The Internet is Causing Mail Order to Boom…
How any Business Can Be Diversified by Mail Order
By Priscilla Y. Huff
Though many mail order businesses are started from scratch, the majority of home-based entrepreneurs can utilize mail order to grow and diversify their ventures with back-end products and/or add-on services.
The National Mail Order Association (NMOA) estimates that mail order sales exceeded $400 billion dollars in 2006, with no slowdown in sight because of the growth of the Internet mail order channel. Mail order in the U. S. is said to have been in existence since Ben Franklin sold science books by mail and in the late 19th Century when Aaron Montgomery Ward and several other companies produced the first mail order catalogs. In the ‘90s, affordable technology enabling entrepreneurs to start home-based businesses, the increase of consumers’ online connections, and the changes in people’s shopping patterns spurred a phenomenal growth in mail order sales that has continued into this century.
The Internet & Mail Order
The Internet is the primary reason for mail order growth because more entrepreneurs are using it to market and sell their businesses’ offerings to customers around the globe. With people’s increased work hours and hectic lifestyles, they have less time to shop in stores, and prefer to order items online and have their purchases shipped to them. For many businesses, mail order has become a profitable new “method” for sales and staying connected with customers.
Buyers feel safer shopping online as ordering and paying becomes easier and more secure. They can save time and money by being able to shop anywhere from their laptops or leisurely browse and purchase through mail order companies’ catalogs and their web sites. Though mail order companies usually charge for shipping, they generally do not have to collect sales tax from customers unless they live in the state where the company’s operations or satellite offices are located. Check with your state department of revenue about your business’ tax obligations.
Defining Mail Order
John Schulte, President of the National Mail Order Association (NMOA) says, “We classify any ‘distant sale’ as being part of mail order, i.e. if it's promoted and ordered remotely, without being in a "brick and mortar" store, it's mail order.” Shulte goes on to say that mail order includes; catalogs, web sales, info-commercials and television home shopping, direct mail, and direct response advertisements. He says all these channels share the same underlying characteristics: An order is placed without touching the product, and it's delivered to the customer by common carrier. Schulte concludes that other than television or radio, the written word is the salesperson in all these channels; even the television pitch people (demonstrators) are scripted. Customers are entered into a database (mailing list) for future promotional offers.
Note: The NMOA says the FTC's 30 day rule applies to all remote sellers no matter what system is used to promote and take the orders. Visit www.ftc.gov/bcp/conline/pubs/buspubs/mailorder.shtm, to read “A Business Guide to the Federal Trade Commission’s Mail or Telephone Order Merchandise Rule,” as it pertains to the timely delivery of purchased mail order items.
Diversifying Your Home Business with Mail Order
Though many mail order businesses are started from scratch, the majority of home-based entrepreneurs can utilize mail order to grow and diversify their ventures with back-end products and/or add-on services. As a home business owner, mail order is an excellent low-cost and low-risk way for you to develop new income streams, especially with your regular customers. You know their preferences and they are familiar with your products and trust buying from you.
Mail order can also give you an edge over competitors. Using your web site and/or a catalog or telephone, regular and new customers can purchase new or continued products from you in ways that are more convenient for them.
Selecting a Good Mail Order Product
Some of the most popular items purchased through mail order include books, craft supplies and kits, clothing, educational items, technology, sports and hobby equipment, gifts, recorded music, office supplies, financial services and more. If you are a professional or have expertise in a field, you can also sell that knowledge in the form of original newsletters, e-zines, books, e-books, CDs, or DVDs.
Specialization is the key to success. Choose mail order products/services that target a potential customer market that is too small to be profitable for large businesses (but profitable for you). If you tutor special children, for example, you could sell toys and equipment that are designed for these children; or provide a consulting service for parents or institutions, along with your packaged instructional or informational products. Selecting items that relate to your business encourages repeat mail order purchases.
