I have been doing a lot of strategy work lately for several different companies and have come to believe that there may be a “perfect storm” approaching for B2B catalogers. Here are three big picture issues that I believe should be on your radar.
- Increased online completion. With the launch earlier this year of www.AmazonSupply.com there has been a significant increase in online competition. If you have not already done so take a look at their site to see their broad multi-industry product offering that makes them the biggest “one stop shop” by far. Also note their pricing on your key items, easy 24/7 returns and their fast and inexpensive (free for an estimated 8 million Amazon Prime subscribers) delivery. I also can’t help but think what the Google, Ebay and other large online players will do in response to Amazon Supply’s entry into B2B distribution.
- Postal increases and/or cuts in service. While the deficit problems at USPS have be “kicked down the road” for many years I am getting the sense that this issue might actually get addressed after the election. In all likelihood that means a combination of higher rates, closed post offices/distribution and elimination of Saturday delivery. Combine this with the irreversible downward trend in first class mail volumes and it is hard to imagine how postage, one of the largest expenses for a B2B cataloger will not increase. While increases are bad enough it the lack of predictability in frequency and magnitude that is even harder to deal with. We have lived through double digit increases with less than six months notice before. We know that’s very difficult to absorb.
- Collection of state sales taxes. It’s not secret that the states are strapped for cash and as online sales have increased over the last ten years so has the size of their opportunity. Our good friends at the American Catalog Mailers Association (www.catalogmailers.org) are fighting this issue hard on our behalf and allow with other interested parties have formed TRUsT, www.truesimplication.org to fight this particular issue with gusto! The Marketplace Equity Act Congress) and the Marketplace Fairness Act (Senate) are both in discussion to “level the playing field” and raise billions of dollars for state coffers. It is interesting to note that Amazon has recently switched sides on this issue and come out in favor of this pending legislation presumably because they already have a presence in many states.
So, what do you think? Is there a “Perfect Storm” approaching? More importantly, how will your B2B catalog business respond to such fundamental changes to the way we do business? Hmmmmm…..it may be worth thinking about and planning for now…while our waters are still reasonably calm.
Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221
Comments or questions are welcome.