A Warning to Catalog and E-commerce Entrepreurs

 

Many thanks to Bill Lapierre for this guest blog posting. Please see his contact information at the end of the article.

Do Two Know Less Than One? 

 

If you are a fan of the radio program CarTalk on NPR, you may have heard the famous “Andy” letter, a listener letter which the hosts of CarTalk consider the greatest letter ever written. The letter, from a listener named Andy, posed the question – “Do two people who don’t know what they are talking about, know more or less than one person who doesn’t know what he’s talking about?

 

I was reminded of this letter over the weekend when I read that as the economy starts to pick-up, more entrepreneurs are looking again at starting their own businesses. Prior to the recession, I’d get between 5 to 10 calls a year from people that had no prior catalog experience, that wanted to start a catalog. More important to not having prior catalog experience, they had no merchandise experience. They were starting from scratch, with just an idea on how they were going to make money.

 

There are still companies/entrepreneurs starting catalogs – Datamann has helped several start since the recession. But these companies have all been a manufacturer, wholesaler or retailer that had four key factors going for them: they had an existing business, existing supply chain, existing cash flow, and they knew the product line (merchandise).

 

I remember being in a local bookstore’s business section about 20 years ago, and there were four or five books on how to start a mail order company.  That same bookstore today has four or five books on how to start an online company. (There are never any books on how to become a plumber – which might be more practical.) Which brings me back to those entrepreneurs that have none of those four above mentioned factors for starting a catalog. Most of them are probably not thinking these days about starting a catalog anyway, but are building their new businesses on the web, and are probably expecting social media is going to pave the road to the bank. And all those books at the bookstore reinforce how easy it is to do.

 

The beauty to starting a business on-line is that you can pretty much do so below the radar, and not seek any help from anyone. With a catalog, you at least have to contact a printer.

 

 Which got me to thinking about a catalog version of the question posed in the Andy letter.  Posit the question: Do two people that have no catalog/on-line experience, but who are starting a catalog/website, know more or less, than one person in similar circumstances? Perhaps a better question to ask is why these entrepreneurs are willing to often risk their life savings on a high risk opportunity, without seeking any professional advice?

 

          Ah, the eternal optimism of the entrepreneur starting a catalog. They read a few books, attend a few seminars, walk the Atlanta or High Point shows, and they think – nay, believe – they are going to get a 25% response rate with their 24 page digest size catalog.

 

          No one ever wants to be told their baby is ugly. Likewise, no one who has ever been bitten by the catalog bug wants to hear that their idea is invalid. Common sense be damned, let’s just get the thing in the mail. However, with intense competition coming from the web as well as existing catalogs, it is downright disappointing how many new entrepreneurs try to do it on their own.

 

          This is not a plug for consulting, mine or anyone else’s. But most entrepreneurs have little appreciation for the advice that consultants can impart to their endeavor. They are more inclined to take advice from their barber or brother-in-law (who also knows nothing about catalogs or selling on-line) than from a consultant that actually has experience in the area.

 

          Back to the original question posed – in my opinion, two people are definitely more dangerous in this area than the solo entrepreneur. In my experience, the person going at this alone typically seeks help in as many places as they can. The solo entrepreneur will doubt his/her own ideas, and at least seek confirmation about their plans.

 

But watch out for the two or three person team of catalog/website entrepreneurs. Their collective lack of retail, on-line or catalog experience simply plays to each other’s weaknesses, building to a crescendo of ineffectiveness, benefiting their few vendors for just one job or one year (assuming they get paid at all). They not only ignore consultants advice, I have seen them do exactly what a consultant has warned them not to do (whatever the advice was), simply because they collectively believe they know they can prove everyone else wrong. Once in  a great while, it pays off. But, 9 times out of 10, they spend a fortune proving that the consultant’s advice was correct from the start.

 

So, if you are one of those entrepreneurs thinking of starting a catalog or website to sell “stuff” – seek some advice from the professionals in the industry that can help you avoid costly mistakes. As my grandfather used to say “If you want to double your money, take it out of your wallet, fold it over, and stick it back in”.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 802-295-6600 x235

blapierre@datamann.com