Q: I'm looking for information on how to start a mail order catalog. Anything you can tell me would be appreciated.
A: Mail order can be a great business for the new entrepreneur. Those small classified ads you see in the back of magazines and newspapers can reap great rewards. Because of that, many new entrepreneurs who don't know what kind of business to start often turn to mail order since it seems that mail order businesses have been around forever, are fairly inexpensive to start and have a huge upside. That's all true, but you must be careful. Westinghouse lost $10 million with its mail order record club, and General Foods was forced to close a mail order business of its own.
So if you want to start a mail order business, let's make sure you're doing it right. The five rules you must follow to achieve mail order success are:
Rule 1: Pick the right product. Some things sell great by mail, others (as the big boys above learned) don't. You must pick a product that traditionally sells well via mail order. There's no need to reinvent the wheel. Those products are:
How-to instruction booklets
Craft and hobby kits and supplies
Handcrafted items such as quilts and toys
The important thing here is to do some research before you get started. Look through periodicals you might want to advertise in and see what sorts of ads they run. If no one else is selling Ginzu knives, you might want to rethink your idea. On the other hand, if you see that "grandma's recipes" are all the rage, hop aboard. One more thing to check out: Which ads repeat week after week, month after month? Those are the ads you want to emulate.
Rule 2: Plan for repeat sales. It's hard to make a successful mail order business with one-shot products. Accordingly, repeat sales are important. Having a catalogue with more than one type of product in it will go a long way toward creating a loyal clientele. Similarly, selling items that deplete, such as stationary and cosmetics, can assure repeat sales.
Rule 3: Use proven advertising techniques. This is another area where you need to do some research before getting started. Don't look for the number of ads a periodical may have but rather how many of those ads repeat every month. Repeat ads mean people are successfully selling things through that medium. Also, make sure to pick the right months to advertise your mail order item. January, February, September, October and November are traditionally the best months for mail order sales.
Rule 4: Keep your overhead low. Test an ad first before you start running it in a lot of places. Dropping a bundle on an unproven ad is a sure way to go out of business fast. Similarly, don't expect gigantic results from your ad campaign. A small classified usually brings in about 20 replies per every thousand of people who see it. If you keep your overhead low, you'll be able to last long enough to see which ad works best.
Rule 5: Monitor your results. You must learn where your business comes from-which ad, which periodical, which day. This will help you target your mail order dollar more wisely.
Steven D. Strauss is a nationally recognized lawyer, author and commentator. He is the author of theAsk a Lawyer(W.W. Norton & Co.) series of legal advice books geared toward the layman. He is also the author of The Unofficial Guide to Home-Based Businesses and is a business columnist for USA Today.com.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.