Before getting into the nitty-gritty of starting a mail-order operation, however, I should give a word of warning. The secret to all direct marketing (and mail order is direct marketing because you are dealing direct with the customer) is testing. If you stake all on one product, one advertisement and it fails, you have nowhere to go. The secret is, therefore, to develop a test programme before you even start. This doesn't - thanks to the Internet and sites like eBay - have to involve a lot of cash. But remember, if you don't know what you are going to do next in the event that your initial effort fails, you may be wasting your money.

1. Picking a product or service to sell
Isn't this the first step in starting any business? The types of items and services sold by mail order run the gamut from hand-crafted items to advice-giving newsletters to antiques. But how do you pick something that stands a chance of success?

Most experts agree that the items you offer for sale must be unique - and unavailable. Why? If your product is a one-of-a-kind, it has appeal for buyers. And if you can purchase the product at the local supermarket, why order it through the mail? If you can't find something unique, you need to be able to sell it for less than anyone else.

When you have a few items in mind, you'll need to evaluate them. Here are a few questions to ask of each product or service to determine which one or ones you'll sell.

2. Locating suppliers
Do you have a source for the product? This final question in your product query is pivotal. Where will you obtain your product? You may already have determined that you'll manufacture the product yourself. This might include items like crafts, 'how to' booklets or your very own invention.

If you intend to produce the product yourself, you'll need to address a number of issues - such as where will you secure your supplies at wholesale prices, if possible?

Are there any laws that apply to the manufacture of your product, for example planning restrictions if you're working at home, food-safety rules and so forth?

If you've decided that you'll purchase your product and resell it by mail, you'll have to locate sources. Keep your eyes open for the products you're interested in. Look at catalogues and at retail stores. Attend trade shows and read trade magazines. Then contact the manufacturers of the products you're interested in direct.

3. Pricing your product
To determine your selling price, you'll first need to calculate the actual cost to you of buying (or producing) the product. Your actual cost will include all raw material, start-up expenses, shipping, packaging, labour, overheads and advertising.

Now you'll need to determine what your profit should or could be and what your target market is willing to pay. Many companies in the mail-order industry use a mark-up of 200% to 300% of the actual cost of the product. But you won't want to charge more than your target market is willing to pay.

4. Basic business 'stuff'
The following 'business start-up' issues, among others, must be addressed as you put together your mail-order enterprise.

Your business name. An important first step for any business, the task of creating your business's moniker involves telling the public what you do in an unforgettable way but in as few words as possible.

Credit-card merchant account. The ability to accept charge cards for payment is crucial to your business. Start with your local banks; if your personal credit is good, you may be able to acquire a merchant account through them.

If not, try an ISO (independent sales organisation - essentially, a go-between that exacts a fee from you for their services). Remember to shop around for your merchant account, compare prices and always read the fine print.

Business plan. You've heard it a thousand times and, yes, you do need a business plan, even if it's a very informal one for your eyes only (although, if you're attempting to secure a merchant account or start-up financing, you may need to make it a formal document to be shared with bank officials.)

Over and over, studies prove that businesses that fail to plan are, essentially, planning to fail. Putting together a business plan is crucial to your business's survival.

Your plan should include at a minimum: an Objectives and Business Description (detailing your business concept and its goals), a Product/Services Description (the items you're offering, why they're marketable etc.), Operational Details (who your suppliers are or how you'll produce items if you intend to manufacture them), your Financial Plan (including estimated start-up costs, pricing information, sales estimates etc.) and your Marketing Plan (see next section). A brief one- or two-page summary of the plan's elements should be included after the cover page and before the formal plan.

5. Your marketing plan
This is one of your biggest start-up steps as a mail-order entrepreneur - and the element that truly sets mail order apart from other types of business operations. Your marketing plan will determine how you connect your customers to your product.

The first query of your marketing plan is: Who are your potential customers (your 'target market')? Are they business people? Teens? The disabled? The elderly? Teachers? What are their needs? Why would they want to purchase your product or service?

The next section of your marketing plan will describe how you intend to reach that target audience. With mail-order businesses, the methods of marketing have blossomed in the past decade.

Years ago, the traditional approaches for mail order were classified advertising (at the back of magazines or newspapers) display ads and direct-mail solicitation. Bigger press advertisements, inserts, radio and TV ads were also possibilities.

These are methods that are still used and which you very well may want to include in your marketing plan. For any of these methods, your ads need to be well written and placement (the venues you use to advertise) should be well chosen to reach your target audience.

Once you've determined the magazines, newspapers and other media outlets through which you plan to place ads, you should contact their advertising departments and ask for a 'media kit'.

Your next task will be to write 'copy' (the ads themselves) that sells. Draft some ads listing the persuasive selling points of your products - perhaps with introductory or 'limited time' offers - and then test them on family and friends. Remember, I am always happy to run my eye over copy, as is Sue Waddington, our resident copywriting guru.

Try them out in selected publications and then see what kind of results they bring. You may need to change your copy, your publication - or both - for success.

If you decide to use direct-mail solicitation, you'll need to develop a package of information to send to your potential customers. You'll probably also want to consider the new approaches to mail-order marketing, most noticeably the Internet (see below).

