Submitted by Nick Colas of DataTrek Research
The history of US consumerism starts with the Sears Roebuck mail order catalog. Yes, the very same Sears that is struggling to emerge from bankruptcy today. But 125 years ago the company was every bit the disruptive innovator. A brief summary of how that happened:
- Mail order became viable in the late 1800s because of the expansion of the US rail system, post office regulations that allowed for catalog mailers at 1 cent/pound, and Rural Free Delivery.
- The first Sears catalog was published in 1894 with the slogan “The Cheapest Supply House on Earth”.
- Its target audience was rural America, which in 1900 was 60% of the US population. This was a deeply underserved community, often with just a thinly stocked general store to supply all their needs.
- The 1903 catalog added the commitment of “Your money back if you are not satisfied”, reassuring customers that buying a product sight-unseen was a viable way to shop.
We recently bought a 1920 Sears catalog from an eBay seller. Printed in late 1919, it is a fascinating snapshot of American life 100 years ago. And, at 1,493 pages, it is a remarkably wide-angle view of that image.
In studying this early bible of the American consumer, three points struck us as particularly salient when comparing 1920 to 2019:
#1: The comparison to Amazon.
- Our catalog was published 25 years after Sears began its mail order business; Amazon is 25 years old today.
- The scope of the Sears offering in 1920 was every bit as vast as Amazon’s is today. The company offered everything from men’s/women’s/children’s clothing to furniture, appliances, jewelry, home entertainment, toys, and even entire houses and farm buildings.
- Sear’s merchandising method was exactly the same as what you see on Amazon’s website. Every item for sale had a picture, description, and price. The catalog is organized by the type of product offered for sale, something akin to “If you like this item, you might also like this…”
- One key difference: Sears offered credit on expensive items. If, for example, you wanted to buy a “New Freedom” coal/wood stove, you could pay $86.50 ($1,100 today) or make a first payment of $10 and then $7.50/month thereafter until you had paid $95.50. That’s a 7.1% annualized interest rate, in case you were wondering. Amazon, of course, takes credit cards.
Conclusion: Sears was actually a more ambitious business model than Amazon when it started. On day one, it was already selling a wide array of products – not just books. In terms of consumer offerings, Amazon now is right where Sears was in 1920. Yes, there are more SKUs on the website, but in terms of what people needed in 1920 the Sears catalog is remarkably complete.
#2: Early stage technology.
- The new technologies in 1920 were electric-powered appliances and phonograph players. Radio was still some years off – the only items in the 1920 catalog were Morse code transceivers.
- A 110-volt vacuum cleaner retailed for $57.50 – $68.00 ($740 – $870 today). For reference, a top-rated vacuum on Amazon goes for $70 today.
- A hand-crank record player went for $30 (basic tabletop) to $225 (solid wood standup), or $385 – $2,900 today. A Bluetooth speaker today goes for about $20.
- A basic bicycle sold for $53, or $680 in today’s dollars.
Our takeaway: the big difference between 1920s technology and today is how quickly prices come down as demand rises. Part of that is related to infrastructure; for example, in 1920 only 35% of American homes had electricity but by 1929 68% were wired for power. That, plus the disruption created by World War II, explains why vacuum cleaners remained expensive and adoption rates remained below 50% until the late 1940s. The rest, of course, is globalization, both in terms of supply and demand.
#3: A big idea can go a long way.
- Our 1920 catalog is a relatively early manifestation of a business that continued to prosper and grow for another +50 years. In 1974, at the height of its powers, Sears built the tallest building in the world in Chicago to house its home office.
- The company started opening retail stores in the 1920s, predominantly in urban areas to augment its rural business, and eventually had thousands of retail locations. It built its own brands like Craftsman tools, Kenmore appliances and DieHard automotive batteries.
- In 1931 Sears created Allstate Insurance and by 1934 it had agents in every store. In 1981 it added broker Dean Witter and real estate company Coldwell Banker. In 1985 it created the Discover credit card. It was even an early Internet adopter, developing the Prodigy system with IBM.
The lesson here: even if Sears is now a tiny shadow of its former self, it pays to remember this company had an almost 100 year run of success. It survived and prospered through 2 world wars and the Great Depression, living long enough to benefit from the post World War II boom. All from one big idea: a mail order catalog.
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When younger, my 93 year old gramma explained to me that the catalogue also had another very important purpose sitting in the farmer’s outhouse…
A lot of people in the rural South still Rawbutt’s catalog up at least until the late 60’s. I knew quite a few.
My Grandfather called it the “Rear-back and Set awhile Catalogue”.
There were also many prurient uses for it over the years.
Best part of the Sears catalog when I was a boy were the pictures of women in bras.
Prolly’ was a bitch going to the outhouse and all the pages in the womens’ underwear section was stuck together.
They sold all kinds of stuff. Guns and ammunition. Kit homes. farm equipment.
