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60 WAYS TO INCREASE YOUR MAIL ORDER CATALOG SALES
Perfection in a mail order catalog is like infinity...you can
continually approach it but never quite reach it. In the case of
many catalogs, however, it is not necessary to achieve perfection
or even approach it very closely - in order to make the catalog
vastly more profitable than it is at present. Relatively small
improvements can result in a more-than-proportionate enlargement
of that all-important figure on the bottom line of the financial
statement.
Making as many improvements as possible as quickly as possible is
probably the most profitable procedure. But even making each new
catalog a little better than the one which preceded it can
produce substantial increases in sales per catalog and in total
sales over a period of time.
Following are 60 suggestions that should help your catalog do a
better selling job for you if you are not already using these
ideas. Whether you use all of them in connection with your next
catalog or adopt a few at a time in the course of producing
several future catalogs, the ultimate result should be very
noticeable and very gratifying.
BEFORE YOU CREATE YOUR CATALOG....
1. Look at your present catalog with extremely cold, critical and
unsympathetic eye. Pick out all the faults-large or small-that
you could find if you were no longer the owner of the catalog but
a nitpicking customer who has been disappointed in his or her
last purchase from you and is still sore about it. Such a review
could be very enlightening-even if it should prove slightly
embarrassing-and could make your new catalog much more
profitable.
2. Put your "letterman" on your team. Review all incoming
correspondence from customers and prospects during the last two
years for comments, suggestions or criticisms that may be helpful
in preparing your new catalog. Screen all future correspondence
of this nature as it arrives and place copies of the useful
letters in a special file to be reviewed before starting your
next catalog.
3. Think of your catalog as a means of helping your prospects
accomplish something they want to accomplish or create an effect
they want to create-and prepare your layouts, copy and
illustrations accordingly.
4. For each major type of product you sell, determine as many
reasons as possible why different groups of prospects or
customers do buy or should buy this product. Arrange your groups
of prospects or customers in their orders of importance. For each
group arrange the reasons for buying in order of their
importance. Then arrange the reasons in their order of importance
to your total group of prospects or customers. Use the most
important reasons as the basis for the copy and illustrations you
use in this catalog.
If there are significant differences in the primary reasons for
purchasing different types of products, make the presentation for
each specific type of product fit the product of using the same
type of presentation for different types of products...
5. If the preceding reasons indicate that different appeals are
needed for different groups of prospects or customers, change the
wrap-around, letter or introductory page of your catalog to
appeal to different groups, and separate your mailings
accordingly.
6. Plan your catalog completely before you start preparing
layouts and copy.. Use all 60 suggestions in this list as your
guide for your planning..
7. Plan to ring your cash register more often by using approaches
in tune with the times.
8. Plan to attract new customers-reactivate dormant customers-and
get bigger and better orders from present customers by adding new
and excitement and extras pleasure to owning or using the types
of products offered in your catalog.. For example, feature
dramatic new items, unusual items, items that are especially
timely, etc... Include unusual facts of interest about specific
items.
9. Plan to add interest to your catalog-and give it a much longer
life--by including helpful information on how to use, operate and
maintain your products...unusual uses, etc.. This is information
that customers can use to advantage and will want to keep for
future reference, Such information also increases customer
confidence in your company which correspondingly increases the
customer's inclination to buy from you.
10.. Determine whether items that were unprofitable or barely
profitable in the present catalog should be promoted more
vigorously in the new catalog or should be dropped and replaced
by new products, Never keep an unprofitable product in your
catalog just because it is one of your favorites. If it doesn't
sell, get rid of it!
11. Give your company a distinctive personality. Promote this
personality in all future catalogs as a means of making your
company not "jut another mail order marketer" but a very special
marketer in the minds of your prospects and customers.
WHEN YOU CREATE YOUR NEW CATALOG...
Use Procedure 12 to 19 to make your prospects want your products:
12. Write your copy to tie in with and stimulate the specific
reasons for buying discussed in the preceding section.
13. Wherever possible show your prospects how your merchandise
can accomplish the results desired by the prospects to a greater
degrees than competitive products-and prove it by citing results
of lab tests, field tests, wards received, other special
recognition- and especially testimonials and case history
stories, preferably with photographs. Give the prospect every
possible incentive to buy from you rather than somebody else.
