So, do you want to start to mail-order selling but don’t know how to begin? There are a few basics to this exciting business with which you should be familiar. Being armed with this information beforehand may mean the difference between your ultimate success or rapid failure.
The mail-order business is a distinctive type of retailing because it primarily uses the postal service to carry its advertising messages, forward consumer orders, and deliver its products. A mail-order business makes its offers through catalogs, flyers, newspapers, magazines, and even single printed sheets. In addition, some mail-order sales are solicited through radio and television advertising.
Launching a thriving mail-order business requires a few complex skills. However, it is helpful if an operator has an aptitude for merchandise selection, knowledge of market trends, some organizational ability, at least a small capital investment, and some time to invest. While highly profitable, mail order will not create overnight riches. However, if a prospective dealer exhibits all or part of these characteristics, there is a good chance for success.
Don’t doubt for a minute that mail-order has created some wealthy individuals. Many have discovered a veritable gold mine. And for many others, mail order provides them with independent and thriving part-time and full-time employment.
Many small mail-order businesses are started with only a single product to sell. Starting with only the proverbial shoestring, a dealer can advertise with a single-page circular distributed by mail or promoted in a mail-order magazine or newspaper advertisement. The item is usually unique, perhaps exclusive, or not widely distributed. Suppose the item is wanted by many consumers and is attractively presented and priced. In that case, a new, successful mail-order business can rocket to profitability. The dealer can then expand his line of products his advertising and increase his sales for even greater earnings.
A wide array of related items also encourages multiple sales and a greater profit per order. A presentation of a few products in a small flyer or booklet might well become the foundation for a multi-color catalog boasting several hundred items.
It is advised, however, that you proceed cautiously and keep in mind that few miracles occur in any business endeavor. Rule out making a first lucky strike. Instead, use sound judgment and proven methods in preparing your business plan. Ability, perseverance, and good judgment are attributes of a successful business person. Keep costs at a minimum, use what is available, start from home, and keep it simple. These factors can help you build a successful business.
Some people decide to go into the mail-order business because an item about which they know something seems to lend itself admirably to selling. A good product should be desirable to many people, compact and easily mailable, and able to be sold at an attractive price with a profitable margin.
Other people enter the mail-order field because it is a uniquely distinctive endeavor. For them, the right merchandise must be found. In either case, the focal item should have a character that distinguishes it from the mainstream mail-order products. It may be an item bought on impulse, not so much because it is needed, but because large numbers of people want it and may not be able to obtain it elsewhere. Such an item can be priced at a level that causes the least sales resistance, with a margin that will cover costs and return a great profit.
When selecting merchandise, avoid items readily available in department, discount, drug, or food stores — unless they are such an exceptional buy that the lower price you can offer will stimulate profitable sales volumes.
There are no absolute rules when determining price markup. However, you should be able to make a fairly accurate estimate of what your total expenses will be, how much people are willing to pay for such a product, and at what selling price you can move the most goods.
Generally speaking, the right selling price is the one at which sales volume is maximized at profitable levels. The first sales will be the most expensive due to your start-up investment in time and money. Therefore, the product you offer should be selected with the customer’s best interests in mind. If customers are pleased, they will buy again. And when they make repeat purchases, your investment develops highly profitable sales. An ongoing business cannot be built on a one-shot basis. Repeat sales can occur only if good service is provided for a quality product sold at a competitive price.
Assuming you have a place from which to operate a mail-order business, you should consider yourself deciding upon your focal product and how to obtain a sufficient supply of merchandise.
Finding the right item to start a mail-order business is one thing. It is quite another to find a dependable source of supply. The supplier must be able to furnish the quantities needed, as needed, at the agreed-upon price while maintaining quality standards.
Some manufacturers cannot afford to sell the limited quantities required by a small mail-order business. Sometimes arrangements can be made with other businesses to combine orders into one large one and benefit from volume orders. It may be necessary to find small manufacturers or selling agents willing to handle small accounts on a ship-from-stock basis. A visit to trade shows held periodically in larger cities is a unique way to get first-hand information on what’s new in the marketplace.
Most often, however, you will be able to find a wholesale distributor who will dropship single items for you. As you make each sale, you forward to the distributor your cost for the product plus shipping labels for each order. He then dropships the items under your label to the customer.
With a product that becomes a fast seller, your problem may become one of obtaining enough product. In this case, more than one manufacturer or supply source should be identified. With multiple sources of supply, the chances are that competition between them would be beneficial to you, providing a lower cost per unit. However, don’t play one supplier against the other too far. Loyalty to a resource is important to establishing a solid foundation for a healthy growing business.
Above all, study the catalogs and mailing pieces of other mail-order people. Know your competitors, what they sell, and how they price. Don’t be reluctant to take some guidance from them and copy their successful promotions.
After selecting a suitable product and identifying a continuous supply, consider how and where to sell it. Knowing your market is essential. Determine the most likely prospects to buy the product. Where can you advertise to reach these prospects? What type of ad will they read? Almost any item can be sold by mail. However, not every person is a prospect for every item. Some items will sell better to people with particular interests when advertised in a specific media.
The most basic way to determine a market or where to direct your selling effort is to test small space ads in magazines or newspapers that reach consumers with interests that seem compatible with the product. Try to place the same ad in several different publications.
If you can afford a large display ad, include a coupon in the advertisement that must be filled out and returned. Key the coupon with a letter, number, or department number so that response can be measured for each time and place the ad is run. Divide the cost of the ad by the number of responses received to determine the cost per response. If a fair test of the ad can be made, with all elements equal, the results will show which periodicals will move the product at a profit and which will not.
