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In this issue of the Food-by-Mail Industry Update (FBMIU) we will summarize some of the key numbers we have aggregated from several specialty-food mailers in the holiday (Sep-Dec) 2010 season.
We are happy to report that most specialty-food online merchants posted significantly better results than holiday 2009. The season started fairly strong and gained momentum all the way to the end—September sales were up almost 6%. October was up 4%. November was up 11%. December was up 12%.
The companies we track posted an 11% overall increase compared to a 2% increase in holiday 2009 and a 6% decrease in holiday 2008. Most companies had high single-digit growth goals for the season and almost all of them exceeded their plan.
Looking at the distribution of companies by growth rate compared to growth rates in holiday 2009, we found:
None of the companies’ sales fell more than 10% vs. 18% last year 17% had sales declines of 1% to 10% vs. 27% last year 33% grew from 1% to 10% vs. 19% last year 42% posted gains greater than 10% vs. 36% last year
Compared to holiday 2009, most clients increased their marketing and operating budgets. They also increased list rental prospecting, made more changes to their catalogs and websites, introduced more new items, and beefed up seasonal personnel to improve customer service. However, overall, costs did not grow as much as sales, so almost all of our clients and other specialty-food direct marketers posted higher profits than in 2009, and they exceeded their plan.
Mailing Trends
From September 1 to December 31, 2010, we received almost 800 specialty-food catalogs. Upon review of these, we found:
For the second year in a row, the median page count went up. In 2008, the median page count was 27; it was 28 in 2009. It was 32 in 2010. As you can see from the table below, catalogers continued to migrate to the full-size format. Due to more stringent tabbing requirements and the resulting hit to response rates, the slim-jim format is all but dead—going from 22% of the catalogs we received in 2008 down to only 2% in 2010. The “other” category includes postcards, letters, and a few 3-D mailers.
Customers continued to order later in the season. 64% of the season’s orders and sales occurred in December, up from 58% last year and 54% in 2008. Over 75% of orders and sales were generated between mid November and end of December, up from 72% in 2009. Even though customers continue to order later (closer to Christmas) each year, 2010 was the first time we saw a lower percentage of catalogs arrive in-home in December than the prior year. We suspect this may be due to more and more merchants relying on email to get the word out that there is still time to order for Christmas delivery, that they still have gifts in stock and ready to ship, and that customers can go online for the latest availability, offers, and shipping cut-off dates.
Of all of the catalogs we received, 45% had some type of promotional offer vs. 50% last year. The biggest change came in the area of free gift with purchase offers—21% of the catalogs we received had this type of offer vs. only 9% last year. Surprisingly, discounted, free, or conditionally free shipping fell in popularity with merchants, going from 19% of all catalogs in 2009 to 16% in 2010. The following table shows the percent of all catalogs we received by offer type.
To sum up the season, sales were stronger than almost any of us thought they would be. Companies increased their marketing expenses, but were smart about it and got the maximum bang for their buck. Catalogers continued a long-running trend of mailing later, but they basically maintained page counts. There was a dramatic increase in the number of catalogs with promotional offers, with free or discounted shipping leading the way.
In the next few issues of the Food-by-Mail Industry Update we will present stats, trends, and benchmarks for web performance, paid-search programs, and email campaigns for specialty-food online merchants. We will also review some of the common elements and techniques used by high-performing specialty-food direct marketers and discuss how you can apply these techniques to your mail order and online food business. Finally, we will report on the results of our fifth annual survey of specialty-food online consumers. Our hope is that this information will give you a frame of reference as you begin analyzing your own results from holiday 2010 and help you in your planning for holiday 2011.
Warmest regards,
Tony Cox
President
5th Food Group
ABOUT 5TH FOOD GROUP
5th Food Group helps specialty-food catalogers and Internet marketers grow and make more money by developing, managing and implementing their mail order and online marketing programs.
We are the only catalog/Internet marketing firm that works exclusively in the specialty-food industry.
Helping smaller companies or large companies with small mail-order or online divisions is what we do best.
Visit us online at www.5thFoodGroup.com to download a copy of our free booklet, The Seven Habits of Highly Ineffective Catalogers, and for information on our fully guaranteed introductory program called JumpStart,
back issues of the FBMIU and other information on our services.
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5th Food Group