Excellent essay! We in South America have an Amazon equivalent called MercadoLibre. Delivery costs are high for many items, but if one is a frequent user, one gains points that provide “free” delivery; the hidden cost is of course in a somewhat higher price, but even so… Living in a rural area, I’m grateful for its existence and my family and I use it often for items we’d otherwise not easily acquire. They even offer a payment system to vendors, something that has come in quite handy for my son and his wife, both of whom have small businesses. My son’s biz (well drilling) has greatly benefited from this
Wow, what a powerhouse. Crazy to think after all of that innovation, they simply stopped.
They didn’t just stop. Sears was a victim of some incredibly stupid CEO’s in the 80s and 90s, and they didn’t respond to the Walmart challenge very well, deciding they needed to compete on price, which resulted in a serious decrease in quality. Craftsman and DieHard used to be high quality products but Sears turned them into just more Chinese crap. They also expanded product lines beyond reason. Do you really need to sell 8 different models of treadmills? Forty refrigerators from 5 different brands? They also screwed over their sales staff, treating them like cashiers instead of knowledgeable product specialists.
Had Sears maintained a commitment to a limited product line of quality, reasonably priced products they’d probably still be around. Oh well; at least the executives made out like bandits.
So Sears had the infrastructure for mail-order for 100 years before Amazon. Why didn’t they jump on the internet bandwagon when they could have been miles ahead of the competition? They would have been lightyears ahead now instead of going bankrupt.
They did jump on the bandwagon early on, Prodigy was contemporary with Compuserve.
They truly were in a position to cash in on it, but they threw that opportunity away by not competing with America Online very well, or getting involved in high speed internet like others did.
Anyone remember S&H Green Stamps? Fuck, am I old.
my dad gave out the yellow stamps in his gas station–
Just goes to show how no company is immune from outside competition or internal stupidity. The imbeciles whining that Amazon is some kind of evil monster should read this article. Some new company will likely eat Amazon’s lunch in the future, and it won’t take a century.
If Amazon keeps up quality control, and customer responsiveness as they do now, they will have no problems in the future.
Despite driving other businesses into the ground, even a monopoly will be good if they deliver without messing over the customer.
My favorite parts of the catalog in the late 50s and the 60s was ladies underwear, guns and toys. We couldn’t wait for the Christmas catalog to come out!
I remember laying on the floor in my Grandparents living room and browsing through the toy section of the catalogue making plans for Santa. Vividly. Now there’s an abandoned Sears a couple of towns over where they took the letters off the wall and all you can see is the faded outline of the word SEARS, like a ghost.
Tears for Sears like JCPennies from Heaven.
Do you remember when both sold fabric and sewing supplies?
Who remembers paper patterns?
What woman here is old enough to remember the infamous “Penis on page 602” in the fall/winter 1975 Sears catalog? LINK to story and pics; https://medium.com/message/the-penis-on-page-602-of-the-1975-fall-winter-sears-catalog-3da16446975f
Amazon was simply the updated pre store Sears business plan, it is no coincidence that Amazon started within a year after the Sears Catalog stopped being published, Amazon is what Sears could have been had they simply transformed their catalog operations into a well built internet presence, even today Sear has a horrid internet presence, incapable of competing with Amazon or even Walmart, but had the Sears management recreated the catalog on sears.com. the company would be a thriving juggernaut and Mr. Bezos would probably still be happily married and selling books out of his house’s garage in a somwheresville Seattle suburb
Not only did they have retail stores but independent operators could also use the Sears name as ‘catalog’ stores. There is still a locally owned independent Sears store in our town.
Sears totally blew the internet revolution. They had: Nationally known name brands famed for quality (Sears, Kenmore, Diehard, Craftsman). They had working contracts with most major manufacturers (Mattel Toys, Levi Strauss, etc.). They had retail stores and warehouses in most major urban & suburban areas in the USA. Most of these retail stores had automotive repair facilities. AND they had a fleet of panel vans used for servicing Kenmore appliances. They had ALL THE INFRASTRUCTURE IN PLACE. If they had simply paid attention to the internet, they could have beaten Amazon at its own game simply by rearranging the use of its van fleet to deliver packages door-to-door. All they had to do was put their entire catalog online.
But they blew the opportunity, and now it is gone forever. It is the marketing equivalent of the Confederate victory at First Manassas. Had PT Beauregard’s orders been followed and the Union Army been pursued…
But like the Confederacy, the opportunity was not recognized and taken advantage of in time.
Good bye Sears. You won’t be missed.
Yeah well, we kicked those Yankee asses quite a few times after Bull Run #one..Fuck em…
sears never adapted to the baby boom generation as they came of age but when they tried they didn’t do a good job of it while getting rid of much of the merchandise that did sell–
in the 90 s they started hassling people about returns of craftsman products,about the time home depot was rolling out husky tools–
Mismanagement killed Sears. They quit the mailorder business 1 year before Amazon started.