At some point, renting name lists and mailing your advertising packet directly to prospects may be desirable. Numerous list houses can furnish the names and addresses of prospects for various products. Targeted mailing lists are rented for between $45 and $150 per thousand names. The more specialized the list, the higher the cost.
Mailing list brokers can be very helpful in selecting the right lists for the right products. You can usually rely on a good list broker because successful use of his lists assures repeat business for him. List brokers are listed under “Mailing Lists” in the telephone directories of most large cities. Check with several to determine the list most responsive to your offer.
A complete understanding of a market will come only through experience and testing. Rising costs for advertising space in periodicals and increased costs for postage, printing, and paper make it essential to use care and foresight. If you develop meaningful test patterns, stick with them, and then believe in and be guided by the results. You can build a profitable mail order business.
Advertising is a reflection of your business. It is not necessary to be a polished writer if ad copy is informative and honestly presented. Do not exaggerate performance or make unsubstantiated claims about construction, quality, or price. The Federal Trade Commission enforces complete disclosure and accuracy in advertising. Some states, cities, and Better Business Bureaus also police advertising. Include all the details necessary for a customer to make a sound buying decision. Truth in advertising will win you more customers in the long run.
Here is a brief summary of important rules and regulations for mail order selling. Read through them and determine which may apply to your individual situation.
Licenses and Permits – The federal government has no restrictions on mail-order businesses operating. Likewise, in most cases, no state or local licenses are required. However, it would be best to check with local officials to ensure there are no applicable zoning regulations that might hamper you in operating from your home.
Business Names – A business can be conducted under a personal name or business firm title. Use of a “firm” name (also called a “dba” or “doing business as”) may require registration with your local city or county clerk. A business name should also be recorded at the local post office so that mail so addressed will be delivered.
Business Addresses – Small mail-order businesses can use a home address unless business or zoning laws are contrary. To be sure, check with your local government, and you may wish to use a post office box to avoid any potential problems.
Postal Rules and Regulations – The United States Postal Service publishes a Postal Bulletin of information about business mailers. Your local post office also has information that may serve as a guide. Make sure you always ship promptly. Any undue delay in delivery after an order has been placed arouses suspicion, and the buyers have the privilege of reporting it to a postal inspector. Lack of confidence will hurt a business and may lead to an investigation. If there is any unreasonable delay, inform customers and give them the option of waiting or receiving a refund.
Other Federal Laws – Under provisions of the Federal Food, Drug, and Cosmetics Act administered by the Food and Drug Administration, certain rules apply to the sale of these items. For further information, contact the FDA.
Taxes – Taxes of different kinds are levied on some products. The manufacturer or supply source will help you determine if any special taxes must be collected on your products. In most cases, you will be responsible for collecting state sales tax on sales made to customers in your home state. Contact your local State Comptroller’s office for further details.
When you must collect taxes from your customer, inform them in advance that such a tax applies to their purchase. You can do this by placing a notice on your order forms or price lists. If you intend to include the amount of tax in the product price, remember to make allowances for these taxes as part of your operating expense.
Keeping Records – The preservation of records is an essential part of a mail-order business. Personal computers can help greatly in this matter. A database of names and buying characteristics can be set up to track sales and mailings to individual customers. Also, using a computer will significantly simplify the preparation of your mass mailings.
If you do not have access to a computer, you can still keep detailed records of each customer. The names of all customers can be recorded on individual cards on which address corrections, the tally of mailings, and sales records can be made. Each card should be a complete record of the customer in terms of mailings made and the results. If repeated mailings do not bring orders, the name should be dropped from your active file.
All customers’ letters to you should be filed. Copies of letters and their replies should be kept together. You should also include letters of inquiry to your product suppliers in your business files.
Be sure to keep a careful record of all expenses. A file of all items purchased should be kept to determine weekly, monthly, and annual costs. A continuing inventory should be maintained for each item in stock, showing quantity and date purchased, quantity sold, and quantity on hand. This serves two purposes. Careful stock records decrease the chance of running out of product and can, with a quick glance, give you some idea of the turnover. If an item is moving slowly, its sales volume may drop so low as to be unprofitable.
The beginner in mail order can easily and quickly find offers that promise easy and quick profits. Sift through them. There is no shortcut to success. Too often, items offer little but promise in return for your money and commitment.
In summary, the beginning mail order dealer should pay careful attention to these principles:
Enter the mail-order business on a small scale. In the beginning, you can operate from home and put the maximum amount of your profit back into the business.
Choose products that are unique, attractively priced, and not widely distributed.
Buy quality products from dependable suppliers.
Build dependable relationships with customers through direct advertising and promptly deliver what has been promised.
Fill out all orders promptly or give the reason for the delay and offer the option of a refund.
Always offer a money-back guarantee if merchandise is not satisfactory.
Keep careful financial records.
Keep detailed records of all customers.
Entering the mail order business carries with it a serious responsibility. It is a trust-based business, and it takes only a few fast-buck operators to give it a bad name. Most mail-order enterprises are run by honest people who care about their customers. There are, however, a few bad apples. Suppose a profit can be made while serving a customer’s best interests. In that case, an excellent and profitable business is in the making.
You can enter the mail-order business and become a success. It is not an overnight route to riches. However, careful planning and determination can help you develop a thriving, profitable business. And who knows? You may be one of the lucky few who discover a sure-fire product that people will be lining up to buy. We wish you every success.