APPLE EXTENDS CD-ROM TEST CONTINUES WITH ELECTRONIC CATALOGS DESPITE LUKEWARM RESULTS

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Apple Computer plans at least two more tests of its En Passant CD-ROM catalog before yearend, despite mixed feelings from participating marketers.

"We're going well beyond another pilot," said Steve Franzese, Apple director of business development, new media division. He said Apple would use demographic data gleaned from the first test, ended Jan. 31, to market the disc to other catalogers.

Twenty catalogers participated in that two-month test, including Williams-Sonoma, L.L. Bean, Neiman Marcus and Lands' End. Apple worked with Electronic Data Systems and Redgate Communications Corp., Vero Beach, Fla., on the project, which cost an estimated $1.5 million.

Viewers could browse, change colors of garments and listen to audio product descriptions. Order calls were made to a central 800-number, and then transferred to specific catalogers.

But convincing catalogers to re-up may be difficult. Although they declined to provide specific figures, several catalogers said sales were disappointing and expressed dissatisfaction with the percentage of sales they had to pay Apple to participate in the test.

Right Start Catalog, which markets baby products, made "quite a few sales," but President Stan Fridstein said he's still considering whether to participate in future editions.

"We will obviously have to be convinced that we can at least finance the costs through the sales on the program," Mr. Fridstein said.

Other catalogers expressed similar concerns.

"While we would not judge Tiffany's participation in the CD-ROM program successful from a sales standpoint, we did learn much useful information from it, especially in the area of creative development," Diana Lyne, senior VP-marketing and advertising at Tiffany & Co., wrote in response to a reporter's query. "Overall, using CD-ROM technology as a vehicle continues to interest Tiffany & Co., particularly for our corporate division's gifts program."

As its first entry into new media, cataloger L.L. Bean did not intend for En Passant to drive sales, said Dale Moore, director of new-media technologies. The hope was to "get on the learning curve and get something tangible to explore," he said.

"We didn't get into it for orders, and we knew that was inappropriate and unlikely," he said.

Neiman Marcus isn't sure it will return to En Passant, said Jessica Weiland, VP-marketing with Neiman Marcus' NM Direct unit.

Characterizing her reaction as "very pleased" with the interaction and "relatively pleased" with the order volume, she said the company, which has never before participated in an interactive medium, viewed the program as an educational experience. In that regard, she said, it worked.

Apple is reviewing payment options to see whether upfront or back-end payments better suit the vendors involved, Mr. Franzese said. Apple is looking at "a blended model, even a sliding scale," that will give catalogers a choice.

"The payment structure requires a fresh way of looking at the business for many of the players involved," he said.

Mr. Franzese refused to release specific data, other than to say the CD- ROM broadened the catalog viewer base, increased browsing and provided a longer shelf-life than print catalogs. Some 1.7 viewers per household used the disc, and the average viewer watched it three times for an average of 15 to 20 minutes each time, he said.

As he prepares for En Passant's next run, Mr. Franzese said the company already has tracked shoppers by gender and age and "can now go with a media kit to a potential catalog company and say, `Here's how this age group and gender class will respond."'

Apple wants to broaden its category offerings, though Mr. Franzese wouldn't say which catalogs would be targeted. He hopes to convince them that the venue should be considered an "ongoing channel of investment for the catalogers," he said. "That's something we need to break new ground on."

But Right Start Catalog's Mr. Fridstein complained that En Passant targeted only 30,000 of the 7 million U.S. CD-ROM disc drive owners.

"The question is are we marketing [to] CD-ROM owners or are we marketing [to] people who are catalog shoppers who happen to have a CD-ROM?" he said. "The opportunity is to convert people into the catalog industry who otherwise might not be there."

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