Lillian Vernon: A Catalog Business in the Age of the Internet

(Editor’s
Note: This interview with Ms. Lillian Vernon was first published on
June 17, 2003. In 2003, she sold the Lillian Vernon Corporation).


“The best way to predict your future is to create it.” This quote
from an unknown author best exemplifies Lillian Vernon, the remarkable
founder of a mail order catalog business that bears her name.


Lillian Vernon started her multi-million dollar business in 1951 on
her kitchen table and pregnant with her first child. Since then, the
home business she founded has become the leading catalog and online
retailer of gift, house wares, gardening, seasonal, and children’s
products.


Lillian was not the typical woman of her era. At the time when women
were expected to stay home to raise families, she defied conventions by
launching a successful business. She started her mail order business in
her small apartment with $2,000 of wedding gift money. She bought a
supply of purses and belts and placed a $495 ad in “Seventeen Magazine”,
offering a unique service – personalization with her customers’
initials free of charge. The ad brought in a whopping $32,000 in orders
and it was only the beginning.


That was 52 years ago.


Today, the business landscape has changed. Competition in the mail
order industry has intensified. The advent of the Internet has given
consumers another medium of choice for shopping.


Amidst all these changes, Lillian Vernon remains at the top of her
game. Her company now has eight different mail order catalogs,
presenting toys and children products, gifts, houseware and garden,
personal and home accessories, outdoor products, and others. Her company
has likewise opened 14 Lillian Vernon Outlet Stores in the Eastern U.S.
offering products from the catalogs at discounted prices.


Lillian Vernon has successfully steered her company to embrace the
Web. A woman who has always been ahead of her times, her company first
offered its products on the Internet in 1995. In 2002, the company
launched a completely redesigned e-commerce site www.lillianvernon.com
that provide users with greater functionality, ease of use, and
sophisticated merchandising capabilities. Today, Internet orders
comprise about 21 percent of total orders – and growing.


PowerHomeBiz.com interviewed Ms. Lillian Vernon on the strategies her
company employed in making a successful transition to a catalog and
Internet retailer, as well as the future of the company she has built.

What is your strategic positioning in the mail order and catalog industry?

We are a multi-channel retailer known to 39 million Americans.
Because we’ve been in business for 52 years, Lillian Vernon is
considered a pioneer in the catalog industry and has become a household
name. What sets us apart from other catalogs is our trademark- free
personalization, a service I offered when I launched my company in 1951.
We are leveraging our strong brand to attract new customers through new
initiatives such as licensing, advertising and e-mail marketing.


The company began in the 1950’s. How did your company cope with the
changing face of business of the 21st century? What changes did you
implement to keep the company at the forefront of your industry?


We realized early on that the Internet would be a popular way to shop
so we became one of the first catalogs in the country to introduce a
Web site in 1995. Since then, we have invested in a state-of-the-art
site that features all of our 6,000 products. The Internet now comprises
24 percent of our business and we are continuing our efforts to shift
more of our catalog business online with new marketing and advertising
initiatives.

What sets the company apart from the competition?

What sets us apart from the 10,000 plus catalog titles that compete
with us in the marketplace is the fact that we are one of the most
well-known and well-respected companies in the direct marketing industry
and we have an established 52-year history. We created a niche by
offering free personalization and there are very few retailers that
offer this today.

What will you need to be a major competitor in the mail order and catalog industry?

We must continue to offer our customers unique and value-priced
products they can’t easily find in other catalogs or stores so they have
an incentive to shop with us. We need to reach out to a new demographic
and generation of catalog shoppers.

You have built your business successfully in mail order and now on
the Web. What strategies did your company adopt to ensure the smooth
transition to the Web?

While we were one of the first catalogs to have a presence on the Web
we invested cautiously unlike many dot-coms that failed. We wanted to
be sure to avoid committing too much capital and staff before the
Internet market had matured and proved itself. Our transition online was
smoother than other retailers because we had the existing fulfillment
infrastructure in place and the ability to provide good customer
service.

How did the Internet affect your mail order business? Do you see a
shift from one to the other? Or are the two mediums complementary?

The Internet changed our business in many ways. Because of the
vastness of its reach, the Internet has helped us gain a new demographic
of Lillian Vernon customers who are better educated, more affluent and
younger. Shifting our business to the Internet has helped us save money
because processing an order online is cheaper than the mail or phone.
Our catalogs complement our Web site by advertising the site and helping
to drive traffic to it.

What changes did you undertake in the company to incorporate the e-commerce strategy?

Since the Internet is the fastest growing segment of our
multi-channel business we invested in new technology to create a
technologically enhanced and optimal shopping experience for our online
customers. We feature all of the same products on the Internet as we do
in our catalogs but we had to adjust our inventory projections to factor
in online orders. We have a specially trained group of customer service
representatives in our Call Center to handle the flow of online orders
and e-mails from customers.

How do you differentiate selling on the Web and selling through mail order?

Selling on the Web is a more targeted and efficient experience since
search engines can help locate specific products by price, gender and
age whereas catalog shopping is great for browsing. Upselling and
cross-selling are easier transactions to make online and less tedious
for the customer than having a representative of the company sell you
over the phone.

What are the key principles of Lillian Vernon Corporation? How do they differ from Lillian Vernon the woman?

Our philosophy is “helping customers live better for less” and I live
by these same principles. My home contains many Lillian Vernon products
because I don’t believe in selling products that I don’t use or would
not give as a gift.

You have built your company from scratch. What do you think are the reasons for your success?

I became successful due to several reasons. I never gave up and I
never let anyone or anything get in my way. I use the power of positive
thinking to tackle obstacles and challenges so they don’t defeat me.
Passion for my work and my business is another important reason. I
really love my work and I get great satisfaction from it.

What would you have done differently? Can you give examples of business missteps you’ve made and lessons you learned from them?

In the 1970’s, Lillian Vernon was growing rapidly and we didn’t have
the right technology or enough staff in place to keep up with the large
volume of orders coming in for the Christmas season, our busiest time of
year. We faced a crisis of growing too fast. Inventory was building
rapidly and we could not ship orders on time. I needed a quick infusion
of cash to buy more equipment and hire more help and under no
circumstance was I going to declare bankruptcy as some had advised me to
do. I acted immediately and asked for a bank loan which I received and
paid back months before the due date. In the process, I learned a
valuable lesson from this near catastrophe – a company must keep pace
with technology in order to compete and be a successful business plus
too much business can be as problematic as too little.

In today’s economic environment, what do you see as the key challenges for small businesses?

The competition is steep in the retail industry for the consumer
dollar and customer loyalty is becoming less common. To start a
successful business, you must have a unique product or service that the
competition doesn’t offer. You should also have enough capital reserved
to sustain you through the first few years in business when your
emphasis is on building your brand and a customer base.

What advice can you give a small business entrepreneur in general
and women entrepreneurs in particular starting out a business today?

I would advise those starting out to carefully research your niche
and know your competition and the marketplace before you start a small
business.

Any suggestions to someone who wants to enter and succeed in the mail order business today?

Don’t try to be all things to all people. Concentrate on selling
something unique that you know there is a need for, offer competitive
pricing and good customer service.