Multichannel Merchant reports that catalog mailings for March 2008 were down 20% from the same month last year. They speculate that a depressed economy and increase in paper and delivery costs have contributed.
I think this leaves somewhat of an opening for e-commerce merchants to include mini-catalogs, highlighting their products, inside shipments. I've always been a big fan of this strategy as a great way to foster long term customers. Just make sure to give them a great buying experience so they pick up your catalog as their Sunday morning reading.
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