Another marketing boost, which has skyrocketed in popularity recently, is to secure a free or low-rate phone number. Studies have shown that prospects are seven times more likely to call a low-rate number than one they'll be charged for. Shop around, compare rates and read the fine print.

 

6. Filling orders
Once you've contacted customers and secured orders, you'll need to keep your end of the bargain. Fulfilment is the process of securing and shipping goods to the customer who's ordered them. If you produce your own inventory or you've purchased goods for resale, you'll be responsible for packaging and shipping.

A dropship arrangement is also possible, where you arrange with the manufacturer to ship direct to the customer. However, I would urge caution with regard to dropshipping. The companies involved are often unscrupulous and may also not be that efficient.

7. Taking care of business
With fulfilment of your mail-order business's purchases, the marketing loop is complete, right?

Yes and no. Your successful business will include the ongoing issue of customer care and service. Satisfied customers will keep buying - and they'll tell others about the experience.

Other elements of your business are also ongoing. Changing your mix of marketing methods is important as you determine which approaches work best for which products. Adding and/or eliminating products may also be good for your business. Tracking results of various advertising efforts is pivotal.

If your approach to your start-up steps - and your follow-up tasks - is professional and earnest, the sky is the limit for your mail-order operation.

 

 

Going online with your mail-order business The traditional outreach method for mail-order enterprises has been advertising in magazines and newspapers. And that's still a method used by many. But the Internet has opened up a whole new world of marketing possibilities for mail order entrepreneurs. With Web sales predicted to reach an astonishing £400 billion annually by 2011, it only makes sense for mail-order business owners to get in on the action. Some of the possibilities for online sales and marketing for your mail-order businesses include the following. Using email. Providing an email option as one way to communicate with your customers is merely good business sense. Include your email address on all correspondence, business cards and other company documentation. You can ask current customers for their email addresses or you can rent an email list online. Type in 'email lists' for your Web search to find sites that sell lists. However, do be cautious - many email lists are not very effective. If you can get 20% of them to open what you send out you are doing well... and when it comes to actual orders response is likely to be very low. Setting up a website for your mail-order business. This is an obvious approach and can be used in at least two ways. One is to have an information-only site. If you choose this route, you can include your website address, or URL (Uniform Resource Locator), with your promotional material. It should also be on your letterhead, business cards, on press releases - in every kind of document your business produces. Referring potential customers to your informational website is a quick and efficient method of delivering company information to customers, the press and the general public. Pack your website with clear, interesting and accessible information about your products/services along with a frequently asked questions (FAQs) section. New products, sales information, seasonal products etc. also can be quickly publicised with a website. With information on how to contact your business - by phone, fax, email or snail mail - your site will also function as a shopping venue. Creating a guest book and asking website visitors to sign in before gaining complete access to your site is an easy way to build a quality email list. The second website option is to take your website a step further. With a full-blown e-commerce site (offering shopping-cart technology and encrypted credit-card processing) you'll have a virtual online store. But this type of site really only makes sense if you have a number of products to sell or you're planning a catalogue of goods. Start out with a more modest site to see which makes more sense for your business. Signing up for an online mall. Another approach to the online-sales equation is to sign up as a tenant in an online mall. Online malls are the virtual counterparts to bricks-and-mortar malls, typically offering a number of 'departments' to choose from, advertising and promotional services and even shopping-cart technology and order processing. There are hundreds of online malls on the Web - from giants like www.netmall.com with over a quarter of a million tenants to small, regional malls - and they offer a vast range of options for small businesses. Prices can be as low as £20 yearly for a simple listing and can run as high as several hundred pounds monthly with all the bells and whistles. Thoroughly research what these marketing vehicles offer before signing up. Ask for a free trial period - or at least ensure that you can terminate your arrangement if results are not forthcoming. Use eBay. I have written so much about selling on eBay recently and so am not going to say much more here. I would just point out that eBay is a fantastic facility for anyone wanting to get into mail order. It is cheap to test. You can always include a 'buy it now' option. You can set up your own 'shop' as part of the eBay site. You can count on them to get your product listed with all the search engines, like Google and MSN. Really, eBay should be a large part of your marketing strategy.

Catalogue marketing for your product
Thinking of selling your product or invention through a mail-order catalogue? You know, you go to them with your product and they then sell it for you through their catalogue or website? Here are some key things you should watch out for as you begin to sell.

Giving away the farm
Many catalogues will ask for a multitude of discounts and concessions before they even place one order. You give them a set price for your product. But they insist on a lower price. They expect you to pay shipping. They want an 'advertising allowance'. They ask for a volume discount, a catalogue allowance and a photography fee. The requests for concessions go on and on. But beware of this game. If a catalogue truly likes your product, they will usually pick it up without requiring a ton of concessions.

Being stung by mistakes
Review a catalogue's rules and shipping requirements closely. Mislabelling your master cartons, late delivery or failure to follow any of their vendor requirements could cost you. Penalties are typically enforced through deductions off invoices. A few deductions here, a few there and you can kiss your profit goodbye.

