Focus On: Merchandising: Show 'Em Your Wares

How can a $20 lace nightgown help fight cancer? What good can a candle shaped like a moccasin be to a child whose family can’t afford to send him to school?

These products, and thousands like them, appear in catalogs produced by nonprofit organizations to increase contributions and educate donors. The American Cancer Society sells the nightgown, along with accessories made with cancer patients in mind, in its “TLC” catalog; the shoe-shaped candle appears in the Southwest Indian Foundation’s tome. No matter what the cause, nonprofits that sell products, either through a catalog or on the Internet, must run their call centers and fulfillment operations efficiently and competitively in order to keep costs low and customer satisfaction high.

Focus on the product
Product is the single most important aspect of a profitable catalog business and is central to nonprofits using catalogs, retail stores and Internet sites. Increasing revenue per catalog is all about increasing the number of products, pages and page density.

“Product development is one of my major concentrations,” says Liz Grainer, executive director for retail marketing at The Art Institute of Chicago. “How products in the retail stores, catalog and on the Internet site relate to the institute’s collection and mission is a key to success. The institute in the past five years has moved from having 60 percent of the product being open-market vendor merchandise to 60 percent proprietary-developed product unique to the institute. The products relate to the institute’s collection, different cultures and exhibitions in progress.”

Exclusive and proprietary product differentiates product-selling nonprofits from other catalogs and retail stores and helps organizations achieve considerably higher gross margins. Hard-goods and gift catalogs need to have a gross demand of $2 per catalog mailed to make money. Apparel typically increases gross demand but suffers from high return and cancellation rates. Overall, apparel catalogs generally exceed $2 revenue per catalog.