14. Put special emphasis on your products and/or services which
are exclusive or markedly superior to those of your
competitors-and tell your readers WHY your products and/or
services are superior!
15. Take the prospect "behind the scenes" if practical and show
what you do (especially exclusive or improved procedures) to make
your products better than competitive products.
16. Make the most of new items the first time you offer them;
they are only new once.. Give them every opportunity to succeed
saleswise by giving them preferred position and allowing adequate
space for you to do a proper educational and selling job on them
at the time they are introduced.
17. Assure prospects that is easy to use these products...that
instructions are included with each order (if true) and/or are
available in specific books or magazines (preferably obtainable
from you)...and cite case histories to prove how successful other
customers have been in using them.
18. Tell prospect how to start using your merchandise properly
and what other action should be taken-and when-or state that this
information will be included with the shipment.
19. If your products are bought primarily for pleasure or are
considered a luxury or "non-necessity", help the prospect
rationalize the value of the purchase.
Use Procedures 20 to 26 to make it easy as possible for the
prospect to make an accurate selection of the types of
merchandise and the specific items of each type best suited for
his or her purposes:
20. Group all items of the same type in the same section of your
catalog.
21. Arrange the groups of items in their present or potential
order of importance to you profitwise. Put the most important
group at the front of your catalog and the least important near
the end of your catalog (but not on the last three pages).
22. Within each group , arrange the individual items in
descending order of quality, price, popularity or promotional
possibilities.
Give the most important items the most valuable positions and
extra space for copy and illustrations. Allocate positions and
space to the other items in the order of their importance.
23. If practicable, use the Sears system of offering the same
type of item in three different qualities-- GOOD, BETTER and
BEST- with different price ranges to match the differences in
quality. Usually it is more effective to talk about the BEST
quality first and the GOOD quality last.
24. Use COMMON copy to present features or qualities that are the
same for all or most items of the same type.
25. Use INDIVIDUAL copy to talk about the features or qualities
that make each specific item different from all or most of the
other specific items in the group.
26. In preparing the INDIVIDUAL copy above, use "parallel
construction" to help the prospect make a point-by-point
comparison of the specific items as quickly, easily and
accurately as possible.
Once the prospects have selected the merchandise they wish to
buy, make it as easy as possible for them to order Procedures
27-31
27. Be sure your ordering information is easy to understand.
28.. Make your order form easy to use, with adequate space to
write the necessary information.
29. Put in one or more extra order forms to make it easier for
customers to order again..
30. Encourage prospects to order by phone on credit, charge or
c.o.d. sales and encourages them to telephone for further
information they may desire.
31. Offer a 24-hour phone-in service through an arrangement with
a local telephone answering service who can answer your phone
during the hours that your business is nor normally open.. This
is especially convenient for the customer who shops in your
catalog during evening or weekend hours.
Make it as easy as possible for customers to pay for their orders
Procedures 32 and 33
Offer credit card service on orders for a specified amount or
more.. By putting a minimum on credit card orders you will often
increase the original order to at least that minimum amount.
Credit card orders tend to be nearly double the size of cash
orders.
33. Make it easy to determine shipping charges so they can be
included in cash-with-order payments.
Use order starters and sales stimulators such as 34 to 42
34. Use a wrap-around letter on the front of your catalog to
stimulate ,ore orders and to do a selling job on the merchandise
in the catalog; also to make special appeals to special groups or
call attention to merchandise in the catalog of special interest
to special groups.
35. Use the wrap-around to offer order starters (loss leaders or
hot items to get prospects in to the catalog).
36. Offer specials at intervals throughout the catalog to entice
readers to start an order. Once they buy even one lonely item
they'll tend to order other items to go with it.
37. Offer logical assortments of mixed or matched seasonal items
to provide extra variety and pleasure at any given period of
time. Make suggestions for these assortments and provide
inducements for prospects to order them.
38. Offer assortments of mixed or matched items designed for use
during different seasons in order to provide variety and pleasure
throughout the year (or most of it) instead of during just one
season.
