MTAC Meeting

November, 2008

MailOrder Gardening Association

Presented by: Camille Cimino, MGA Executive Director

Ken Lane, Chair, MGA Freight Committee

Wednesday

November 19, 2008

2MAILORDER GARDENING ASSOCIATION

Foreword

In this presentation we will:

The MGA – Who we are

What we do…Our Mission

Our Members…Why we love Direct Mail

Our Metrics

Review recent Outbound Shipping survey results

How to contact us…

3MAILORDER GARDENING ASSOCIATION

“What’s an MGA member to do in Order to Exist 20 Years From Now?”

Who we are and What we do…

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MTAC & the MGA

Who we are…

The Mailorder Gardening Association is a member organization for companies who sell gardening products to the consumer via paper catalogs as well as the internet.

We also represent the grower/wholesale segment of the industry

The 3rd Membership Category is our Allied Membership. This segment is represented by any company that provides a service to the cataloger or wholesaler – such as printing companies, gardening magazines, list management companies, PR consultants, shipping companies, etc.

We are celebrating our 75th Anniversary in 2009. Our headquarter Office is in Elkridge, Maryland. Camille Cimino has been the Executive Director since 1987. There are presently around 200 member companies with the majority being catalogers.

6MAILORDER GARDENING ASSOCIATION

MTAC & the MGA

Some of our member companies…

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MTAC & the MGA

What we do…Our Mission

“To Make Mail Order Gardening businesses the most successful they can be.” This is accomplished by:

Promoting its members and the MGA brand

Educating and representing its members

Protecting the integrity of its members

The MGA sponsors 2 conferences annually which provides a forum for networking, education and making new contacts. Convention brochures as well as Membership Literature, has been distributed to everyone here today.

The Association’s website is www.mailordergardening.com. The site serves a dual purpose:

For Consumers – it is a resource for locating garden catalog companies as well as Hardiness Zone information. There are smart tips for consumers on how to purchase mail order garden products and what to look for and do once you receive them.

There is a Member’s Only Section that contains the results of past recent survey results, as well as demographic information on each member company and much more.

8MAILORDER GARDENING ASSOCIATION

** MGA external research. Estimate based on participation rate and mailer provided volumes.

MTAC & the MGA

What we do…we mail Packages!!!

Average MGA company mails is 60,000 packages annually**

Extrapolating this across the membership base provides a range of 1.9mm to 4.0 mm total MGA packages.**

5%

20%

17%

7%

20%

17%

7% 7%

0%

5%

10%

15%

20%

25%

< 1000 1000 -5000

5001 -10,000

10,001 -25,000

25,001 -50,000

50,001 -100,000

100,001 -250,000

> 250,000

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MTAC & the MGA

What we do…Green Thumb Awards

In addition the Education, we also help promote our member companies. In January 1998, we launched the Green Thumb Awards in order to recognize outstanding new garden products available through paper catalog and the Internet.

Winners, chosen by an independent panel of garden writers and editors, are selected based on their unique qualities, technological innovation, ability to solve a gardening problem or provide a gardening opportunity, and their potential appeal to gardeners.

The award winning companies and their products are featured in news releases and the MGA website. Companies may use the Green Thumb logo in recognition of their receiving the Award. Gardening Magazines and local Newspapers are willing to print articles on these products and their companies.

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MTAC & the MGA

Why do we love Direct Mail…it Works!!!

"I received my favorite gardening catalogs the day before we got two feet of snow. The gardening Gods were watching over me!”

“I just received my order today, just as your e-mails stated it would. I'm very happy, not only with the service I relieved from you, but with the USPS person who knew to put it where it would be kept dry. I know this my be a small thing, but in today's world, when someone gives this kind of service, we, the customer, really appreciate it."

“Hi! I just wanted to tell you I received my catalog today and it is gorgeous!!!!!! The colors remind me of last spring and have me pining for another season in the garden.”

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MTAC & the MGA

Did you know…Our Metrics

Source: MailOrder Gardening Association, Zed Marketing

MGA Member Companies “Jump” in 2008 – MGA Member First Generated $743 Million+ in Annual Sales during the 12 month period (Nov. 2007 – Oct. 2008)

Direct Mail and Internet Sales – promotions of seeds, bulbs, nursery stock, gardening aids and outdoor power equipment.

                                     Number of Sales                    Gross Sales                Avg. Order

 

          *2006                6,015,637                              $385,121,074                   $64.02

 

            2008                6,840,496                              $461,801,880                   $67.51       

 

            Variance          824,859                              $ 76,680,806                   

                                        13.7%                                           19.9%

* January – December 2006

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MTAC & the MGA

Did you know…Our Metrics

Source: MailOrder Gardening Association, Zed Marketing

 Publications – magazine subscriptions and book buyers

 

                       Number of Sales                    Gross Sales                Avg. Order

 

*2006               12,903,276                             $241,420,296                   $18.71

 

2008                13,284,125                             $281,431,110                  $21.26

 

Variance         380,849                              $40,010,814

                           8.2%                                           22.9%

* January – December 2006

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MTAC & the MGA

MTAC Communication with our members…

Three MGA Representatives on MTAC

Camille Cimino – Mailorder Gardening Association

Andy Lagendyk – K. Van Bourgondien & Sons

Ken Lane – Hathaway & Lane Direct

MTAC Workgroup 119 representation

MTAC updates at two MGA conferences annually as well as email updates during the year.