Evaluate your customers’ responses to your initial test-marketing, and add a line of products that sensibly relate to one another, fostering their “need” for your products. For example, if you wrote a book on Italian-American cooking, you could post sample pasta recipes on a web site, along with selling special ingredients or unique cooking tools used in your recipes. Mail order experts advise that you carry more than one product for increased orders and sales; but not so many that would prevent you from handling a sudden demand. Solicit your customers often for their feedback to monitor their needs and buying patterns and to better provide them with the mail order products or services they request.
Starting a Generic Mail Order Business
Mail order is an excellent method to sell a product or service without having a brick and mortar retail store or wholesale warehouse. As mentioned, a mail order business can be a spin-off to an existing venture where sell your own line of original products or others' new or used products through a catalog, direct advertising, or online or with drop shipping or affiliate programs.
In drop shipping, your supplier ships directly to your customers, but uses your business’ shipping tag. It is one way to get started in mail order and to keep the costs down of buying (or storing) too much inventory. Analyze the products you are selling for their quality and profit potential. Research your suppliers and manufacturers to guarantee they are dependable. Ask for references. Follow-up on sales to ensure your customers have received their products and are satisfied. Your eventual goal is to have a supply of well-selling products on hand that you produce or can purchase and ship from your location.
Designing a Mail Order Business Plan
No doubt, you have read about famous persons who have become millionaires through their mail order businesses, but many people have also lost money. To be successful, you should learn all you can about running a mail order business; and design a mail order (business) plan based on your situation and your objectives.
Your Plan’s Purpose
The reason for a business plan is to first determine if starting your proposed mail order business is a viable option financially, with potential for growth; and to use as a guide. It should include your business’s goals, objectives, and your strategies for achieving them. Use your plan to figure your start-up and operating expenses (advertising, printing and postage are usually biggest costs in mail order); and realistic cash flow projections, especially the break-even point, when your income will equal your expenses.
To create your plan, you can use business plan and or mail order business planning software or contact volunteers of the Senior Corps of Retired Executives (SCORE) that offer free assistance for writing business plans. Visit www.score.org for the location of local offices; and for access to the site’s business plan templates.
Highlighting Your Product
Use your plan to define the most profitable market niche for your business and through market research to highlight the distinctive qualities and benefits of your products and services that will appeal to customers.
Finding Target Customers
Your plan should identify your specific target customers and reveal if they exist in sufficient numbers to support your mail order venture; and are willing to pay the prices you need to make a profit. Once identified, you can plan your marketing tactics to reach them. (SEE Marketing/Advertising). Your prices should be competitive but attractive enough to your potential customers to pay for your product or services, in addition to your shipping and handling fees. Though your goal is to get customers to purchase the first time, remember that in mail order, steady profits come from repeat sales.
If your market research reveals that your competitors carry similar products or services to yours, then decide if your offerings differ enough from theirs to attract substantial paying customers for a profitable business. Your products’/services’ exclusivity will be an important factor in marketing and business success.
Going Full- vs. Part-Time
Save up to two years’ living expenses if you decide to launch full-time in mail order. Going part-time has the advantages of keeping the benefits of your regular job while test-marketing your products reception and learning mail order operations. Take the time to follow your plan and build your business at a pace that you can handle, while satisfying your customers. Refer to your plan often to keep your business on target.
Marketing includes all the activities (publicity, public relations, and paid ads) that business owners use to communicate to potential customers that they have product or service that is beneficial for them to purchase. Consider these methods:
Effective Ways to Market and Advertise for Mail Order
Use a marketing “mix” of both paid ads and public relations strategies to find the ones that bring the best responses. Launch your mail order business with a well-written press release. Mail it along with an informational packet to the editors of publications whose readership includes your target market. Include your contact information and photos.
Advertising space can be costly, so start with less expensive classified ads. Request publications’ media kits whose readership demographics will help you determine the best placements for your ad. Ask also about advertisers’ special rates for mail order and any other discounts.
Study publications’ back issues to see if competitors have repeated their ads there, an indication that your ads may be successful there, too. Use a marketing calendar to implement and evaluate the effectiveness of each marketing method. Track response rates from your ads by assigning codes to them. Keeping records of your ads, the costs, and responses, takes time, but you will eventually discover the best publications for your mail order business.
