Is the B2B Catalog Dead or Dying?

Many of our clients ask us our opinion on the future of the B2B catalog.  Of course, the answer depends on many things like who your target customer is and what are you selling.  Legacy catalogers also generally have legacy measurement systems that tend to inflate the importance of their catalogs somewhat.   Their new internet only competition does not have such a bias.  Nonetheless, if we believe the short answer to the question is…No, they are not dead yet, but they are dying.

Last year we discussed the approaching “perfect storm” for B2B catalogers.   I would like to revisit and update several of those points as I believe they are key to making your own assessment of the diminished importance of your catalog.

1.    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 in 2013.   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.   Just this week the American Catalog Mailers Association/ACMA sent out two emails warning of pending legislation to dramatically (20%+) increase catalog postal rates.  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.  You are wise to plan now for a significant increase in postal rates in 2013. Also think about how your new customer acquisition and development would change if postal rates increased, say, 50% increase over the next 3 to 7 years.

2.    Collection of state sales taxes.    It’s not a 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 ACMA (www.catalogmailers.org) are fighting this issue hard on our behalf and along 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.  We believe it is not a matter of IF, only WHEN this will happen and advise our clients to have a contingency plan now.

3.    Increased online completion.   With the launch earlier in April of 2013 of www.AmazonSupply.com there has been a significant increase in online competition for B2B catalogers.   Amazon Supply will become the leading B2B buyer marketplace within the next few years.   If you have not already done so take a look at their site to see their broad multi-industry product offering (750,000+ SKUs) 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.   Pay attention too to the number of your manufacturers and suppliers who have chosen to sell direct to Amazon Supply.  Also note the competitive responses from Google (GoogleShopping4Suppliers) and Ebay (expanding their business and industrial product range).   B2B online shopping is only going to get easier and cheaper for your customer and that will impact you.

4.    “March to Mobile” Another trend that will negatively impact B2B catalogers who are not prepared is the ever-increasing B2B uses for mobile and voice activated technologies.  For many MRO buyers for example the catalog from their supplier of choice (Grainger?  MSC?) rode along in the truck with them to be consulted when a need arose “in the field”.  Today, smart phone and tablets that are voice activated assist the MRO repair person not only with sourcing a needed product but also with valuable diagnostics and application information.

5.    Improved delivery.  Amazon, Google, Ebay, Sears and many others are testing affordable same day delivery on a range of B2B products.  Amazon is also building their own (lower cost?) delivery system to supplement (compete with?) UPS and Fedex.  In addition, many items can now be ordered and shipped directly from far east sources.   All of this will further erode one of the prime differentiators of B2B catalogs – broad selection with fast delivery.

6.    The coming “tipping point”.    As these trends take hold and as a new generation of more computer savvy B2B buyers takes over what will be the affect on your B2B catalog?   We believe the traditional B2B catalog as we know it is dying and that one-day soon we will reach a “tipping point” where legacy B2B buyers will make the switch.  It will be like the day we finally realized that printed yellow pages or manufacturers directories were not as useful as a Google search.   Those 10-20 B2B catalogs that now sit on a B2B buyers shelf will dwindle to 5-10 and, one day, the buyer will clear the shelf entirely and depend only on his/her computer.   How many B2B catalogs can you name that have stopped circulation in the last 3 years alone?   The “tipping point” is coming.

So, what do you think?   Is YOUR B2B catalog dying?  Is it already dead?  More importantly, how will you respond to these marketplace changes?  How will you adapt and take advantage of emerging technologies and changes in buyer behavior?  Hopefully, you have started down the path of change and already acquire more customers online than through the mails.  Hopefully, adoption of new technologies, “sticky” content, >50% proprietary products and solid customer relationship selling continue to differentiate your brand and hold your customer.   Hopefully you have already reduced your dependence on mailing your B2B reference catalog.

 

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.

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