39. Offer a free guide or plan for using each assortment above
correctly and offer information on how to make the most effective
overall use of the assortments.
40. Offer a gift or discount for orders of certain sizes and use
a stairstep graduated approach to increase the value of these
discounts or gifts as the size of the order increases.
41. Offer a gift-shipping with gift cards.
42. Provide extra services such as "Seeker Service" for items not
listed in the catalog. Through extra service techniques you will
make your customers more dependent on the information you provide
and they will become more dedicated customers.
Stimulate promptness in ordering Procedures 43 and 44
43. Use action incentives to spark early orders, such as premiums
for ordering by a specified date; special offers for a limited
time only; etc. When a time limit is involved, send a reminder
(letter, promotional mailing, second catalog, etc) timed to
arrive two weeks ahead of expiration date (as nearly as you can
time it with current third class mail service).
44. Mention frequently and prominently in your catalog that
anyone who orders merchandise from this catalog will
automatically receive the next catalog free. If you wish, this
offer can be modified to require the purchase of a specified
amount during the life of the catalog or by a specified date.
Other suggestions Procedures 45 to 53
45. Use the back cover of your catalog for special offers; also
the inside front and back covers and the pages facing the inside
covers.
46. Use teaser copy and cross-references throughout the catalog
to entice readers (into other sections. This can be especially
effective when related accessory items are sold.
47. Concentrate service information on a Service Page; locate it
on a page conveniently adjacent to the order form; and use
frequent cross-references to this page throughout the catalog to
stimulate extra page traffic.
48. Humanize yourself and your catalog by making it seem like the
catalog came from helpful, friendly people. If your business is
truly a "family business" don't hide that fact.
49. Watch your language! Avoid using technical "industry or
business jargon" in your selling and service copy; keep legal
phraseology to the absolute minimum in your guarantee.
50. Make your entire catalog harmonious in layout and copy style
but not monotonous. Include enough variety to keep the reader
interested instead of becoming bored.
51. Give your catalog a longer life by emphasizing the length of
time that you will be able to ship from it and suggesting that
readers keep the catalog for future reference.
52. Ask for referrals from your satisfied customers; also names
of friends who might like to receive a copy of the catalog.
Consider testing the "cluster concept" that neighbors are very
similar and nail to your customers next door neighbors.
53. Sell subscriptions to your catalog by providing a location on
the catalog for readers to remit 50 cents for a "full years
subscription to your catalog." You can also suggest that they
give a "gift subscription" to a friend very inexpensively (and
thus pay for the catalog you mail to the referral).
AFTER YOU CREATE YOUR NEW CATALOG...
54. Use the basic or major catalog to establish the value and
regular price of the merchandise. Use other, smaller catalogs or
solo mailings to promote sales from the major catalog or to
provide special reasons for buying (reduced prices on individual
items or special assortments, closeout, etc).
55. Ask the recipient to pass the catalog along to an interested
friend if the recipient already has a copy or is no longer
interested in this type of merchandise.
56. Re-mail the same catalog to your better customers 3 to 5
weeks after you mail it the first time.
57. Prepare an alternate cover for the catalog and mail the same
catalog to your entire list several weeks later. You'll find it
will do just about as well as the first mailing did.
58. Mail to your BETTER CUSTOMERS monthly, featuring items
carried in the catalog- don't rely solely on the
once-or-twice-a-year catalog.
59. Use your catalog as a package stuffer-enclose one with every
order you ship. Your best prospect is the person who just placed
an order with you and received prompt and safe delivery of the
items ordered.
60. Be prompt in acknowledging orders (with thanks), answering
inquiries, shipping merchandise and making refunds or exchanges
if necessary. Remember the old adage of that great retailer
Marshall Field, "the customer is always right." Less than 2% of
the population will intentionally try to take advantage of you
and the other 98% are well worth cultivating.
...And just as every good mail order catalog has something extra
thrown in for good measure make the customer happier...here's our
extra one for good measure!