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MTAC & the MGA

What’s important to our members…

Costs…

Printing, paper and postage

Outbound Freight expenses

People costs…

Commissioned Market Research to quantify the MGA in total

Results on the next slides

Survey

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Details

21 Wholesale and 110 Regular Member companies were sent survey via email – 58 responses

Web-based to protect anonymity

Three email blasts for survey submission

•June 4, 2007 – All members

•June 26, 2007 - Reminder

•July 17, 2007 – Post Summer Conference Last Chance Reminder

Forty-two questions measuring…

•Type of business

•Usage

•Packaging/Product specs

MGA Outbound Freight Survey

Source: Hathaway & Lane Direct

Section 1: Who are you and what do you ship

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Responses

21 Wholesale and 110 Regular Member companies were emailed the survey

•131 total companies surveyed

• 58 responses (2 via paper response)

• Greater than 40% participation (!!!)

Audience…

MGA Outbound Freight Survey

BusinessCataloguer 34Wholesaler 1

Both 21Neither 2

Total 58

Decision Maker?Yes 85%No 15%

• …Survey spoke to the right people at the right companies.

Source: Hathaway & Lane Direct

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Survey Questions – Business Channel

Most respondents are Cataloguers or run Catalogue/Wholesale operations

What best describes your Business Channel?

34

1

21

2

0

5

10

15

20

25

30

35

40

Cataloguer Wholesaler Both Neither

# o

f R

es

po

nd

nts

Source: Hathaway & Lane Direct

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Survey Questions – Business Channel

This translates to 95% are in the sweet spot of shipper targets…

5%

95%

Businesses Residences

…and 95% are shipping residences. Again, no surprises..

Cataloguer59%

Wholesaler2%

Both36%

Neither3%

Source: Hathaway & Lane Direct

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Survey Questions – What do you sell ANY of?

There is a diverse mix of what products are shipped…

1

912

1 1 2 1

27

3

16

10

63

1

0

5

10

15

20

25

30

birdh

ouse

s, gif

ts

Books

Bulbs

Cut Flower

s

Food i

tem

s

Gift P

lants

Greenh

ouse

kits

Hard

goods

Irrigat

ion Equ

ipment

Plant

mater

ial

Seeds

Shrubs

Trees

veget

able

plants

Source: Hathaway & Lane Direct

Section 2: Shipping Specs – Volumes, etc

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Survey Questions – What do ship in?

Over 80% of respondents are shipping to their customers in BOXES.

1

48

53

1

0

10

20

30

40

50

60

Bags Boxes Bubble Mailers Envelopes Other

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Survey Questions – If BOXES, what SIZE?

Almost 70% of respondents ship in boxes not subject to shipper dimensional weight surcharges.

13

19

9

5

1

0

2

4

6

8

10

12

14

16

18

20

Small (less than10x10x10)

Medium (about10x20x15)

Large (about15x36x20)

XL (greater thanlarge)

Don't know

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Survey Questions – The average weight of a package shipped is:

The predominance of Gardening Hard Goods drives 71% of survey respondent packages above 5 pounds.

Weighted average is: 11.1 pounds per package

5%

24%

35%

24%

12%

Less than 1.0 lbs 1-5 lbs 5-10 lbs 10-25 lbs >25 lbs

Source: Hathaway & Lane Direct

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Survey Questions – The amount of packages shipped in 2006 was:

Annual package volumes by respondent vary greatly.

Average per respondent is 60,000

Extrapolating this across the membership base provides a range of 1.9mm to 4.0 mm total MGA packages.**

5%

20%

17%

7%

20%

17%

7% 7%

0%

5%

10%

15%

20%

25%

< 1000 1000 -5000

5001 -10,000

10,001 -25,000

25,001 -50,000

50,001 -100,000

100,001 -250,000

> 250,000

** Estimate based on participation rate and mailer provided volumes.

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Survey Questions – The Month most packages shipped in is:

Overall, respondents are Spring shippers…

• …converse to most mailers Q4/Q5 shipping curves

0% 0%

34%

28%

18%

6%4% 4%

2% 2%0%

2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Section 5: Current Outbound Freight Providers

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Survey Questions – Who do you currently ship most with?

UPS is clearly the current shipper of choice

FedEx growing from prior levels

USPS has opportunity for growth

50%

7%

13%17%

3% 3%7%

0%

10%

20%

30%

40%

50%

60%

UPS USPSPriority Mail

USPS Other FedEx DHL CommonCarrier

Other

UPS USPS Priority Mail USPS Other FedEx DHL Common Carrier Other

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Survey Questions

Do you pay a residential surcharge?

My guess is the IDK =Yes

“Yes” estimate is 93%.

81%

7%

12%

Yes No I don't know

Source: Hathaway & Lane Direct

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Survey Questions

Do you pay a fuel surcharge?

Assume Sometimes/IDK =Yes

“Yes” estimate is 90%.

There is an opportunity to negotiate these on behalf of MGA members.

Yes69%

No10%

Sometimes/IDK21%

Source: Hathaway & Lane Direct

Section 4: Impact on Business Strategy

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Survey Questions

Let’s face it…rates will continue to go up and members will be forced to do things that are not good for their business

This clearly underscores how critical this issue is!

What would you do if your Outbound Freight Expenses increased by 5%-10% next year?

33% 33%

5% 5%8%

15%

0%

5%

10%

15%

20%

25%

30%

35%

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MTAC & the MGA

How to Contact us…

MGA Office: 5836 Rockburn Woods Way, Elkridge, MD 21075

410-540-9830 FAX 410-540-9827 www.mailordergardening.com

Thank You…

PO Box 1003 – Litchfield, CT 06759 – (860) 567-5275

www.hathawayandlane.com

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