after 1996, "1-888") numbers also generated a large increase in sales. Many catalog companies reported increases of more than 60 percent in sales as a direct result of utilizing toll-free order numbers.

The effect of these and other advances was a 300 percent increase in nonstore retail sales between 1980 and 1990. Indeed, from just $72 billion in 1980, sales in mail-order houses skyrocketed to $211 billion by 1990, representing average annual growth rate of more than 11 percent. By the end of the decade, catalog and mail-order shipments were responsible for about 10 percent of all merchandise sales, more than 3 percent of retail sales, and 1 percent of consumer services sales. Furthermore, trade in the industry represented nearly 2 percent of U.S. gross domestic product.

However, U.S. mail-order sales growth declined in the early 1990s as a sluggish economy suppressed revenues in all retail sectors. By 1992, industry participants faced heightened price competition that reduced profit margins. In addition, many analysts believed that the catalog and mail-order industry was maturing and had passed its stage of high profits and dynamic growth. Several trends supported this theory, including the increasing consolidation of the industry, a leveling of sales growth, escalating advertising costs, and an increase in failure rates. A major cause of higher advertising costs was media saturation. Because consumers were being bombarded by increasingly larger amounts of mail-order advertising, response rates for promotions, on average, were declining. The average consumer received more than 21 pieces of mail per week in 1995. Households that regularly purchased items through the mail, however, often received much more.

In addition to declining sales growth and slimmer profit margins, catalog and mail-order houses were battling state and federal regulatory efforts that sought to eliminate an important industry advantage with the absence of sales taxes on products sold to out-of-state consumers. Companies narrowly averted disaster in 1992 when the Supreme Court ruled that states could not force mail-order retailers to collect or remit state sales taxes unless they were physically present within the state. An opposite decision would have cost the industry at least $3 billion, in addition to lost sales. Many states continued to seek methods of taxing out-of-state sales, however.

In response to the relatively inclement business environment of the early 1990s, catalog and mail-order houses scrambled to increase sales and profit margins. Companies emphasized customer satisfaction by gathering data on preferences and wants, then carefully tailoring products and promotions accordingly. Companies also eliminated large, general audience catalogs and relied instead on specialty niche promotions. In 1992, for instance, Fingerhut Companies Inc. joined forces with Montgomery Ward and Co. to develop a set of ten specialty catalogs.

Part of the customer satisfaction strategy included the integration of advanced database management techniques. By gathering and storing consumer information on a computer database, retailers were able to determine what, when, and how to market to each of their customers. For many companies, database marketing became an exact science that allowed them to maximize the efficiency of every advertising dollar. Indeed, many companies offered products to potentially new customers at a loss so that they could gather information on the consumer and generate profits from follow-up sales.

In the mid-1990s, the business-to-business division of Dell Computer Corporation spent more than $1 million to clean up its database, using a comprehensive telemarketing campaign to add more than 150 fields of information to its database. At the same time, the company eliminated more than 50 percent of its existing list. As a result of this $1 million expenditure, Dell doubled the response rate from its remaining customers and realized an approximate $4 million in annual savings by reducing printing and postage costs.

Firms also beefed up inventory control systems in the early 1990s. Just-in-time management techniques, whereby warehouses kept minimum stock on hand and relied on prompt delivery by suppliers, became standard for most successful large mail-order houses. Value pricing, too, became an important strategy for many firms. By improving the quality of merchandise, increasing service, and reducing prices, many successful competitors were able to overcome reduced margins by increasing market share and sales volume and taking advantage of follow-up sales opportunities.

In addition to internal efforts, a flurry of mergers and acquisitions characterized the industry in the early 1990s as companies sought the benefits of economies of scale and greater access to investment capital. Aaron's Furniture Warehouse, Donnelly Marketing, Burpee, Ticketron, and Conde Nast were just a few of the companies that were absorbed by other mail-order houses. One of the largest mergers involved the sales of Murdoch Magazines to K-III holdings for $650 million.

The Rise of Electronic Retailing.
Although the Home Shopping Network was founded in the late 1970s, this retail medium was stagnant for a number of years. Dismissed "as a downscale medium whose average viewer was a far cry from the urban and suburban sophisticates that merchants hanker after," as Business Week observed, electronic retailing was given little attention by major retail companies. The arrival of former Fox Network executive Barry Diller as a part owner of QVC, however, gave the concept an increased credibility.