61. If you receive a change-of-address notice from one of your
customers, immediately mail a copy of your catalog addressed to
"The New Residents at (the former address of the customer)"
because the new residents probably has tastes and interests very
similar to those of your customer-after all, he bought the same
house! To give this mailing added power, you might tip a note
onto the front cover of the book stating that "the Smiths used
our catalog regularly, maybe you'll find it equally useful."
21 STEPS TO HOME BUSINESS SUCCESS
Fifty million home-based businesses will be in operation by 1997,
according to Link Resource's National Work-at Home Survey. All
around the country, people who want more control over their lives
are starting home businesses
In New Orleans, Rick Hart's home based cajun Cargo ships seafood
nation wide. In Palatine, Illinois, Stephaine Heavey works from
home designing and selling original patterns for fabric dolls.
And in Dallas, Lisa McElya published the Dallas Party & Event
Planners Guidebook from the entire first floor of her two-story
home.
These three people are living the new American dream of owning a
business, but avoiding the high overhead and start-up costs of a
commercial location. If the idea of working from home is
appealing, but you don't know where to begin, here is a
step-by-step guide.
STEP #1 DECIDE WHAT PART OF THE HOUSE TO USE
Select an area away from family activity. The perfect space is a
separate room (or perhaps the garage), but any area will do, if
it can hold all the business supplies and equipment, and also
provide enough work space for desks, tables, or counters.
STEP #2 DETERMINE HOW MUCH TIME YOU CAN SPEND ON THE BUSINESS
Many people start a home business on a part-time basis while
raising children or working outside the home. Others start
full-time when family and finances allow. However you begin,
figure out how may hours per week you can devote to the business
Make a weekly chart of your activities, examine it, and determine
where the business fits. Don't assume you have time and find out
later you don't.
STEP #3 DECIDE ON THE TYPE OF BUSINESS
Make a list of things you like to do, your work and volunteer
experience, and items you own that can be used in a business.
Look over this line-up, and using ideas from it, list possible
businesses to start. Eliminate any business that isn't appealing
or doesn't fill a need people have.
For ideas on different types of businesses, consult the end of
this article. Other ideas can be found in the source material
listed at the end of this article.
STEP #4 CHOOSE A LEGAL FORM
The three basic legal forms are sole proprietorship, partnership,
and corporation. The most common is the sole proprietorship. As
its name implies, a sole proprietorship is owned by one
individual. It is the oldest form of business, the easiest to
start, and the least complicated to dissolve. Here are some of
the advantages of this business form:
1. You own all the profits
2. Your business is easy and cheap to organize. You don't need
any government approval, although you may be required to carry a
city, state or county license. Your only other obligation is to
notify the Internal revenue Service (IRS) for the purposes of
sales tax.
3. You're the boss
4. You enjoy certain tax savings.
You must pay regular individual taxes on your income, property,
and payroll, but these are not levied as special taxes, as with a
corporation. You will also have to pay sales tax which you have
received from your customers.
5. Greater personal incentive and satisfaction. Since you have
your investment to lose if your business is not successful, you
should be more willing to put time, thought, and energy into the
business. And when your business is successful, you enjoy maximum
sense of accomplishment since you know its success was dependent
upon your decisions about your management ability alone.
For more information about this and other forms of business, send
for the U.S. Small Business Administration (SBA) Publication
MP25. Selecting the Legal Structure for Your BUsiness (50 cents).
It outlines the advantages and disadvantages of each legal type
of structure. If after reading it you are still uncertain what
form of the business should take, consult an attorney.
STEP #5 DETERMINE WHERE THE MONEY WILL COME FROM
There are three ways to finance start-up costs: use your own
money, obtain a loan, or find investors. If possible, it is
better to start small, use your savings, and not worry about
repaying a debt. also keep in mind that since you are a
home-based, chances of qualifying for a loan or finding investors
are slim until the success of your idea is proven.
STEP #6 GATHER INFORMATION
Spend a few weeks researching home-based businesses. A library or
bookstore can provide numerous books on business basics, and on
the specific type of business that interest you. Homemade Money
by Barbara Brabee (see sources) is an excellent book to start
with.
