Disney Goes Online Sans Catalog

Discussion
Feb 22, 2006
George Anderson

By George Anderson


Mickey don’t need no stinkin’ catalog.


The Walt Disney Company, buoyed by the percentage of orders for goods being made on the company’s web site this past holiday season, has decided to can its catalog and bring its consumer direct business totally online.


Paul Gainer, vice president of Disney Shopping, a division of Disney Consumer Products, told the New York Times, “Customers almost dictated this to us. Once they go online, we just don’t see them going back to the phone.”


Disney’s move takes place when a number of web-based businesses including Amazon.com and eBay have made the decision in recent years to mail catalogs to consumers.


Still, Disney saw a 45 percent drop in phone orders this past holiday season.


The company, said Mr. Grainer, spent $18 million to mail out 30 million catalogs this past holiday season and the end result led him to conclude “it’s time to focus just on e-commerce, and see how great we can be.”


Jim Coogan, president of Catalog Marketing Economics, said Disney is making a mistake.


“What almost inevitably happens,” he said, “is that the business has lower costs, as expected, but a much greater-than-expected drop in sales. Typically companies expect to hold onto almost all the web sales and are surprised when that doesn’t happen.”


Donna Hoffman, professor of marketing at Vanderbilt University, also believes Mr. Gainer and Disney are making a mistake.


She pointed to research showing customers with access to multichannels of commerce for retailers spending 15 percent more with a particular company than those who shop through only one of three options: online, catalog or store.


“Disney’s just leaving all of that on the table,” said Professor Hoffman.


Mr. Gainer is undeterred. He told the Times that the company plans two more catalog drops in March and April and that’s it.


“You may see print materials in the future, a postcard or something, but it will only be to drive traffic online,” he said. “There won’t be another 80-page catalog.”


Moderator’s Comment: What is your reaction to Disney’s decision to discontinue its catalog in favor of its web-based business?
George Anderson – Moderator

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9 Comments on "Disney Goes Online Sans Catalog"


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Warren Thayer
Guest
15 years 10 days ago

I see it taking a moderate hit in sales first year, but if it invests in a long term drive to build more traffic to the site instead, it may well come out ahead over the long haul. The younger generation that now has young kids has been raised with computers, and is totally comfortable with the online experience. That makes this particular demographic a good one for this effort, which I am sure will be watched closely. Besides, $18 million represents the profits on a lot of Mickey and Minnie dolls. Having said that, I expect, as they hinted, Disney will be needing to send out a few reminder postcards or mini-catalogs — to drive site traffic and whet the appetites of the very small kids who don’t already spend half the day on their computers but can go wild over, well, a Disney catalog. If it were up to me, I’d wean this puppy slowly, with a considerably smaller catalog, perhaps mailed to fewer people, but a catalog nonetheless.

Mark Lilien
Guest
15 years 10 days ago

Catalog retailers are very careful to analyze everything. Placement on the page, price points, size of the page, copy length, catalog length, which lists are more profitable, which frequency is optimal, etc. I’m sure that reallocating the catalog overhead to other forms of promotion will improve profits. Is The Sharper Image better off with an online presence, bricks and mortar stores, and catalogs? Their financials don’t seem to indicate that. Would major department stores use their own money (not the suppliers’ money) to print catalogs as well as display online and in stores? I doubt it. This doesn’t mean that all catalogs are mistakes, but there certainly seem to be too many, considering the alternatives. Disney cut way back on their bricks and mortar store investment when profits were elusive and they should be congratulated for doing the same with the catalog. If more retailers cut back on their losing investments the remaining industry would be stronger.

Vasanti Ballinger
Guest
Vasanti Ballinger
15 years 10 days ago

I agree with Warren. It is a good idea to make an ultimate goal of a website versus a catalog, but it should be done in steps. With the website, demographic information can be obtained that will show who is using the website and who should be mailed out a catalog instead if they have not responded to the website. The catalogs can become smaller over time with captions to explain that a larger variety can be found online as well as 360 degree views to encourage website usage. Some of the older generations prefer to spend their time doing other things besides learning how to use a computer as well as how to make transactions online. It is hard to believe at times, but a computer and Internet connection are still not readily available in every household. By holding onto a catalog, even if smaller than the original one, Disney can maintain some of the sales made from people that still prefer the “old-fashioned” way.

Mark Hunter
Guest
Mark Hunter
15 years 10 days ago

It’s not a bad decision if Disney’s customer base is wide but not deep, meaning they have a lot of customers, however, few who spend a lot. The cost of producing and mailing a catalog is significant and only works when you can target a key consumer group. Another drawback to catalogs is that your pricing becomes fixed and you can’t respond quickly enough. The magic combination for Disney would be doing it on-line and supplementing with “cata-cards” to their targeted groups. “Cata-cards” are oversize postcards featuring a single item with a call to action that brings the consumer to their website. This technique is extremely effective in driving website traffic due to it’s ability to be very consumer specific.

Carol Spieckerman
Guest
15 years 10 days ago

If it were anyone but the “new” Disney, I would call the move short sighted, however, I believe that Bob Iger has a real vision to make up for lost time and replace old revenue streams with multiple digital media plays. This decision is consistent with his strategy.

Kai Clarke
Guest
15 years 10 days ago

This is both a strategic and tactical error for Disney. The “pass around” value of a catalog, especially in today’s environment has much greater value because other folks have stopped doing theirs. This makes their catalog unique, a reminder for any online campaigns, as well as something which has a high pass around value instead of online spam. Disney will see a tremendous drop in revenues, combined with a lower repeat business from existing customers. Any smart retailer knows how important these customers are and are continually finding ways to retain customers like these. Disney, instead, is finding ways to lose them (though not intentionally) by cost-cutting. This is a classic move to save money instead of customers. The real question is how long will it take Disney to realize their mistake?

Lauren Adler
Guest
Lauren Adler
15 years 10 days ago
I think it’s a big mistake for Disney to take an all-or-nothing approach to using a catalogue as a sales tool. It would be prudent to continue to use a targeted catalogue as a teaser to highlight key items that can be found on the Disney website. Many successful retailers such as Smith & Hawken and Tiffany use their catalogues, not as a phone-book approach to listing everything they have to sell, but as a tool to highlight items and drive sales through their bricks-and-mortar, online or phone channels. Keeping an online-only presence can result in a company being out-of-sight and out-of-mind, particularly for those customers not trolling sites on their computers all day. There is a big opportunity cost in not producing the catalogue. While Disney will not have a problem reaching the customers who already have a product in mind and must head to the Disney website to buy it, they will be less likely to get a sale from an impulse shopper or someone who isn’t sure where to purchase a particular… Read more »
Bernice Hurst
Guest
15 years 10 days ago

Seems a bit silly to me to reject the concept of a marketing mix. Not all methods of buying and selling suit people all of the time, we do like some variety in our lives. Having been without an internet connection at home for the past 3 weeks, a catalog might have gained my attention had I wanted to do any shopping.

Jon Ortiz
Guest
Jon Ortiz
15 years 7 days ago

If catalogs are passe, then why is Ikea cranking out more (160 million last year) than ever?

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