Padopolis Wants to Move the Billion-Dollar Retail Catalog Business to the iPad
Instead of clogging up your mail and piling up uncontrollably on your coffee table, Padopolis wants to deliver the same content you’d find in a catalog in electronic form–starting with an iPad application.
Catalog Spree, which launched yesterday on the iPad, aggregates a number of catalogs in one place, similarly to a mall, where consumers can go to find multiple stores.
So far, the app includes catalogs from Dwell Studio, Serena & Lily, Tea Collection, Nordstrom, Filson and Artful Home. More will be added regularly.
On the surface, the application may sound like a bunch of pretty pictures, but Padopolis’ co-founder and CEO Joaquín Ruiz makes a big case for the idea, which investors were willing to bet on.
After 10 months of boot-strapping, the Menlo Park, Calif.-based company has raised $1.3 million in seed funding from El Dorado Ventures, Blackberry Partners Fund and Andrew Jenks, an angel investor. The company, which officially launched in November, didn’t know it was on to something until Christmas.
Ruiz said they started having discussions with retailers, who reported that anywhere from 2 percent to 10 percent of holiday purchases occurred on the device in the months leading up to Christmas. That’s up from zero the year before since the iPad didn’t exist.
Ruiz said the catalog industry makes a great target because unlike other print publications, such as newspapers and magazines, it’s on the rise.
Roughly 20 billion catalogs were mailed last year in the U.S., jumping from 18 billion two years ago. Those catalogs translate to more than $100 billion in annual revenues, he said, representing the single-largest revenue generator for retailers.
But despite their effectiveness, there’s two downsides: distribution costs–including paper and postage–and, of course, consumers who don’t want the clutter (Ruiz swears 65 percent of people who discontinue catalogs still want to shop from that store, they just don’t want the paper).
That’s where the iPad can make the difference on both sides of the equation.
“There are three ways to interact with the customer: brick and mortar, there’s the Internet and there’s the catalog,” he said. “An Internet-only shopper spends an average of $120 a year. If you buy in the store, you spend an average of $180. If you’re a catalog shopper, your average spend is $240. But if you shop on all three, it’s more than $1,000. There’s a fourth channel. Mobile is going to become a significant part of that fourth channel.”
When you first enter the app, you are greeted by “Sally Spree,” a cartoon-ish blond-haired woman in high heels with a big smile who is galloping across the screen, carrying four shopping bags. The image portrays how fun and easy the shopping experience can be (instead of fighting crowds at the mall in any kind of shoes–much less pumps).
Once inside the app, there are miniature pictures of several catalogs, much like iBooks, where Apple sells the latest bestsellers from a digital bookshelf.
A user touches a catalog to enter, where they will see a nearly identical layout of the real catalog with pictures and descriptions. The difference, however, is its interactivity. Users can tap on an item to receive more information or to buy it. They can search to discover new catalogs and subscribe to feeds or be alerted to promotions. A favorite item can be posted to your Facebook feed.
On the back end, the catalog is linked into the retailer’s e-commerce site, so it’s intelligent enough to know if an item is in stock. Likewise, if a friend clicks on an item from your Facebook page, it won’t take you to a broken link or an iPad app, but to the company’s regular Internet site.
The application is free to consumers to download and to browse. Padopolis plans to take a percentage of revenue from each sale it helps generates on behalf of the retailer.
For now, the company seems to be ahead of the curve.
A search in the iPad store reveals a competitor called Catalogs.com that has products from Home Depot, Petco, Speigel and others, but it has only received two stars. Its biggest competition likely is the retailers themselves that have the resources to create their own standalone applications. As of launch, a search reveals that none of its partners have taken that route.