If you are considering a computer business, get in touch with the
association of Electronics; Cottagers, P.O. Box 1738, Davis, CA
95617-1738. To keep informed of what is happening in home
business world, contact National Home Business report, P.O. Box
2137, Naperville, IL 60566, for subscription information; and
Mothers Home Business Network, P.O. Box 423, East Meadow, NY
11554 (send SASE for free information).
STEP #7 CHECK ON ZONING RESTRICTIONS
Find out how your property is zoned, the call City Hall and ask
what regulations apply to home businesses in that zone. Also, if
you rent or live in a condominium, check the lease or homeowner's
association rules to be certain a home business is allowed.
Generally, if you do not annoy your neighbors with excess noise,
odors, and traffic, you will not be deterred from running a
business at home. The neighbors may not even be aware of the
business, but it is necessary to know exactly what you can and
can't do before you start. This is important should any problems
or questions arise later.
STEP #8 PICK A BUSINESS NAME AND REGISTER IT
If the business you choose is different form your name, file an
assumed (or fictitious) name certificate with the county. You are
notified if another business already has that name, so you can
select a new one.
Do this before investing in expensive stationery and brochures.
It costs only a few dollars to file, and it protects the business
name from being used by someone else in the county.
STEP #9 WRITE A BUSINESS PLAN
A good business plan clarifies your ideas and establishes a plan
of action. A good business plan should include a description of
what you are selling, your background and qualifications, who the
prospective customers are and where they can be found, what is
needed to build the business, how you plan to promote, and how
much money is need for start-up costs.
SBA Publication #M925, The Business Plan for Home-Based Business
($1) is helpful.
STEP #10 GET AN IDENTIFYING NUMBER
If you are the sole proprietor of the business and have no
employees, you may either use your Social Security number or an
Employee Identification Number (EIN) as the business number on
official forms. If you have employees, or the business is set up
as a partnership or corporation, you must obtain an EIN. To do
this, complete IRS Form SS-4 (Application for Employer
Identification Number) and file it with the nearest IRS Center.
STEP #11 OBTAIN A SALES TAX PERMIT
If the product or service you sell is taxable, you need a state
sales tax permit. Call the local tax agency, explain the type of
business you have and what you sell, and ask if you need to
collect sales tax. If you do, they will send you the necessary
information and forms to complete. You also use this tax number
when your purchase items for resale.
STEP #12 OBTAIN LICENSES & PERMITS
It's very important not to overlook any necessary license or
permit. For example, some cities and counties require a general
business license, and most have special laws regarding the
preparation and sale of food.
Call City Hall to find out what is need for your particular
business. In addition, Chamber of Commerce provide information on
city, county and state licenses and permits.
STEP #13 SELECT BUSINESS CARDS, STATIONERY, BROCHURES
Spend time on the color, design and paper for these items. They
make a definite impression-good or bad- on the people who receive
them. If you are not certain what is most suitable and effective,
consult a graphics designer or a creative printer whose work you
like.
STEP #14 OPEN A BUSINESS CHECKING ACCOUNT
Call several banks to find out what services they offer, and what
minimum balance, if any, must be maintained to avoid paying a
service charge. Also ask about credit card if you plan to offer
this convenience to your customers. Bank fees can be significant,
so shop around for the best deal.
If your personal checking account is with a credit union, see if
it can also provide a separate business account. when you open
your account, you may need to show the assumed name certificate
and business license.
Finally, investigate obtaining a credit card in the business's
name. If this is not possible, set aside a personal credit card
to use for business expenses.
STEP #15 SET UP RECORD-KEEPING SYSTEMS
Put together a simple and effective bookkeeping system with an 8
1/2 x 11" three-ring binder, columnar pad sheets and twelve
pocket dividers from the office supply store. For each month, set
up columnar sheets for income and expenses. Use a pocket divider
for each month's receipts, bank statement, deposit tickets, and
canceled checks.
In addition, an automobile log for business mileage, and filing
system for correspondence, invoices, supplier catalogs, client
records, etc. are two other useful tools.
For more information on record-keeping, see IRS publication #583,
Information for Business taxpayers.
