Catalogue trade in Ukraine with its population of many millions has a fine and bright future. Besides, there is no serious competition in this segment of the market so far. The only company of mail-order catalogue trade officially working in the Ukrainian market is Neckermann-Ukraine. The company has been working for only 1,5 years and has already felt an “exciting taste” of success.

Today, General Director of “Neckermann-Ukraine” Company Juriy Shurmelev is sharing their secrets and work experience already acquired in the Ukrainian market with us.

A little bit of history …

“Neckermann” is one of the most successful and dynamical enterprises of mail-order trade in Europe. The company has existed since 1950, its trade started with a 12-page catalogue containing 133 offers of fabrics. Together with continuous line extension of the main products and offers of fabrics “Neckermann” Company gradually increased its total product line with electrical goods and furniture during the following years. At the same time the company set up its branches in the Netherlands, Belgium, France, Scandinavia and other countries.

Today “Neckermann” Company develops and publishes about 52 million of catalogues per year.

Correspondent: How has the entrance to the Ukrainian market come up to the forecasts and expectations of “Neckermann” Company?

Juriy Shurmelev: I’d like to note, that “Neckermann” is an only company of mail-order catalogue trade which officially entered the Ukrainian market. “Neckermann” branch in Ukraine was founded in February, 2005. It was the first project of mail-order trade in Ukraine owing to which the trade under consignment contracts between post departments started working. Expectations of “Neckermann” concerning its entrance to the Ukrainian market were courageous enough and were undoubtedly based on work experience in other Eastern European countries. However, the practice has shown, that these expectations appeared to be too modest in comparison with success which has been achieved for 1,5 years of active work. During 2006 which was the first full year of work in the Ukrainian market “Neckermann-Ukraine” sent to Ukrainian consumers more than 425 thousand of parcels and about 2 million copies of catalogues and advertising-information materials.

Correspondent: What are the differences in working in the European market and in Ukraine?

Juriy Shurmelev: The difference between a Ukrainian and European consumer consists lies only in the fact that a western client can perfectly orient in the given type of trade. In Ukraine people are used to buy things in the shops where they can touch them and try them on, therefore they only start to understand what a distance trade is.
It stands to reason that when placing an order a person can get pleasant surprises (something more favorable or more convenient than he expected), as well as he can feel some disappointment (for example, wrong terms of delivery he expected or wrong size of clothes). Certainly, all these moments are settled in the system of trade. The customer has the right to return or to exchange the goods. However, it is necessary to work with a consumer, to inform and educate him, so that a person can understand how this mechanism works. If a consumer has already placed his orders, he is aware of all niceties, all pluses and minuses of distance trade, his awareness can be compared with awareness of his western colleague. It is fair to say that those people, who have once tried to buy “a pig in a poke” by the catalogue and felt happy enough with this purchase, not only have become regular customers, but also recommended it to their relatives and friends.

It is worth noting that a specific range of goods has been developed for Ukraine, as well as the sales system and marketing strategy have been developed too.

It is an interesting fact. Development of this type of trade is directly connected with improvement of living standards of the population. For example, in the USA 33% of consumers buy the goods by mail-order. An average American family receives about 50 similar editions per year. On the whole, in the West sale of the goods by catalogues makes up a quarter of all retail commodity circulation and gives 10% - 15% of additional income to the trading companies.

There are some moments which complicate our type of activity namely in Ukraine. First, as I have already mentioned, we work on the basis of consignment contracts between post departments. Under these contracts all goods in mailing pieces to a certain amount of money can be sent to Ukraine on attractive terms, it allows us to make a good price offer, however it limits the sum of the order. The sum of delivery to one physical person with cash payment on delivery is limited by 150 euros per month. Thus, the client can receive the order in several parcels during several months. Naturally, it is not convenient.

Geographical factor is also important. In fact all goods are gathered in European warehouses, then packed in parcels and delivered to the Ukrainian postal service. Then they are customs cleared and “Ukrpochta” sends these goods further on to regions. All these actions demand a certain period of time. As a result the terms of order delivery are surely incomparable with those of West-European countries.

Correspondent: What post departments do you work with in Ukraine? How can you characterize their work?

Juriy Shurmelev: The main partner of “Neckermann-Ukraine” Company is Post State Operator “Ukrpochta”, being a state enterprise it renders commercial services under consignment contracts. In comparison with post departments of other post-Soviet countries “Ukrpochta” deserves a compliment: all parcels reach a consumer and cash on delivery reaches the sender in acceptable time limits, and this is very important.

Correspondent: What DM tools do you use in your work? Which are most effective? How are databases created?

Juriy Shurmelev: Naturally, our style of work as distance traders assumes the use of DM tools most of all. It is necessary to remember, that we have enter the Ukrainian market not far ago and now we are at an initial stage, therefore our today task is to maximally inform a potential client the information about such service as the order by catalogues.

Therefore we will use all possible promotion tools such as image advertising, distribution of booklets and direct marketing (in particular, direct mail). The major part of advertising is in specialized magazines, first of all in female magazines, and as of today it is still an optimum variant concerning price-result and price-quality relationships.

As to dispatches (direct mail) we practice no-address and address dispatch to physical and legal bodies, both by means of “ukrpochta” and by means of express delivery services which work in different cities. We test every possible variants of dispatches offered in the Ukrainian DM companies. I would like to note, that we do not buy and we do not rent address bases, as we work with our own address base created by us.
Our company is planning the Internet-trade as our strategic direction.

An extended range of goods from all our catalogues is presented on our web-site. Both catalogues and goods can be ordered online.

In Western Europe the Internet-trade is highly developed and demanded. I should admit, when we began our activity in Ukraine, I was a little bit skeptical about the expected efficiency of the Internet-shop. Fortunately, a very short time period has shown that opportunities of the Ukrainian Internet are obviously underestimated. “Neckermann-Ukraine” receives about 15% of all orders through this channel.

Correspondent: Are you planning to carry out DM projects in future?
Juriy Shurmelev: Sure. I think, it is impossible to pay no attention to it. But at present I think we have not taken full advantage and used all potential of mass advertising so far, postal and electronic dispatches are still rather effective. We are experimenting with small DM projects nowadays and we haven’t held large-scale national DM campaigns yet. 

 I’d like to underline that “Nekermann-Ukraine” Company has no particular image advertising. If we speak about advertising in female or other specialized editions, then, as a rule, it works for image (“Neckermann” brand is available) and it works for information distribution, i.e. the coupon of the catalogue order. Our clients’ database consists of “conscious” customers of the catalogue only.

If a client wants to have a catalogue, he can order it in several ways: to phone the call-center (all orders are processed by the call-center operators – more than 50 operators), to fill in the coupon of the order and send it by mail or by fax, or by means of our Internet-site. More profound work is conducted with a client who has already received the catalogue and placed an order. Actually, this is the analysis of databases as a result of which the clients receive a new information material every 3-4 weeks (a catalogue or a specialized offer).

Our short-range plans are to lay emphasis on the Internet-advertising (contextual, banner, electronic dispatches, teasers). In November-December we conducted the test and analyzed efficiency of various channels and types of advertising. Now the matter depends on the implementation of business projects based on this experience.

Olga Nedogibchenko
exclusively for dmdays.com.ua

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