House Calls The prognosis is good for mail order health-care companies.

In the average U.S. household's mail, you can count anaverage of 87 mail order catalogs per year. Yes, mail order hasbecome a way of life for Americans--191.5 million shopped by mailin 1995, according to the Direct Marketing Association, buyingeverything from lingerie to gardening supplies. And now, becausethe much-needed service exists, more and more mail order shoppersare buying prescription drugs, vitamins, fitness gear, diet aidsand other health-care products from the comfort of their homes andoffices.

According to John Schulte, chair of the National Mail OrderAssociation (NMOA), the mail order health-care industry'sannual growth rate of 10 percent to 12 percent helped push sales to$6.1 billion in 1996. And that growth rate is expected to remainsteady. That's a good prognosis for the 560-plus mail ordercompanies--many of which are small businesses--that currentlyspecialize in the health-care sector, as well as for entrepreneurswho are entering the field.

What's giving the health-care sector such a shot in the arm?Schulte cites all the usual reasons shoppers choose mail order overretail, such as convenience and privacy. But he adds that thegraying of America is the major impetus. "As the populationages, there is more need for health-care products," he says."And seniors have higher levels of income and don't likegoing out as much, which makes them a prime target for mailorder."

Frances Huffman, a freelance writer in Pacific Palisades,California, is a former senior editor forEntrepreneur.

Rx For Business

Since its inception in 1994, Alan Rudy's Express-Med Inc.has experienced a growth rate of 150 percent--a far more robustrate than the industry average. The Col-umbus, Ohio-baseddistributor of medical supplies has increased revenues from $1.4million in 1995 to an estimated $22 million in 1997.

The company, which sells diabetic supplies such as insulin,syringes and test strips, as well as respiration medications,wound-care supplies and supplies for incontinence, has hit upon oneof the tried-and-true prescriptions for mail order success:built-in re-peat customers. With some health-care products, such asdiabetic supplies, repeat orders are almost a guarantee. While amail order clothing catalog has to constantly come up with newfashions to entice consumers, providers of health-care products areoften expected to deliver the same products clients needindefinitely.

But according to Rudy, 34, taking repeat customers for grantedcan poison a business. Express-Med customer service repsconcentrate on building relationships with customers, contactingthem when it's time to reorder and following up with anothercall after an order has been shipped.

Although customer service and repeat business have helped boostbusiness at Express-Med, Rudy says they aren't the key to thecompany's success. The real secret? "The reason we'resuccessful," says Rudy, "is we're equipped to handleinsurance payments." Since many pharmacies don't processinsurance claims on diabetic supplies, Rudy claims customers cansave up to $100 a month on supplies for which they would have topay full price at a pharmacy. As the success of Express-Med shows,companies in the fast-growing prescription drug/medical suppliescategory must be prepared to handle the insurance end of thetransaction.

One A Day

Although not all mail order health-care businesses have to dealwith insurance claims, entrepreneurs in this arena face all theother challenges most mail order businesses do: advertising,marketing, product development, product expansion, developing amailing list and more.

For Russell Crist, founder and owner of Wholeaf AloeDistributors in St. John, Indiana, product expansion is a toppriority. For the past 11 years, Crist has offered a limitedproduct line, including aloe vera shampoos, conditioners andlotions. Unlike marketers of prescription drugs, which people areadvised to take by their physicians, Crist has had to educatecustomers about the benefits of aloe vera. "Everybody needsaloe vera, but they just don't know it," he says.

The nation's growing interest in health and alternativemedicine is helping spark growth at Wholeaf Aloe Distributors."The alternative medicine industry is growing [quickly], andour customers have been asking us to branch out into that arena forquite some time," says Crist, 58, who is teaming up with amanufacturer of nutritional supplements to offer additional itemssuch as calcium and melatonin. It's also a strategy to helpfight off another big challenge: competition. According to Crist,"There's more competition every day."

And the government may be adding to these entrepreneurs'challenges. Crist warns that some of the large drug companies arelobbying to get the government to require prescriptions for manyvitamins currently available over the counter, including vitamin C.This could have a potentially devastating effect on thenation's vitamin marketers, which make up part of the largestsector of the mail order health-care market.

Regulation already affects mail order marketers who sellprescription drugs. For example, Express-Med is required to hold apharmacy license because it sells prescription medications.It's important to check into any licensing requirements (startby calling the NMOA) before forging ahead with a health-carebusiness.

First-Class Lists

Coming up with a viable mailing list is one of the keys tosuccess in the mail order industry, and the health-care segment isno different. Whether you sell products to individuals, doctors orhealth-care facilities, your ability to find customers and getdirect-mail pieces into their hands can make or break yourbusiness.

Finding a "gatekeeper" could increase your customerbase dramatically. For instance, if you sell dental hygieneproducts, you may want to team up with dentists to market yourproducts. You supply dentists with brochures, and they recommendyour product to patients.

That's one of the ways Crist has helped boost sales atWholeaf Aloe Distributors to an estimated $400,000 in 1997."Lots of doctors order products from us for theirpatients," says Crist, who also wholesales his aloe veraproducts to health-food stores.

Crist is just one of thousands of entrepreneurs in thisburgeoning field. And while you might think they are doing all theycan to ward off competition, some business owners--like PeterRothschild of Featherspring International in Seattle--are welcomingthe increased competition.

Rothschild's company, started in 1972, sold more than $5million worth of orthotics, insoles and knee braces last year. Hiscompany adds some 200,000 names to its mailing list each year, inpart because the growing 55-plus market makes up the bulk of thecompany's customers. Rothschild, 50, sees newcomers to thismarket as potential buyers for his mailing list. "Sincewe're a small niche, we can provide names to othercompanies," he says.

Just as Rothschild is optimistic about the industry'sfuture, the diagnosis for entrepreneurs entering the field looksgood. In fact, a mail order health-care business may be just whatthe doctor ordered.

Contact Sources

Direct Marketing Association Inc., (612) 788-1673,e-mail: consumer@the-dma.org, http://www.the-dma.org

Express-Med Inc., 3592 Corporate Dr., Columbus, OH 43231,(614) 895-5211

Featherspring International, (206) 545-8585, http://www.featherspring.com

National Mail Order Association, (612) 788-1673, http://www.nmoa.org

Wholeaf Aloe Distributors, P.O. Box 221, St. John, IN46373, (800) 599-2652