Pushing The Envelope

Cutting Costs

Companies can spend $200,000 to $300,000 to launch a full-blown mail order business today, Sroge says. Thrifty entrepreneurs, however, are getting started for much less.

"In most cases, people going into a mail order business create some kind of catalog," says Sroge, also the author of The United States Mail Order Industry (NTC Publishing, $54.95, 800-323-4900). This is where the high costs begin to accrue. "The cost of professional design, photography and printing is at an absolute minimum of $30,000. The flip side is that, if someone wants to create a catalog on their computer, print it at home and mail out a few thousand, that can be done, too."

In addition to production costs, there are mailing costs to consider. The U.S. Postal Service (USPS) has announced a rate increase for 1998, Schulte says, which will include regular first-class postage, bulk mail and other shipping costs.

To compensate for occasional rate increases, Blair adjusts his delivery fees and is planning to start charging for his catalog in the next year. "The fee--only a dollar or so--will be refunded when the customer places an order," he says. "This will help us qualify the genuine customers who request our catalog."

According to Garry Rodriguez, acting manager of the U.S. Postal Business Center in Newark, New Jersey, there are three other ways to reduce mailing costs. First, keep your mailing within the dimensions of the USPS' letter classification (6 1|8 inches by 11 1|2 inches, with a thickness no greater than 1|4 inch). Pre-sort your mail and use a bar-code system to automate your procedures. (Smart Marketing Suite software has a do-it-yourself bar-coding system in addition to its other, standard mailing features. From Group 1 Software; $1,895; 800-368-5806).

Rodriguez also recommends researching mail consolidation companies--firms that pre-sort mail and deliver it to bulk-mail centers around the country. To locate such companies, look in the Yellow Pages under "mailing services."

Chet Dalzell of the DMA says many mail order marketers have downsized their mailings in an effort to save on postal rates, which he says have risen 75 percent in the last decade. Conducting test mailings, he says, can help you check rented mailing lists before investing in major mass mailings. Getting rid of out-of-date addresses and making sure mailings are reaching customers who've moved is another method of economizing; the fewer wrong addresses you have, the fewer the mailings that will end up in the trash.

The mail order industry offers entrepreneurs a vast field of opportunity. Industry experts and successful entrepreneurs both agree: To be a success, make sure to sell something you know about; carefully research the costs associated with your business; keep your database maintained; and closely track your sales.

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This article was originally published in the October 1997 print edition of Entrepreneur with the headline: Pushing The Envelope.

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