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.