235 E. Van Buren, Phoenix, AZ 85004
(480)555-4653
azhikingventure.com
To: AZ Hiking Venture corporate headquarters
From: Rohan Shetty
Date: March 7, 2008
Subject: Proposal for changing catalog delivery
Summary
With the news about the frequent shopper program getting around, we have seen an
increase in the frequent shopper membership. This increase in membership has a
particular problem which has caught my eye: hard copy catalogs. We have been sending
hard copy catalogs to the members of the frequent shopper program. While in the past
this has been the only solution, now we just can’t bear with the numerous shortcomings
with the hard copy catalog. The hard copy is wasting resources, quickly becomes
outdated, and is not user-friendly.
The solution that I, manager of the Phoenix division, propose is to make the catalog
electronic and accessible through the internet. The electronic catalog will be a web site
based catalog that members of the frequent shopper club can use. By the use of their
membership code, members will be able browse through the store’s merchandise online.
The website will also be updated weekly by the store managers. There are multiple
benefits with the frequent shopper program. The electronic catalog is economical, userfriendly, and contains updated information.
I have done extensive research and found other stores that switched from hard copy to
electronic catalogs really enjoy the benefits. Web Designers Inc. is the company that the
job will be given to. Web Designers Inc. can have the web sited functional in four weeks.
Web Designers Inc. estimates the cost of setting up the website to be $125,000.
Problems
The hard copy catalog has a few advantages, but overall it has too many shortcomings. In
the past hard copy catalogs seemed like the only way to market the store’s products, but
after researching some of the alternatives I have found that the hard copy catalog has 3
major flaws.
1. Wasted Resources
Every year we mail out 10,000 copies of our catalog to members of the frequent
shopper program. In doing my research I found one third of the members discard
the catalog immediately because they confuse it with junk mail. Of the two thirds
that keep the catalog, only half ever refer to it when they want product
information, so theoretically speaking only 1,650 of the hard copies ever get used.
After doing the research my view on hard copies is that they are a waste of
paper, ink, money, and time.
2. Outdated Information
The second major flaw with the hard copy catalog is that the product information
often times gets outdated fairly quickly. With our store being as large as it is,
inventory levels are constantly changing. I get emails regularly from customers
inquiring about products. Often times the emails are to check whether a product is
still in stock. Another thing that gets outdated is customer information. A lot of
members forget to inform us after they move.
3. User-Unfriendly
The last major flaw with the hard copy catalog is that customers have a hard time
finding products they are looking for. The catalog has a lot of information about
products, and often times customers find it confusing. The table of contents is the
only tool we provide for the customers to navigate through the confusing catalog.
Another email I often receive is from customers who are lost looking for a
product in the catalog.
Solution
The solution I propose is to make the catalog electronic and accessible through the
internet. The web based catalog would be a simple website used by the members of the
frequent shopper club. Members can access the catalog through their frequent shopper
code. There are many benefits to the electronic catalog, and below I have stated the major
ones.
1. Economical
The electronic catalogs most important feature is that it does not waste resources.
We do not have to print anything; the only things we have to do are setup up the
website and update it regularly. Also being nature enthusiasts, we can help
conserve the planet’s resources by not wasting paper on unnecessary hard copy
catalogs.
2. Updated Information
The electronic catalog also has another feature that I think customers will really
appreciate, the inventory information is updated quarterly. I think this is going to
boost our sales and also make it a more enjoyable experience for our customers to
shop with us.
3. Search Engine
Another benefit with the website is that there will be a powerful search engine
that displays accurate information. Right now the website is modeled to have a
search bar where members can type in product specifics and be able to compare
prices and quality.
The only disadvantage with having an online catalog is that it projects a less personal
feeling. I think this will not be a big problem because catalog users are frequent shoppers
and are familiar with our store and our employees.
Setup
With this project being fairly big, I have planned on getting outside help to set this
website up. I have been doing research for website agencies, and the best one I found is
Web Designers Inc. Web Designers Inc. has a strong resume and has handled big
companies before. Web Designers Inc. can also have the website fully functional in four
weeks.
The cost for the website is going to be $125,000 for initial set-up with $10,000 for
quarterly updates. This is higher than the figure we currently are being charged, $90,000
for the hard copy catalogs; however, prices with the electronic catalog will remain
constant while hard copy prices tend to rise due to mailing costs. As you can see in the
table below, after two short years we start saving money, and after 10 years we save
$375,000.
Year
Hard Copy
Electronic
Total Profit
1
$90,000
$165,000
-$75,000
2
$180,000
$205,000
-$25,000
3
$270,000
$245,000
$25,000
4
$360,000
$285,000
$75,000
5
$450,000
$325,000
$125,000
6
$540,000
$365,000
$175,000
7
$630,000
$405,000
$225,000
8
$720,000
$445,000
$275,000
9
$810,000
$485,000
$325,000
10
$900,000
$525,000
$375,000
Conclusion
Electronic catalogs are starting to become the trend for the future, and being the manager
of the Phoenix division I think now is the best time for us to join. After changing to an
electronic catalog we will save more resources, have happier customers, and also boost
sales.
Rohan Shetty