Falling behind with orders
The only thing worse than having a product no one wants to buy is having one that so many people want you can't keep up with the deluge of orders. If you've never had insomnia, this scenario is guaranteed to cause it. When thinking about your production needs, think as optimistically as possible. Make sure you're capable of handling production if the catalogues are successful with your item. And always have back-up suppliers lined up - just in case.

Products that boomerang
Returns from catalogues are an inevitable part of the equation when figuring out your profit. If you have a good, well-built product that delivers on its promises, you have little to worry about. However, high returns are often the first warning sign that there are problems with your product. It breaks easily when posted, customers think it's overpriced or assembly instructions are confusing. Any number of issues can be red-flagged by high returns.

Placing your eggs in one basket
Many catalogues ask for an 'exclusive'. This agreement guarantees that the catalogue will be the only one carrying your product for the length of the exclusive. Generally, this is not a good deal for your company. Naturally, an exclusive with one company locks you out of the rest of the market. If you do grant an exclusive, keep it as short as possible. Six months is plenty of time for an exclusive.

Doing business with deadbeats
Let's face it, the main reason you do business with a catalogue is so they will pay you for your product. How frustrating it is then when they don't live up to their end of the deal. And it happens. Like all businesses that are strapped for cash, when a catalogue is experiencing lean times, they will delay payment to their vendors. So keep a close eye on when an invoice is due, and don't let them slide too far past the deadline. Any invoice more than a month overdue could indicate trouble. Your best recourse is to hold up shipments to that catalogue until you get paid. You can even ask for payment upfront on new orders.

Sell to a large market
Approximately 20% of all consumers have bought something through mail order in the last 12 months. With the right product, a company can go from zero to several million in sales - just through catalogues.

Compete more easily
Catalogues offer a level playing field for the big corporation and the smallest start-up. With few exceptions, products are judged and sell on their merits, not on the reputation of the manufacturer.

All you need is one
Unlike store distribution, manufacturers don't need a line of products. Catalogues evaluate one product at a time. So the one-product company is not at a disadvantage as they are when trying to get shelf space in a large store chain.

Save on packaging
Unlike point-of-purchase sales, where the package helps sell the product on the store shelf, the package has no bearing on the sales of an item in a catalogue. So you don't need an expensive four-colour box. In fact, the simpler the packaging, the better. A plastic bag is often sufficient.

Keep your risk low
A few catalogues now require a nominal 'advertising allowance' to sell your product. However, many catalogues still charge nothing to advertise your product.

Get national exposure
Catalogues offer start-ups and small companies exposure to millions of potential customers. When your product appears in a recognised catalogue, your product and your company enjoy instant credibility.

Test the market
Catalogues provide an ideal opportunity to find out how well your product sells. In addition, when you place your product in specific niche catalogues, you can test different segments of the marketplace. Naturally, success in catalogues can lead to success in other marketing avenues.

Tips on dealing with vendors
If you are going to be purchasing a lot of products or goods to sell in your mail-order business, don't forget to check out the vendors. You don't want to throw your money away; so do your homework.

1. Do an online search. Check that the company has a good reputation and that there has been no bad publicity.

2. Ask the company to supply references. If they suggest that their distributors or dealers can make £XXX a year, ask them to supply the names and addresses and phone numbers of some people who did just that. If they can't product a list of satisfied customers, look elsewhere for your pot of gold at the end of the rainbow.

3. Make sure you have a very good idea of what you are purchasing. It's important to feel comfortable about the products you will be selling. Make sure you understand what it is. Some companies are great on the sizzle but fail to provide a steak that you can resizzle and sell. If a company is too vague, for your instincts, find a new business opportunity in which you can invest.

4. Inquire about follow-up and support. It's important that you understand whether or not the company from which you might purchase your business opportunity will be available to answer questions in the future. Some are, and some do not provide this service. Some provide it, but for a fee. Understand what you are buying.

5. Ask about accessibility of future shipments and turn-around time. If you are investing in a company which will require that you purchase additional inventory or minimum orders, ask them how long they take to fulfil orders, how they ship and whether they are available on weekends etc.

6. Make an appointment to visit the facility or headquarters. Ask if you can visit the company's headquarters. If you get the run around, it means something is not right. If they welcome you to visit, you are one step closer to finding a good business 'partner'.

7. Use your instincts. Many people say, "If it sounds too good to be true, it probably is." We completely disagree, because we've seen incredible successes come from as little as an investment of £50. We say, "If it doesn't feel right, if the company with whom you are about to do business arouses your suspicious instincts, something could be wrong." We've evolved a long way from our cavemen brothers and sisters, but they relied very heavily on instinct for survival. When it comes to starting a business, it is necessary to conjure up this sixth sense known as instinct and use it.

8. Stick to it. No matter how slowly the business seems to move in its way to development, stick with it if you believe you have a great product to sell. Create a timetable and if you have made a mistake and misjudged the market know when to cut your losses.

Here's one final and crucially important mail-order tip. Remember the value of a niche market. It is easier to sell something to a small number of highly motivated, enthusiastic, easy-to-identify customers. What you lose in volume you should gain in lower costs and higher margins.