At the same time, retailers increasingly recognized that, given the moribund performance of many of the stores, electronic retailing had its charms. As an analyst at UBS Securities observed in Business Week, electronic home shopping is "a low-cost distribution system. You don't need thousands of stores, and you don't need thousands of pieces of inventory in each location."

The Direct Marketing Association reported that in 1995, 77 percent of the U.S. population had viewed direct response television in an infomercial, a direct response television spot, or a home shopping program. More than 22 million adults had watched home shopping programs, and approximately eight million bought merchandise from a television offer. One of the fastest-growing areas of television sales was the infomercial (an in-depth promotion of a product, replicating a television show), which increased from $350 million in 1988 to $1 billion in 1994.

The next big event in the history of nonstore shopping was the arrival of the Internet. Though some commerce had been tried over the Internet earlier, online shopping became a recognized presence on the American scene in 1997. The success of some early online ventures, such as 1-800 Flowers and Amazon.com, led to a plethora of online sales sites. Many of these were small start-up ventures without the marketing sophistication of brand identity of either traditional retailers or catalog vendors. However, by 1999 the majority of catalog houses had some presence on the Internet, and many traditional retailers also published online catalogs. Major sellers on the Internet were books, computer products, recorded music, gifts, and financial services.

In the late 1990s, the catalog and mail-order industry was both growing and changing. The doldrums of the early 1990s ended, and sales grew at levels hovering around 8 percent annually at the end of the decade. Though earlier analysts had thought the mail-order industry was saturated, by the late 1990s it seemed that the traditional retailing industry was saturated too, and catalogs were an easy way to expand. The president of the Direct Marketing Association, H. Robert Wientzen, explained in a September 22, 1999 New York Times article, "[T]here aren't a whole lot of places left to put stores." For example, Federated Department Stores bought venerable direct-marketer Fingerhut in 1999, and Fingerhut then ran the catalog and online divisions of Federated's stores. Staples, a giant chain of office supply stores, acquired the catalog office supply vendor Quill in 1998, and Office Depot, another sprawling retail office supply chain, also acquired a catalog vendor, Viking. Yet this trend worked in reverse at the same time, as catalog marketers decided to open stores in the late 1990s. L.L. Bean, which had only one retail store in its almost 90-year history, announced in 1999 that it would begin to open a chain of stores. These mergers and changes showed the catalog and mail-order industry was still volatile at the end of the 1990s. In many cases, this volatility meant lower profits. Many major direct marketers had flat or declining sales as they struggled to adjust business strategies. For example, in 1998 sales remained level or shrank for industry leaders Lillian Vernon, J.C. Penney, and Land's End.

Catalog and mail-order sales as a whole expanded in the late 1990s, but the area of the most explosive growth was Internet sales. Some major catalog retailers reported rapid expansion of their Internet sales, even if overall sales were flat. Online sales for J. Crew, a major apparel catalog, quadrupled in 1998, reaching $20 million. Total sales for J. Crew were $816 million, so Internet sales represented only a small percentage. But Internet sales at the company continued to rise over the next year. Though Land's End, another apparel catalog company, reported a steep drop in earnings in 1998, its Internet sales nevertheless grew from only $18 million in 1997 to $61 million a year later. The stagnating company planned to move more aggressively into Internet selling, while abandoning some of its retail stores. But Internet selling seemed unlikely to replace catalog selling in the industry as a whole. According to a survey of major catalog retailers in the New York Times, direct-mail advertising and large catalog mailings were still considered the best way to reach new customers in 1999.

Some of the highest growth mail-order companies in the late 1990s were computer retailers. Dell had sales of $18 billion in 1998, an increase of 33 percent over the previous year. CDW did almost as well, with an increase of 26 percent in 1998, leading to sales of $1.7 billion. Gateway was another stellar computer retailer, with $7.5 billion in sales and revenues increasing 16 percent.

