No More Disney Catalog??!? :(

[Lou Mongello]

I don't know about you, but I'm bummed about this. We always enjoy looking at the new catatlog when it comes in. It has always been the catalog, and NOT the online store that prompted our purchases.

By BOB TEDESCHI
Published: February 20, 2006
MICKEY MOUSE'S next big role: e-commerce renegade.

The Walt Disney Company, an icon of mainstream America, will move against the grain of conventional business strategy this spring when it stops distributing a catalog that has filled the mailboxes of tens of millions of households for the last decade, and instead embarks on a Web-only initiative.

"Customers almost dictated this to us," said Paul Gainer, vice president of Disney Shopping, a division of Disney Consumer Products. "Once they go online we just don't see them going back to the phone."

The move bucks a trend that has practically become gospel in online commerce in the past several years — namely, that retailers who sell through the combined channels of catalogs, Web sites and physical stores engender more customer loyalty and bigger profits than those that do not.

Many online retailers lack the means to open traditional stores, so this so-called multichannel approach has been beyond their reach. But they still have the photos, call centers and warehouses needed to put together a decent catalog operation.

Why catalogs? Simple, executives say: they're pretty. Unlike most other advertising media, catalogs are something customers want to cozy up with on the couch and browse, sans mouse. Partly on the strength of that idea, companies like Redenvelope, Ice.com, Amazon and ebay among many others, have gotten behind the concept and distributed catalogs in recent years.

But useful as they may be, Mr. Gainer said, catalogs were simply not ringing the registers as loudly. Disney spent $18 million to mail 30 million catalogs last year — half of them sent in the holiday season. The holiday mailing went to similar groups as the previous year's did, yet Disney had a 45 percent drop in phone orders. The number of customers who responded to e-mail and other online marketing messages, meanwhile, skyrocketed.

"I think it's time to focus just on e-commerce, and see how great we can be," Mr. Gainer said.

Jim Coogan, president of Catalog Marketing Economics, a consultancy based in Santa Fe, was critical of Disney's decision, calling it "something I see a lot from the e-commerce world."

"What almost inevitably happens," Mr. Coogan 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."

Disney isn't the first cataloger to cut back radically on its mailings in an effort to shift more business to the Internet. In 1999, Lands' End cut its catalog circulation by 9 percent; its revenue soon fell by nearly twice that percentage, in an experiment that many online executives still point to as evidence that catalogs are more critical to driving Internet sales than they may appear.

But Mr. Gainer says 2006 is a much different selling environment online. Not only have high-speed Internet connections led to more aggressive online buying by mainstream customers, but search engines are considerably more effective in helping attract those customers than they were in 1999.

Mr. Gainer said the unit, which sold $160 million of products last year, did not make the decision lightly. His team tested various catalog mailing approaches in the last six months to analyze if it should keep the catalog operation running. But no matter the approach, online orders grew much faster than telephone sales, to the point that more than 80 percent of Disney Shopping's sales now come online. In fiscal 2005, Disney's consumer products division, which includes stores, product licensing, catalog and the Internet, sold nearly $21 billion globally.

By eliminating the catalog, Disney will save a substantial amount of money. In addition to closing a call center in Kansas earlier this month, Mr. Gainer said he had eliminated an undisclosed number of other staff positions. "We had some people with expertise in print, production and photography," he said. "Some have been restructured, some will be replaced with online-specific positions."

The $18 million that went into the catalog division will instead be used to buy search-engine advertisements, improve the company's e-mail marketing campaigns and develop a more extensive roster of third-party sites, known in industry parlance as affiliates, to help refer buyers to Disney.com.

Disney.com will see "consistent double-digit sales growth" as a result of this switch, Mr. Gainer predicted, compared with just 5 percent sales growth in 2005. "Our marketing will be much more efficient online than with print."

While that may be true, Disney is not getting much slack from the analyst community. "I think this is really short-sighted," said Donna L. Hoffman, professor of marketing at Vanderbilt University.

