Focus On: Merchandising: Show 'Em Your Wares

General costs. These are the costs of buying, marketing, accounting, human resources and IT that are part of the business unit. Typically, in profitable catalogs, G&A costs are 9 percent to 11 percent.

Returns and cancellations. Everyone knows that sales is what gets booked in accounting and deposited in the bank. But demand — orders in the door — is very important. There are two ways that demand gets eroded to yield lower net sales: cancellations and returns. Customer cancellations because of back orders are ideally 2 percent or less. For hard goods, this is often achievable. For apparel and soft goods that have a higher fashion design and more new products that are difficult to forecast, the average may be more typically 3 percent to 4 percent. When bestsellers strip the inventory, cancellations can range into high single digits.