Another new development in the industry in the late 1990s was the introduction of the hybrid magazine/catalog. These "magalogs" or "catazines" were mostly given away as store promotions. Leading retailers Abercrombie & Fitch, Nordstrom, and Neiman Marcus were early users of the magalog. J.C. Penney created Noise , a free magazine for teens, in 1999. These publications were a blend of feature articles and photos that touted store brands without explicitly saying so. The appeal of this kind of catalog seemed to be that it stood out from other mailings. As the number of catalogs mailed increased in the late 1990s, the hybrid version was hoped to be more arresting than the run-of-the-mill direct mail offering.

According to the U.S. Census Bureau in 2000, electronic shopping and catalog houses accounted for 19.1 percent of all retail activity in the United States, with sales valued at $21.4 billion. Book and magazine revenues sold via e-commerce totaled $2.1 billion, or 49 percent of all sales. Computer software sold via the Internet totaled 31 percent of all software revenues. Online sales of toys and music/videos each held slightly under one-third of their category market shares. E-commerce sales of consumer electronics and appliances also garnered 31 percent of the category's total revenues. Online computer hardware sales totaled $6.1 billion, 23 percent of all computer sales, and 28 percent of all e-commerce revenues.

The catalog industry had a rough start to the twenty-first century after a decade of exceptional growth. According to Catalog Age's, "Benchmark Report on Critical Issues & Trends" survey, 24 percent of the survey's respondents reported missing profit goals by more than 10 percent for 2001. Additionally, 29 percent missed the mark by 1 to 10 percent, meaning well more than 50 percent of the industry did not make their profitability goals. Whereas downtrends in 2001 can be blamed on the aftermath of the terrorist attacks that had devastating effects on the fourth quarter, the industry did not rebound completely in 2002, and sales once again fell off in the fourth quarter of 2002.

In the mid-2000s, only 20 percent of the catalog companies in the industry had full price stores. Showing the trend toward more e-business, only 10 percent did not have an online presence and 40 percent did not engage in e-mail marketing campaigns. By the end of 2003, the biggest concern for this industry was the need to slash costs without slashing products and services. The rising cost of catalog distribution and shipping merchandise had a significant impact. Postage and paper costs as well as United Postal Service and FedEx charges are variables that can and have had a negative impact on the cost-effectiveness of catalog campaigns. As a result, some companies were employing money-saving measures such as cutting down on cold-call mailings (sending out unrequested catalogs), reducing page count of the catalogs, substituting a catalog drop with a postcard or e-mail that promotes special offers, and reducing the number of specialty catalogs targeted at specific customer segments.

In the three most recent annual reports of the Multichannel Merchandise 100 (MCM 100), 83 of the top 100 companies reported year-over-year increase in catalog and Internet revenue for 2004, 2005, and 2006. That indicates the industry has stabilized after a difficult stretch in the early 2000s. In 2003, 70 of the top 100 companies reported year-over-year growth for catalog and Internet sales, while 60 of the top 100 reported such growth in 2002.

Acquisitions helped several companies achieve growth in 2006, according to the 2007 MCM 100 report. Talbots, No. 64 on the list of catalog and Internet-driven revenue in 2006, increased sales more than 45 percent primarily through the acquisition of women's apparel cataloger/retailer J. Jill Group. Similarly, Redcats USA (No. 21) grew sales 15 percent while acquiring Sportsman's Guide, and MSC Industrial Direct Co. (No. 23) increased revenue 26 percent while acquiring J&L Industrial Supply.

The Direct Marketing Association (DMA) also noted positive growth in the industry through the fourth quarter of 2007. In its Quarterly Business Review (QBR) for the fourth quarter of 2007, DMA reported the industry experienced its eighteenth consecutive quarter of positive growth. Those results indicated the growth was slowing down, and DMA forecast more modest growth in the first quarter of 2008. With the U.S. economy uncertain heading into the late 2000s, direct marketers expected to be cautious regarding expenditures. Approximately half were prepared to alter budget expenditures; of those willing to change spending in the event of a recession, half planned to increase e-mail marketing, and 42 percent planned to reduce spending on postage. The majority of direct marketers expected to hold new product development expenditures flat.

Current Conditions

In the late 2000s, the industry struggled as the economy weakened prompting the industry to cut costs further placing even more emphasis on e-business. For instance, J. Crew Group Inc. slashed its catalog mailing by some 27 percent in early 2009, while others began to send catalogs only to past customers who placed orders. Online sales proved somewhat lucrative offsetting even deeper cuts in revenues. The Direct Marketing Association warned that while e-business may save money, it fails to promote new customers.

