The DMA (Direct marketing Association) recently released their annual report on the catalog industry.
The report indicated that in 2007, 36% of sales [for the catalog industry] were conducted online. What is shocking is that this statistic is a decrease from 2006, when it stood at 40%. In fact 2007’s percentage was lower than both 2005 and 2004. To find a lower number, we need to go back to 2003, when it was a mere 29%.
What’s the deal? Is there a backlash against online buying?
No, seemingly it was a postage increase! This convincing theory blames the huge postage increase in May of 2007 as the culprit. Many catalogers drastically scaled back their mailings when their postage costs jumped 40%. Although some Internet buyers function strictly online, others are driven online when they receive a catalog or other direct mail piece. Ergo, less mailings equal less orders, and a decrease in sales.
I, too, feel the pain of the catalogers, as I experienced similar increases in postage for my magazines: Connections Magazine‘s postage increased 39% and AnswerStat, 41%. As a result, I began scrutinizing my subscriber list much more closely. Some magazines were pushed to e-publishing, dropping their print versions altogether.
So it should not be at all surprising that the USPS is seeing a drop in mail volume, which caused them to suffer a $1.1 billion loss for the third quarter. As a result, next year’s postage increase is expected to be the maximum legal amount. Experts predict that could mean magazines and catalogs will face a 5 to 6% bump.
Of course that means the affected mailers will scale back more, further lowering mail volume, and necessitating another maximum increase in 2010 — as mailing costs and post office efficacy spiral further out of control.
Peter Lyle DeHaan, PhD, is an author, blogger, and publisher with over 30 years of writing and publishing experience. Check out his book The Successful Author for insider tips and insights.