The Mail-Order Industry

After rapid growth in the 1980s, the mail-order industry has stagnated in the 1990s. However, this stagnation should be regarded as a pause that will be followed by further long-term growth. The mail-order industry combines the advantage for firms of being able to target their sales efforts to likely customers with the advantage for customers of being able to shop at home. Moreover, the industry is potentially well-positioned to take advantage of future developments in interactive home technology.

The mail-order industry is highly unconcentrated, consisting for the most part of small specialty firms; out of nearly twelve thousand firms issuing mail-order catalogues, most had revenue volumes of less than one million dollars annually. The 1994 Catalog Survey, published by Bruce, Dean and Co. (1995, p. 11) identified 11,973 firms, of which only 67 had known sales volumes of over 100 million dollars. Of these, only six had sales of over one billion dollars. At the other end of the scale, 1,227 firms reported volumes between $1.0 and $2.4 million. The vast majority of firms -- 9

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ve also contributed to the stagnation of the industry. Mail-order firms tend to engage in little strategic planning, often not looking past the next catalogue release. Thus, for example -- and in spite of the increase noted above in catalogue costs -- the overwhelming tendency of firms in the industry is to try to boost sales by increasing the page counts of their catalogues. Moreover, the industry has tended to show little imagination in the development of its most basic asset -- mailing-lists of potential customers. In the past few years, firms have depended overwhelmingly on the rental of other firms' lists as a source of new names. (Indeed, renting out their lists is an important source of income for many mail-order firms.) This tendency of firms to use one another's lists means that more and more catalogues are in effect chasing the same customers, who may begin to experience catalogue burnout. Consumer response rates to catalogues have in fact been declining since the mid-1980s ("Service Industries," n.d., p. 1013). This last consideration leads to a broader point: The stagnation of the 1990s may be seen as the natural consequence of the rapid growth of the 1980s. Especially given the tendency of firms to draw fro
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Approximate Word count = 4227
Approximate Pages = 17 (250 words per page)

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