Despite the gloom, gardening products merchants were experiencing significant growth due to the sluggish economy with consumers opting to grow their own vegetables to save money. One mail-order company, Dixondale Farms who retails onions for planting was reaping the rewards from the downturn increasing its revenues by some 40 percent in 2009.

While the industry dealt with the economic downturn, another challenge focused on volatile paper costs throughout 2010 which increased as much as 20 percent at times. In one survey conducted by MultiChannel Merchants, found catalog mailers continued to 39 percent cut back on paper weight, 39 percent reduced total number of catalog pages.

While there were more than 17 billion catalogs mailed in 2009, a mere 1.3 percent actually ended in a sale. In one survey conducted by the Direct Marketing Association with the help of its members found 62 percent of its revenues came from their catalog and only a fifth reported higher sales volume from their online presence.

Controversy surrounded catalog mailers by one environmental group, Forest Ethics who initiated an online petition urging government to set up a "Do Not Mail" list where consumers could block not only junk mail but catalogs as well. On the other hand, the U.S. Postal Service who depends on those extra catalog dollars contracted a consultant on their own who conducted their own research aimed at protecting catalog revenues determined consumers were likely to spend 28 percent more via a retailer's website when they were mailed a catalog versus those who didn't receive a catalog.

Industry Leaders

One of the fastest-growing mail-order companies in the late 1990s was Dell Inc., formerly known as Dell Computer Corporation. It was one of the largest catalog operations by revenue in the late 1990s and early 2000s, and led the world in direct mail sales of personal computers, software, and peripheral equipment. Being a computer corporation, it was natural for Dell to move heavily into Internet sales. Dell reported a net income of $2.1 billion on revenues of $35.4 billion in 2002. By 2005, the company was the top of the industry as ranked by sales, with $49.2 billion in revenue. The company announced plans to begin selling through retail stores in 2007. It reported $57.4 billion in revenue in 2007.

Along with computers and consumer electronics, some of the top products sold by companies in the industry in the mid-2000s were office products. All but two of the top ten companies carried lines in these product areas. Other industry leaders were International Business Machines Corp., Corporate Express North America, Boise Cascade Corp., Office Depot, Staples, Fisher Scientific International, Henry Schein, United Stationers, and CDW.

The phenomenon of the late 1990s nonstore retailing world was Amazon.com. It was arguably the company that made Internet shopping a comfortable option for American consumers. By the close of 1998, more than six million customers had purchased books, music, or videos from its online store. It branched out from its position as a virtual bookstore to become a virtual shopping mall. Amazon.com did this by acquiring the online auction house e-bay and stakes in a host of other online vendors including drugstore.com, HomeGrocer.com, and Pets.com. The Wall Street Journal named Amazon.com as its best one-year performer in 1999. Despite its overall success Amazon posted a net loss of $149.1 million on $3.9 billion in revenues for 2002. Its revenue for 2007 was in excess of $14.8 billion, and it reported a net income of $476 million.

Workforce

Employment in the catalog and mail-order house industry was expected to grow faster than employment in most other U.S. retail sectors in the 2000s. Advances in automation and information systems, however, could curtail job growth as companies eliminated labor-intensive positions. Despite expected growth, the catalog and mail-order industry offered relatively meager employment opportunities in relation to businesses with similar sales volumes. The greatest job growth was expected to occur among computer programmers and information systems professionals, who were needed to integrate and streamline customer, inventory, and financial information. Most computer positions required little prior training, allowing opportunities for many entry-level information specialists.

According to the U.S. Census Bureau's 2005 County Business Patterns, the industry of electronic shopping and mail-order houses included almost 16,000 establishments and more than 250,000 employees.

The U.S. Census Bureau reported the total number of electronic shopping and mail-order houses increased to 21,895 establishments with industry-wide employment of 332,405 workers.

America and the World

The U.S. catalog and mail-order industry is the largest and most advanced in the world. The two basic reasons for the industry's continual growth are a large population and a relatively high-income level. Although other countries may be more densely populated, they lack a large enough number of people who have the income to buy.