Ms. Hoffman said that customers who shopped using a particular retailer's stores, catalogs and Web site spent 15 percent more with that company than those who shopped through just one of those three components. "Disney's just leaving all of that on the table," she said.

Catalogers have struggled to maintain costs amid rising postage and printing costs in the past year, Ms. Hoffman said. "And people are definitely cutting back. They're printing fewer catalogs, with less pages and they're reducing their call center staff. But no one's saying 'Let's get rid of catalogs because they cost too much.' "

Ms. Hoffman also suggested that reversing course could be difficult. "It's really hard to get back the cataloging expertise they're throwing out. What if they decide it was a mistake, and need to get those back, which at some point if they're flush with cash they might do?"

Not a chance, said Mr. Gainer. The company plans two final catalog drops of a million pieces each, in March and April.

"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."

[Lou Mongello]

And the statements and aonclsuions in this are somewhat flawed... The catalog prompted us to place our orders online, not on the phone. (not that anyone at Disney is listening to me... or reading this thread......... or are they??)

[MommytoMJM]

that stinks

[disneydame2004]

I think it's a bad move on their part. The current DisneyShopping site is not the best for finding things. We always enjoy looking at the catalogs, then buying online. OK, so a few extra things usually find their way into the basket from looking at the deals on the website, but it was something in the catalog that got me on the site to begin with. Their catalogs were always some of the nicest ones we receive, and believe me we get a lot of catalogs!

They seem to be basing their argument on the drop in phone sales, equating that with people not using the catalog. That's a pretty big leap to say that just because people aren't calling people aren't using/don't want the catalogs. More likely, more people have internet access and are more comfortable placing orders that way, rather than waiting to get through and talk to a person on the phone. The coworker in the next cubicle (or your kids) can't hear you ordering online, but might hear a phone call.

We'll see how long it lasts.

[queenofhearts36]

Darn! I look forward to the catalog. I'll miss it.

[ToddBreakey]

Big mistake!!!

[Goofygirl]

Bad move for them since we always look for the sale items in the catalog and don't think to go online to see what's on sale. It's a great reminder to go to the site also. This just adds to the bad decisions made by them over the last year!

[SnwhtNdwrfs]

That won't work with my kids. They fight over the catalog and they don't hog the computer that way. I think it is a really bad idea.

[Kellie19891992]

Darn that is one of the view pieces of mail I actually enjoy getting

[iwannabeminnie]

Ditto. We look at the catalog and then order on line. I hardly ever buy something that I saw on line first.

[Shere_Khan]

I am dissappointed by this also.
Although I see where they are coming from. I never order over the phone, but I see what I want in the catalog and then get online.
I would not think to look online if I did not get the catalog. This really stinks!

[MayBWeRMnt2B]

I hate looking online because it takes forever for you to find something. Catalog, once you knwo where it is, you know what it is. It's also easier to just look through it to find things that oyu want. Ah well. Maybe they'll realize it's a mistake.

[mini-V]

Maybe writing you thoughts here isn't enough. Time to pull out pen and paper - you know you have some somewhere - and send them a note by the same method you wish they'd contact you - snail mail. Too bad they didn't put a poll in their order form as to WHERE you found the merchandise first - in the catalog or on-line.

[LoveBugsMommie]

I really don't want to be a wet noodle here, but do you think thier drop in sales may have something to do with Disney selling the Disney Stores to The Childrens Co.? I worked at The Disney Store for a few years starting back in 95. The quality was so much better then. Today when I go into a store it saddens me to see how much things have changed and not for the better.

[queenofhearts36]

I agree. But, at my local mall the Disney Store has been closed for a few weeks for "refurbishments" I've heard they're going to make it better. I'm crossing my fingers that they'll have a better selction, also, besides frames, travel mugs, and Peter Pan action figures.

I got a Disney catalog in the mail the other day, and became really sad that this might be one of the last ones.