SkyMall: The Ultimate Catalog Business Model
Imagine this: You print 16 million catalogs a year that are seen by 500 million upscale prospects (average pass-along ratio is 20-to-1), often cooped up for hours with nothing else to read. Annually, 700,000 orders are placed, typically for 2.1 items at a $110 average order size. Oh, yes, a few more eat-your-heart-out ingredients of your catalog business: You warehouse no inventory, you ship nothing, take no returns and you don’t spend one penny for postage or list rental. Two words describe this model: yum-yum.
If I were writing a novel about a high-powered entrepreneur, strategic thinker and brilliant builder of a multi-million dollar business, I would not give the protagonist a background in accounting. Yet, this was the unlikely career path of Bob Worsley, founder and proprietor of SkyMall—the fascinating, ubiquitous catalog of catalogs you find in the seat pockets of the majority of American airplanes.
The story was related to me by Christine A. Aguilera, SkyMall’s savvy executive vice president, who came over from the law firm that represented SkyMall in its IPO. Bob Worsley, from Boise, ID, with a degree from Brigham Young University, fully expected to follow in his father’s footsteps as an accountant, Aguilera says. But after laboring in the Phoenix office of Price Waterhouse, Worsley quit to form his own business supplying CFOs to small companies on a timeshare basis. The concept was successful, but after several years it became obvious no dramatic growth was possible with a business that billed by the hour. The path to real wealth is through a business that can be leveraged.
On a flight from Seattle to Phoenix in 1989, Worsley found a tiny catalog in the seat pocket in front of him: Giftmasters—a rather offbeat product of Minneapolis-based travel conglomerate Carlson. The book contained low-end merchandise, such as fish ties, at prices that were 20 percent higher than retail. The reason: Carlson was giving the airlines a 20-percent commission on sales in return for circulating the catalog.