Mail-order retailers in the United States benefit from several other advantages. Most importantly, U.S. retailers enjoy access to the largest industrialized, relatively homogenous market in the world. As a result, multiple economies of scale exist for domestic merchandisers. An entire U.S. mailing list industry has emerged, for example, allowing retailers to efficiently attack specific market niches.

Another very important advantage for the U.S. mail-order industry is relatively low postal rates. U.S. bulk and first-class postal rates are the lowest in the world--much lower, in fact, than rates in most of Asia, Europe, and South America. Postal rates in much of Europe, for instance, are twice as high as U.S. rates, making it difficult for companies to successfully promote products through the mail. Higher shipping charges further dilute profit potential in overseas markets.

In addition to these factors, most foreign mail-order markets are characterized by relatively limited media availability, much tighter government regulation of advertising content and product approval requirements, a lack of public understanding and acceptance of mail order, language and cultural barriers, low credit-card penetration, and a lack of toll-free numbers. Furthermore, in some European countries many types of mail promotion are banned for environmental and social reasons. The European Community mail-order industry also suffers from a lack of uniform postal and business standards. Some of these mitigating factors were disappearing, and the growth of the Internet also served to break down geographical barriers.

Cross-Border Sales.
Foreign sales by domestic catalog and mail-order houses have traditionally been limited by language and cost barriers. Despite the inefficiency of nonstore retailing in many overseas markets, however, several U.S. and foreign firms have successfully penetrated other markets. Cross-border sales between the United States and European Community (EC), had particularly steady increases throughout the 1990s, spurred in part by increasingly uniform EC markets.

The most exportable mail order products in the 1990s, in order of revenue size, were information, education, and collectible products. In addition, several U.S. firms successfully marketed specialty American products in some Asian countries. Some of the most successful offshore U.S. mail-order enterprises included Hanna Anderson, Austad's, Eddie Bauer, L.L. Bean, Black Box, Inmac, Myron Manufacturing, and Recreational Equipment Incorporated (REI).

Research and Technology

The most successful catalog and mail-order houses increasingly moved computer systems toward client/server architecture with relational databases and distributed processing. Information databases would eventually allow companies to produce highly specific catalogs and marketing materials tailored to smaller groups, or even individuals. A company might be able to print a set of catalogs, for instance, each of which contained a different product mix and marketing message which could be mailed based on consumer interest. Just-in-time inventory practices assumed a primary role in helping companies maintain profit margins through lower fixed costs and better customer service.

New advertising media increasingly complements traditional broadcast, print, and telephone channels. The burgeoning multimedia environment will eventually integrate video, telecommunications, optical disk technology, and personal computers. Advertisers are expected to be forced to adjust marketing techniques as consumers gain more control in choosing which ads and media they internalize. Advances in recycled paper, printing technology, and ink would likely help the industry move toward reduced waste and lower production costs. At the same time, the proliferation of specialty cable television channels that reach more homogenous niche markets is expected to increase the efficiency of broadcast advertising.

The importance of new Internet technology was amply demonstrated by the catalog and mail order industry as it embraced online selling. Some innovations included Catalog City, a Web site that consumers could visit to request any of 17,000 catalogs. Partially owned by Bear Creek Corporation, parent company of the mail-order fruit and gift firm Harry and David Orchards, Catalog City allowed small vendors without much Internet expertise to have a presence on the Web. Internet shopping also offered new opportunities for interaction between the consumer and the catalog. For example, Land's End offered a "virtual fitting room" where women could construct a three-dimensional model of themselves on their computer monitor to find clothes that flattered their build.

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PC CONNECTION INC.(Brief Article)
Bank Loan Report; May 8, 2000; 260 words
...if 2:1 or greater, Libor + 200 bps FACILITY FEE: 25 bps LOC FEE: 25 bps BUSINESS: Owns and operates catalog and mail-order houses offering software and personal computers RATINGS: NR
Resampling of industries.
PPI Detailed Report; January 1, 2001; 700+ words
...souvenir shops 5948 * Luggage and leather goods stores 5949 * Sewing, needlework, and piece goods stores 5961 * Catalog and mail-order houses 5962 * Automatic merchandising machine operators 598 * Fuel dealers 5992 * Florists 5995 * Optical goods stores...

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