STEP #16 CHECK IRS REQUIREMENTS
If you comply with basic IRS guidelines, you can deduct a
percentage of normal household expenses (mortgage, interest,
taxes, insurance, utilities, repairs, etc.) as a business
expense. see the box accompanying this article and, for more
detailed information, IRS publication #587, Business Use of the
Home.
Also become familiar with these IRS forms: Schedule SE
(compensation of Social Security Self-Employment Tax) and
Schedule 1040 ES (estimated Tax for Individuals). Depending on
circumstances, you may have to file them.
STEP #17 OUTFIT THE BUSINESS
Make a list of everything needed to start the business, but
before you buy anything, look around the house for things you
already own that are usable.
When you are ready to start purchasing, check the classified ads
and garage sales. Both are good, inexpensive sources for office
furniture, typewriters, computers, answering machines, etc. But
only what is absolutely necessary for start-up, and wait until
the business is off the ground to get the extras.
STEP #18 DECIDE ON TELEPHONE REQUIREMENTS
Call the telephone company to find out the cost of a business
phone in your area. If you cannot afford a separate business
line, investigate the telephone company's regulations on using
your personal phone in a business. It may be possible to do this
if you follow certain guidelines. Keep a record of long distance
business calls as they are a deductible expense. Finally,
consider the benefits of an answering machine to catch calls when
you are out.
STEP #19 CHECK OUT THE POST OFFICE & UPS
Using a post office box as the business address down plays the
fact you are home-based. It also prevents customers from dropping
in at all hours.
While looking into box rental, ask for information on the various
postal rates, particularly bulk rate, if you plan to do large or
specialized mailings. If you mail many packages, check out United
Parcel Service (UPS), as it is less expensive than the Post
Office.
STEP #20 PURCHASE THE NECESSARY INSURANCE
Check with your homeowners insurance agent about a rider for your
existing policy or the need for a separate business policy. Also
make sure you have adequate personal and product liability
coverage. Shop around, as each company has different rules
regarding home businesses
To save money on medical insurance, join an association and
participate in their group plan. One such body is The National
association for the Self-Employed: they can be reached at
800-527-5504.
STEP #21 ORGANIZE THE HOUSE & YOURSELF
To have more time for business, organize and simplify household
routines. Start by holding a garage sale to get rid of
unnecessary possessions. Next, have a family conference and
divide household duties, making sure each person does his or her
part. The, set up a planning notebook to keep track of
appointments, things to do, calls to make, errands to run,
shopping, etc. Finally, set up a work schedule so you won't get
sidetracked by TV, neighbor's visits, snacking, and telephone
calls.
Creating and operating a home business is a wonderful and
rewarding challenge. The satisfaction is not only in the money
earned, but in doing what makes you happy.
SOURCES
SMALL BUSINESS ADMINISTRATION. Pamphlets mentioned in this
article are available by calling the nearest SBA office or
ordering from SBA, P.O. Box 15434, Ft. Worth, TX 76119.
NEWSLETTERS
HOMEWORKING MOTHERS. Mothers' Home Business Network, dept. 10-6,
P.O. Box 423. East Meadow, NY 11554: sample available for $2 and
SASE.
NATIONAL HOME BUSINESS REPORT, Barbara Brabec Productions, Dept
10-6, P.O. Box 2137, Naperville, IL 60588; $18/year, quarterly.
(Sample issue, $4.00)
BOOKS, REPORTS
ELECTRONIC COTTAGE HANDBOOK #2 MAKING $$ WITH YOUR HOME COMPUTER
by Lis Fleming. Fleming, Ltd., P.O. Box 1738, Davis, CA
95617-1738; $7.00 ppd.
HOMEMADE MONEY by Barbara Brabec, Barbara Brabec Productions,
P.O. Box 2137, Naperville, IL 60566; $16.95
HELP FOR YOUR GROWING HOMEBASED BUSINESS by Babara Brabec.
Barbara Brabec Productions, P.O. Box 2137, Naperville, IL 60566;
$13.45.
THE #1 HOME BUSINESS BOOK by George and Sandra Delany. Liberty
Publishing Publishing Co. Inc., Dept 10-6, 50 Scott Adam Rd.,
Cockeysville, MD 21030; $4.95.
