Mergers & Acquisitions

Catalog Start-ups: What You Need to Know
February 1, 2003

If you want to succeed, you should strike out on new paths rather than travel the worn paths of accepted success. —John D. Rockefeller Building wealth by starting a catalog is the stuff of legends. The reality, as you know, is much different. Having inadequate financing from the start is a blueprint for failure. Yet, having adequate financing and deep pockets doesn’t guarantee your success either. Sure, cataloging is fun and exciting, and it can be rewarding. My intent is not to scare readers away from the prospect of starting a catalog from scratch. Rather, I want to make you

Be a Survivor
October 1, 2002

The most unlucky cataloger I ever knew was a food cataloger who watched helplessly in 1994 as its retail store in Northridge, CA, turned to rubble in a disastrous earthquake. A year later, the same cataloger was again forced to watch as its retail store in Japan literally slid into the ocean in the Kyoto earthquake. Next time you think the gods have singled out your catalog for special torment, remember this cataloger. Cataloging has seen its share of recent collapses and closures (e.g., Fingerhut, Springhill Nursery, Willis & Geiger, Balduccis). Several others have come right to the brink of disaster before

Reduce Your Direct Selling Expenses
September 1, 2002

In this time of uncertainty, controlling your direct selling expenses is critical to your bottom line. Fortunately, paper prices have remained low, which helps offset the recent postage increase. But the business climate is difficult, and the squeeze on the bottom line is real. This month, I’ll offer various ways to reduce your direct selling expenses. Specifically, the following line-item expenses should be considered direct selling expenses: - catalog creative and production; - paper; - print manufacturing; - outside rented lists; - merge/purge; - bind-in order form insert; and - ink-jet and mailing. These direct selling expenses always should be grouped together

Ingredients for a Catalog Startup
September 1, 2002

The desire to create something, to invent something, was Eileen Spitalny’s dream since high school. “It was in the back of my mind in college that I wanted to start a business. I worked at the entrepreneur program at USC, reviewing new business plans, and I found the prospect [of starting a business] very exciting.” Spitalny and childhood friend David Kravetz had an idea for a business since they were kids: to sell David’s mom’s made-from-scratch brownies. They had no idea it would turn into a direct marketing business. Fairytale Brownies—the business Spitalny and Kravetz started in 1992—celebrates its 10th anniversary this year. Spitalny

Analyze Your Profit Contribution
August 1, 2002

Trying to maximize profit contribution can conflict with trying to grow your business. In other words, do you want profit or growth? Of course, you want both. Unfortunately, one of these goals comes at the expense of the other. Maintaining a balance of mailings to your customer file (where the profits come from) versus mailing to prospects is critical to your bottom line. How do you evaluate contribution from mailings to the housefile and catalogs you circulate to prospects? This month, I’ll discuss the incremental break-even point compared to a fully absorbed break-even point as they relate to contribution to profit

A Deal for Data
May 1, 2002

Like countless others, I’ve grown aware of how much personally identifiable information I inadvertently sprinkle around these days. But a recent retail incident left me astounded at how much data some merchants seek to collect. My husband and I devoted a Saturday to scouring a few furniture stores looking for a new sofa. We tested and examined construction, comfort and cost. We finally agreed on a plush beauty that we found in a store that’s part of a large, mid-Atlantic furniture chain. “How will you be paying?” the saleswoman asked. We told her we’d put 25 percent down when ordering, and

Slash Your Chargebacks
November 1, 2001

In a tightening economy, back-end fulfillment costs such as chargebacks—dispute mechanisms credit card customers use to reverse transactions—comprise a line item worth scrutinizing. Depending on the volume of chargebacks a cataloger is hit with in a set time period, fees (which are levied on a merchant) can run from $20 up to a whopping $150 per chargeback. “To say the least, chargebacks can get very expensive for merchants,” says Scott Martin, chief operating officer of EPX, a New Castle, DE-based electronic payment processor. Here’s how catalogers can reduce chargebacks generated from either customer disputes or outright fraud. Tips to Reduce Customer Disputes

How to Determine Your Catalog’s Break-even Point
November 1, 2001

To prospect for new buyers cost effectively, a catalog company needs to know its break-even point (BEP). I like to express breakeven on a per-catalog-mailed basis—that is, how much gross (or net) revenue must you generate per catalog mailed to hit your desired break-even target? This becomes your stake in the ground. All outside lists and housefile segments should be evaluated and measured against this break-even criteria. Two BEPs Two BEPs can be used: *an incremental (sometimes called variable) breakeven, and *a fully absorbed BEP. Mailings to prospects should be evaluated using an incremental BEP analysis. The fully absorbed BEP can

Selling Your Catalog: Prepare for the End Game
June 1, 2001

Sale, merger, IPO? It’s important to know, from the very inception of your business, how you will exit from it. The end game is a fascinating concept. It is philosophically universal, therefore having definition and meaning relative to life and living, religion, art, war, sports, investments—and ownership of a catalog business. When one thinks of the term “end game,” the two words “end” and “game” should be considered. First, it’s the end of a process, often the sale of a business or the harvest of wealth after a long period of creating and increasing value. Second, it’s a game, that is, a

Three Years and $3 Million to Break Even
October 1, 2000

The longer you’ve been in cataloging, the more variations you will have heard for this month’s rule of thumb. Over the years I’ve heard two years and $2 million, four years and $4 million, even five years and $5 million—but all variations seem to agree that it takes several years and about the same number of millions of dollars for a new catalog to reach breakeven. How reliable is this rule? Are there exceptions? Or has launching a successful catalog truly become a millionaire’s game these days? We’ll find some answers in this column, beginning with a precise definition of our rule: The