NEW YORK CITY--The Direct Marketing Association was hoping to provide a shot in the arm for private delivery and struggling alternative delivery companies Publishers Express (PubX) and Alternate Postal Delivery (APD); but now that attempt seems to need a jump-start of its own.
The DMA announced in June that it would organize a joint alternative delivery test with the two private couriers and a group of catalogers, allowing catalogers to test at least three different markets with both APD and PubX. Though the test is scheduled to run throughout 1994, the DMA is having trouble signing up medium- and small-size catalogers--including some that helped conceive the test in the first place.
"The whole effort that has been going on for the last two years has been designed to make it easier for catalogers to participate," says Ann Zeller, the DMA's vice president for information and special projects. "Our goal is to make catalogers' additional costs [incurred in alternative delivery] for transportation and additional processing transparent."
Many small companies, however, say they can't afford to participate. Although both PubX's and APD's rates have been slightly lower than current comparable U.S. Postal Service rates for more than a year, the smaller catalogers complain that this, or any other alternative delivery test, is more costly for them to run because of the added administrative and transportation expenses they incur.
Clearly, the test is appealing to larger catalogers--including such participants as Hanover Direct, Lillian Vernon and Bass Pro Shops--while smaller catalogers are backing off. The smaller catalogers say they would have to spend proportionately more on an alternative delivery test than their larger counterparts. For instance, Appleseed's, a $35 million women's apparel cataloger, won't take part in the test, says marketing manager Brian Haley. The cataloger is shying away from the idea even though Haley participated in the alternative delivery symposium last May during which the DMA concept was conceived. "Until we get some better indication of how things are developing, it's not a prudent thing for us to do," he says. "We don't have enough books to mail out to the few test areas the private delivery companies cover. There's just not enough [market] representation."
As smaller catalogers see it, the bigger catalogers not only have greater R & D funds available for alternative delivery testing, but they also can distribute enough catalogs to get some meaningful results with the test. "We mail about 10 percent of what an L.L. Bean mails," Haley says. In order for smaller catalogers to get a realistic sampling, "we'd have to mail more than a small percentage of our total mailings," he says. "And that would just be too risky."
In addition to Appleseed's, the approximately $30 million casual apparel cataloger Tweeds (which recently took part in a ride-along test--see DID YOU KNOW and UNEASY RIDER), probably ably won't participate in the DMA venture, either. "We haven't considered the DMA test," says Tweeds' director of marketing Mark Friedman. Although he had no results at press time, Friedman is concerned about prospects in any Tweeds' test receiving their catalogs later than they would through the Postal Service.
Friedman, like other catalogers that have tried alternative delivery, complains there are too many logistical issues to work out. "I don't think the cost benefits are all that spectacular either," he says. "When you factor in the added [administrative] processing for the names you're culling out from the rest of your mailing, and factor that into what APD or PubX charges, the savings aren't substantial enough."
Few catalogers or their printers can determine just how much more administrative expense results from channeling a portion of their mailings through alternative delivery. Nevertheless, the smaller players complain that the added costs coupled with the uncertain return on investment make it difficult for them to justify. "I can't say this has a clear upside for us," Haley of Appleseed's says. "The DMA is asking small- and mid-size catalogers to put a proportionately greater amount of money on the table for something that will probably benefit the larger guys more, because they have the volume."
Even some of the larger catalogers that plan to try the DMA sponsored test have their doubts. Alternative delivery "has a very, very formidable competitor" in the USPS, says Lillian Vernon vice president David Hochberg. "It's a major change from the status quo and that's never easy. But philosophically, we feel we have to support the concept. So we will partake in the test in three markets with both APD and PubX." The $171.5 million company has the resources to experiment; it will channel about 1 percent of its 140 million circulation through alternative delivery.
DID YOU KNOW?
* Casino and health club giant Bally Manufacturing Corp. will jointly produce a catalog and direct mail test this fall-holiday with Road Runner Sports. These will be distributed to some of the 4.5 million members of Bally's health clubs. The companies plan a full catalog rollout to most members next year.
* British consumers receive approximately 43 direct mail pieces per year; that compares with an average of 1,160 pieces per year that the average American receives.
* Bear Creek Corp. will mail the first edition of Northwest Passages in early October. The Harry and David catalog spin-off will sell seasonal gifts with Pacific Northwest U.S. flavor.
* DM Management, mailer of the The Very Thin, J. Jill and Nicole Summers catalogs, plans to go public...Micro Warehouse recently completed a secondary public offering.
* Two-thirds of U.S. direct mailers increased their mail volume in 1992 over '91; half increased their mailing frequency, according to the DMA's annual list usage survey.
* Crutchfield, a consumer electronics cataloger, is entering the personal computer market with its own line of PCs.
* Senshukai Co., a large Osaka, Japan cataloger-retailer, is marketing a Disney catalog in Japan. The catalog has no connection with Childcraft's Disney catalog.
UNEASY RIDER
Tweeds recently conducted its first alternative delivery experiment: a magazine ride-along distributed in Los Angeles and Atlanta by Publishers Express (PubX). The apparel cataloger rode along with Travel & Leisure and Seventeen magazines and was delivered by local newspaper couriers in those markets. Although it was too early at press time for Tweeds to gauge any results, the cataloger still had some concerns about the viability of the mailing. "There's a little complication with this kind of test in that PubX can't really vie you an exact delivery date," says Nancy Reiser, Tweeds' circulation manager. "If PubX tells you your catalog is going to be delivered on July 12, and if the magazines don't arrive [at the local couriers] on time, then our catalogs have to wait until the magazines arrive before PubX's courier can deliver them." If the delays are two days, she says, it's all right. "But if they are two weeks, then I don't know how confident I'd be. Maybe by then we would have wanted to have mailed the prospects a different issue of the catalog."
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