Depending on your advertising budget, you may consider purchasing television and radio advertising spots. Rates vary according to the length of your ad, the time of day or night, and if you use local networks and stations. It may be more affordable than you think.
Designing an Effective Mail Order Ad
Sales pieces that are mailed or presented to potential customers should feature the specific products/services that will grab their attention and motivate them to respond. Remember, the more defined your target audience, the easier it is to market your items to them. Your earlier market research should have revealed their preferences and needs and how your products/services can be useful to them.
- The challenge in writing direct mail pieces to be sent, seen (television or display ads), or broadcast (radio) is to make your written words or copy be the best “salesperson” possible.
Here are some tips:
If you need assistance designing or writing your ads, hire an independent copywriter or agency that specializes in direct mail pieces. Revise and test your ads to find the most effective ones and repeat them until they no longer elicit adequate responses.
Your Web Site & Mail Order
If your home-business already has a web presence, consult with your web designer, web hosting service, or an e-commerce expert on the best way to sell and fulfill online orders. Various U.S Small Business Development Centers (USBDCs) offer on-site or online e-commerce seminars (Visit www.sba.gov/index.html and search “Local Resources” for local offices). If your mail order business is a new start-up venture, first establish your business; and then take next the steps for incorporating a commercial web site into your business plan.
To economize, you can use free web site templates or purchase web site creation software. Almost any web-hosting company can carry an uncomplicated site consisting of a few pages of text and simple graphics for a reasonable monthly fee. To accept online payments, you can use online payment companies like PayPal.com or remotely hosted shopping carts that place a “Buy Now” button on your site but take customers orders on their site.
As your mail order business grows, you can develop a more extensive e-commerce site with a catalog, shopping cart, and credit card processing capabilities. In accepting credit cards, you may qualify for your own merchant account or pay a shopping cart service for the right to use their merchant accounts. Buyers tend to make more purchases if they can pay with their credit cards.
You can use online auctions sites to test products’ sales potential and to attract customers to your site. Exhibit at industry trade shows and offer free samples to get feedback to reveal your items’ profit potential.
Marketing Your Site
In addition to linking to search engines, market your site by listing your business’s web address on your business cards, promotional literature, and in all your ads. Exchange links with the owners of related businesses’ sites, including your suppliers’ so your customers can get additional information; or if you are earning commissions or selling your own products with affiliate programs web sites.
Web sites need not be expensive, but not having one may mean you will miss sales from potential customers who prefer online shopping.
Direct Marketing: Mail Order Sales Packages
Mail order, also known as (aka) direct marketing, includes postcards, brochures, sales, letters, reply cards, and other printed promotional materials that you can deliver through the U. S. Postal Service to obtain a mailed, phoned, faxed, or e-mailed customer responses. According to the Direct Marketing Association (DMA), marketers spent $166.5 billion in 2006 on direct marketing in the United States… generating some $1.93 trillion in incremental sales.
Typical direct mail sales packages contain sales letters, pamphlets or fliers, and reply cards. It takes an average of seven messages to potential customers before they make any purchasing decisions. Using a combination of the following methods and available technology will help bring in more profits. Here are some tips:
Direct marketers mail their sales packages to potential customers whose names they have garnered from advertising responses, trade show attendees, referrals, and other sources; or from mailing list companies that sell lists compiled of target customers.
Update your list twice a year and cut down on mailing expenses with test-mailings and follow-ups to ensure your mailings are reaching your designate targets. Simplify operations by presorting your mail, using barcodes, and mastering database management software for mailing lists. If you prefer and can afford it, you can hire mail consolidation companies to presort your mail and send it to bulk mail centers.
Creating leads by getting customers to respond using reply cards, phone calls, faxes, or e-mails is the purpose of a sales letter. In one page, write an attention-grabber opening that will compel the prospective customer to read the entire letter; and emphasize the pluses of using your products/services. People often read a letter’s postscript (P.S.) first, so include your basic pitch in it. Encourage fast responses with a no-risk offer of free information with a deadline and a “call to action” with a toll-free number, an e-mail address, or a postage-paid reply card. Review the FTC.gov rules regarding the wording “free” in advertisements at www.ftc.gov/bcp/guides/free.htm.
