Case Study: Multiple Zones International
There’s nothing like having a billionaire for a neighbor.
Especially one that throws a little business your way, like Microsoft did when it named Multiple Zones International (MZI) its chief supplier of computer hardware, software and services.
The contract is one of many changes taking place at MZI. Since moving online in 1995, MZI has seen fast growth in revenue and transactions, creating a $115-million company.
What began in 1989 as a three-title catalog company with PC Zone, Mac Zone and The Learning Zone, has grown into a multi-channel retail operation that includes a new business-to-business division. The new Zones Business Solutions division is comprised of Zones.com, Zones Auction and ZonesBusiness.com, and serves the small to mid-size business market, government and education institutions and large corporations.
Online and electronic marketing have had a dramatic effect on the company. MZI has decreased its print catalog circulation by 35 percent a month, cut customer-acquisition costs by 55 percent and increased customer acquisition by 19 percent a month. It has moved from producing 30 million catalogs a year to 20 million and from using the catalog as its main sales vehicle to using it to acquire customers.
Cutting catalog circulation is a scary proposition to most catalogers—usually it means less market penetration. MZI Chairman and Chief Executive Officer Firoz Lalji can’t argue with the fact that MZI’s catalog sales are declining (down 2.8 percent in the first half of 2000), but its online sales’ increases are outpacing the decrease significantly. Customer demand, lower marketing costs and a 59.7-percent increase in sales for the first six months of 2000 are something Lalji can’t ignore.
“Up to two years ago, we were primarily a cataloger company,” says Lalji. “We had started online in late 1995. We were an early pioneer, and there was a slow build up. The momentum started in 1997 and 1998 ... Now we do in excess of $100 million online, since we changed the format of the company. Today, we are less dependent on catalogs as a customer-acquisition strategy.”