THE COMPLETE WORK-AT-HOME DIRECTORY AND IDEA BOOK. E.A. Morgan
Publishing Co.,Dept. 10-6, P.O. Box 1375, Huntington, NY 11743;
$15. (Includes free report: " The Legalities and Tax Advantages
In a Home Business.")
THE WORK-AT-HOME SOURCEBOOK by Lynie Arden. Live Oak
Publications, Dept. 10-6, 6003 N. 51st Street, Suite 106,
Boulder, CO 80301; $13.95
STAY HOME AND MIND YOUR OWN BUSINESS by Jo Frohbieter-Mueller.
Betterway Publications, Box 219, Crozet, VA 22932; $11.45
101 BEST BUSINESSES TO STAR by Sharon Kahn & The Philip Lief
Group (Doubleday, 1983, $19.85). Many of the businesses profiled
are suitable for running at home.
ASSOCIATIONS
AMERICAN HOME BUSINESS ASSOCIATION, 60 Arch St.,Greenwich, CT
06830.
NATIONAL ALLIANCE OF HOME-BASED BUSINESS WOMEN, Dept. 10-6, P.O.
Box 95, Norwood, NJ 07648; $30 annual membership.
NATIONAL ASSOCIATION FOR THE COTTAGE INDUSTRY, Dept. 10-6 P.O.
Box 14850, Chicago, IL 60614; $45 membership.
MAIL ORDERS BEST KEPT SECRETS INTRODUCTION
While many aspects of mail order are commonly understood by those who have alreday learned the hard wya--by costly experience, years of trail and error--there are several facets of mail marketing that remain cloaked in mystery, clouded by half-truths, misinterpretation and misinformation among those who0 have not yet had the advantages of such experience.
This report will attempt to clear away some of the fog and reveal mail order the way it is in the real world, not as some crafty promotor would have you believe it is.
We will cover a wide territory in just a few concise pages, and present both pros and cons of various mail marketing ideas, methods and pratices within the large sco-e of selling by mail. Many books on the subject, some consisting of hundreds of pages do not include the informatioon you will find here.
CAPITAL INVESTMENT
You've probably seen the ads:
"Start your own mail order business with just
$10 and make thousands of dollars at home in
your spare time"
You don't really believe ads like that, do you? of course not. You're much too intelligent to fall for such misleading promises, but there are many people who are not as smart as you, and it's to this audience these ads are directed.
some shrewd promoters of mail order plans, schemes and other questionable programs prey upon the gullibility of the public. They appeal to humanity's inherent greed...the dream of making a fortune without investment, risk or effort.
Just for the record, there still is no free lunch. The amount necessary to begin will depend on what you hope to accomplish. If you plan to buy or rent a small building, stock it with merchandise, hire a few employess, we're talking upwards of $50,000. To begin at home in spare time, using a spare room and operate as a sole proprietorship or with the help of family members, you can trim that figure by many thousands of dollars.
Before we get too specific about dollar amounts, let's pose a few questions:
* How much do you know about mail order? Do you have knowledge and experience in advertising, graphic arts, printing, accounting, record keeping, taxes?
* Have you selected your product line, and have you determined who your prospective customers will be? Do you know which publications to advertise in, what size ad to use, which mailing lists to rent?
* Do you have a reliable supply source for what you will be selling, or will you be your own supplier as manufacturer or publisher?
* If you must rely on an outside supplier, will you purchase products wholesale to stock and ship your customers, or will you operate on the dropship method, having orders shipped directly to your customers from supplier's stock?
Your answers to these questions will help in figuring your initial cost. For instance, if your knowledge of mail order and the other related subjects consist of what you might have read in a book about 10 years ago, you're not ready to begin. Plan to invest at least $100 in a few mail order books, reports, subscriptions to a couple of mail order journals, maybe even subscribe to a newsletter. Learn as much as you can about mail order selling, now and on a continuing basis, because there are always new ideas, changes and innovations that you must keep up with. Never think you know all there is to know.
Obviously, it will require more capital to produce whatever type of item you sell than if you purchase ready-made products, and it will cost more to buy and stock what you sell rather than doing business on a dropship basis.