Brochures fulfill potential customers’ requests for more information. Write them with compelling headlines that persuade people to take one. Whether you produce it yourself or hire specialists, your brochures should enhance you and your business’s professionalism and image.
If prospective customers do not open your direct mail envelopes, then all the materials within are useless. Place an appealing headline of a question or teaser on your envelope to encourage your reader to open and read it. Test unusual sizes, shapes, or colors, but make sure it is tasteful and reflects your business’s image. Follow U. S. postal regulations regarding the placement of art and copy on your envelopes.
If you offer a guarantee for your product/services, prospective customers may be more willing to trust you, request more information, or try your business offerings.
FTC rules state that if your customer has to pay for your product, you cannot use the word “free” in your sales pieces. However, if you guarantee a refund, you are permitted to say your offer is “risk free.” Visit www.FTC.gov for rules and guidelines.
Systemized Sales Letter Follow-Ups
A follow-up letter or communication is the direct piece most likely to bring in sales; so have a system of follow-up responses ready before sending out any direct mail packages. In starting out, use your own basic organizational methods to track responses and follow-ups; but as your mail order business grows, you can invest in direct mail business management software to streamline your operations.
As you can afford it, purchase specialized equipment like letter-folding and opening machines, postal meters (some with document inserters), postal scales (some can compare carrier rates), and other equipment as to speed your mailings. No matter what system you use, it is important to send follow-up communications to all persons who respond. Thank them for their interest; offer some new information or another offer; repeat the benefits of using your product or services; and stress that you look forward to doing business with them. Follow-ups remind prospective customers who you are and that you are a mail order professional they can trust.
Incorporating E-mail into Sales Systems
Businesses that sell their mail order items successfully online use e-mail to keep in touch with their current customers and to solicit to new potential ones. They also use e-mail to send follow-ups with thank yous, congratulations (birthdays), reminder prompts (renewals), or for customer feedback and more.
Use interesting subject lines to pique customers’ curiosity in regular e-mails that contain company news (not always trying to sell something) or helpful tips, and make it easy for people to sign-up or subscribe. Respond immediately to any queries or complaints, or use an autoresponder to acknowledge their e-mails when you are away. Consider using automated email management list software to efficiently maintain your business’s emails.
Factors for Successful Mail Order Operations
The key to managing a successful mail order business is to perform what you do best, and hire or subcontract professionals, agencies, assistants, or customer service representatives to do what you are not qualified or prefer not to do.
Successful inventory management with accurate records is also crucial for your success and to reduce costs and lost sales. You should always know your present stock status; plus have operations in place to promptly handle back orders and returns. Some popular software for managing a mail order business, including an online store, are Mail Order Manager (www.dydacomp.com/mainmom.asp); Order Pro Software (www.pcinn.com/); and Response (www.colinear.com/). Ask other mail order entrepreneurs for their suggestions, and request free demos from companies to find the best software for your operations.
Monitoring & Analysis
To ensure a positive cash flow and customer satisfaction in mail order, routinely monitor and analyze your business’s activities. Business accounting and/or mail order operational software will simplify the tracking and reporting of your daily financials. Review these figures regularly with your accountant or financial experts to regulate your pricing and expenses.
Solicit feedback from your customers about your products and service with reply cards or questionnaires to evaluate and improve your business’s operations. Check your business plan frequently to see if you are working toward your goals, and revise them according to your customers’ needs and requests. Note your most effective marketing tactics, consult with a marketing expert, or network with other entrepreneurs for new and creative ideas.
Additional Success Factors
Mail order entrepreneurs offer some success tips:
As your mail order business expands, consult with your accountant and other professionals to help you keep pace. Hire knowledgeable and customer-friendly employees to foster good customer relations.
Promptness & Fulfillment
You should respond within 24-hours to all mail order inquiries and orders. Failure to do so will result in increased complaints, cancelled orders, and even fines for not delivering in time (or providing refunds) as required by law. Use the methods that are easy and that the customers prefer: First class mail response; e-mail confirmation; and voice mail to return calls.
In fulfilling orders, research and test the best methods to deliver your products. Visit the U. S. Postal Service’s web site (www.usps.gov) and other carriers for information about package sizes and bulk mailing and other shipping costs. Contact other private or rail companies individually for their rates should you need this type of delivery. United Parcel Service (www.UPS.com); FedEx (www.FedEx.com); DHL (www.dhl.com); Provide customers with shipping choices (carriers, delivery time and addresses, tracking capabilities) when they order. Work closely with your carriers to track shipments and ensure the timely delivery of your products. Notify customers immediately about any delays.
Other Mail Order Considerations
Whether you have an existing home-based business or planning to start one, consider how mail order operations could impact your neighborhood as it pertains to your local zoning regulations. To avoid complaints about traffic or parking, try to limit the number of pick-ups, deliveries, or customers’ visits to your home.
As an alternative, you can choose to rent a private mailbox at packaging and shipping stores from which you can send your packages; or rent a unit at a nearby storage facility for dropping off deliveries or for inventory storage. Your home would then be as your mail order business’s operational “headquarters.”
Selling in Catalogs
While some companies are eliminating their mail order catalogs and choosing to sell exclusively through Internet sales, others are using the Internet to complement their existing catalogs. The NMOA estimates there are some 11,000 consumer catalogs and 6,000 business-to-business (B2B) catalogs in existence.
If having a catalog interests you, simply start with a one-page flier listing your products and an order form. Then build your catalog to offering more products as you test them for customer demand. Attend industry shows to keep up with trends, and check out any competitors’ catalogs to see what you could offer differently. Cover the expenses of compiling and mailing by charging your customers for them, and then giving them discounts or refunds when they order. The advantage of sending out a catalog or flier is that potential customers can sit down and take time to read about your items and then go online to place their orders.
If you wish to sell items in other companies’ catalogs, search for ones that sell items related to your business and in the same price range. The National Directory of Catalogs lists some 9,000 North American catalogs. Visit the web sites of likely candidates, or call them about submission procedures. Inquire about the average number of orders they receive to see if you can supply that amount; and whether you can make a profit selling your items to them at wholesale prices.
There are no guarantees you will become a millionaire with a mail order venture, but hard work; a willingness to continually learn about the industry, and a persistence to find those untapped, potentially lucrative niches for your products or services, will increase the likelihood that you will have a successful mail order business with potential customers from all over the world. HBM
Priscilla Y. Huff’s (www.PYHuff.com) latest book is Make Your Business Survive and Thrive! 100+ Proven Marketing Methods to Help You Beat the Odds and Build a Successful Small or Home-Based Enterprise (John Wiley & Sons). Questions or comments: firstname.lastname@example.org.
Questions to Help You Select an Ideal Product/Service for Mail Order
Does it fulfill a specialized market niche by solving a problem or saving time or money?
Is it not easily attained elsewhere?
Are potential customers familiar with the type of product but attracted to its uniqueness?
Are its benefits obvious?
Does it have a strong appeal?
Is it easy to deliver and cost-effective to ship and receive (for customers who pay the shipping expenses)?
Is it profitable to produce/obtain, market, sell, and package?
Is it a product/service of high quality with value to your customers?
Does it compliment your existing home business’s offerings?
Can it be expanded or varied into a line of products or related ones?
Is it a product or service that customers will want/need to purchase repeatedly (runs out or needs replacement parts)?
Mail Order Resources to Get You Started
Direct Marketing Association - www.the-dma.org/
National Mail Order Association www.nmoa.org
Building a Mail Order Business: A Complete Manual for Success by William A., PhD Cohen
How to Start a Home-Based Mail Order Business, 3rd ed. by Georganne Fiumara
www.SBA.gov - SBA booklet: “Selling by Mail Order” – Pamphlet # MT-9 (enter “mail order” in search box)
www.TSNN.com - Trade Show News Network – Internet database with information on more than 15,000 trade shows