We haven't established the selling price of the products in question, either wholesale or retail, but it will require more capital to maintain an inventory of $50 items than if they are to sell for only $5 so this must be taken into consideration.
When purchasing inventory from an outside supplier, you can probably buy in dozen quantities, but the picture changes if you produce your own product line. It would not be practical to produce only a dozen of anything because the production costs would be prohibitive. To enjoy the lowest possible production costs, you would be required to turn out a minimum of a thousand at a time.
On a dropship basis, inventory costs would be zero. If purchasing items to stock yourself, you should maintain an inventory of about $500. If you plan to manufacture, publish or otherwise produce your own products, you should figure a minimum of $3,000.
The biggest chunk of your initial capital--and this is important, because most newcomers don't realize this until it's too late--should be reserved for advertising and promotion. So, if you invest $500 in products, plan to keep about $1500 for promotion. This will include space ads, classified ads, mailing lists (if you opt to take the direct mail route), circulars, brochures, sales letters and envelopes.
If you are operating on the dropship method, you should still plan to invest a minimum of $500 in advertising to get your business off the ground.
As you can see, there is no exact answer to the capital question, but now you should have a working estimate as to how much capital will be required, based on the direction your are investment for your particular objectives.
ADVERTISING--THE GOOD, THE BAD AND THE UGLY
To the mail order newcomer, all advertising looks pretty much alike. Each ad represents a person or company who is trying to sell you something or get you interested in what they have to offer. You normally don't try to judge the sales copy, layout or graphics. Either you buy, inquire or pass it by.
As you become an active advertiser, yourself, all ads begin to take on a new perspective. You see ads interesting or boring; one will zoom out at you with sparkle and zest, while another leaves you cold. All this analysis will be based on your own experience in creating and placing advertising for whatever you are selling.
In the final analysis, however, personal opinion or judgement means nothing to the success or failure of advertising. It's the results of each ad which determines its power and effectiveness.
WHAT MAKES ADVERTISING SUCCESSFUL?
MANY INDIVIDUAL ELEMENTS COME INTO PLAY MAKING A SUCCESSFUL AD:
1. PERSUASIVE SELLING COPY. The wording is the single most important element in determining a successful ad. What counts most is what you say and how you say it.
2. PLACEMENT IN APPROPRIATE PUBLICATION. This might seem obvious, but it is often neglected. If the right people don't see your ad, they can't respond.
3. SPACE/PRICE IN PROPORTION. You simply can't sell high priced merchandise from a small classified or one inch ad space. These should be considered as a low cost means of building a mailing list by asking readers to write for more information. If you expect to sell directly from an ad, the size of the ad will have to increase in proportion to the selling price. Two or three inches of space for items selling for 42 to $5... half or full page for items selling for more than $5 up to $20. When the price goes above $20 it is usually best to run inquiry ads and follow up with a printed sales presentation. There are exceptions, but this is a fairly safe rule to follow.
4. TESTING ALL THE ELEMENTS. Unlike institutional advertising (toothpaste, cars, soap, etc.) which must rely on extensive market research, analysis, surveys and a lot of psychology to achieve success, mail order selling has a built-in "watchdog" to guard against waste and loss, and to help assure that every dollar spent will produce a profit...or at least tell you why it didn't, so you won't make the same mistake twice. This method (unique to mail order) is called KEYING. By inserting a number or letter (or combination) into every ad you run, you can tell which ad works in which publication and in which issues it works best. More sophisticated forms of this testing technique can be carried thru by trying a new headline, a different testimonials, guarantees, etc. The testing technique know no limits, but there is also danger in becoming test-happy. To use the testing principle effectively, be certain that the results will justify the time and expense of making the test. If it merely means adding to your paperwork without adding profit or reducing cost, it isn't worth it.
DROP SHIPPING
Theoretically, you can offer a million dollars worth of merchandise by mail without ever buying or stocking a single item. The trick to this is by using the drop ship method of selling. Simply stated, this means that you merely do the advertising, receive orders at your address, then forward the orders to your suppliers with your wholesale price and they send the item to your customer. It's an easy way to sell, it's effective and it works for many mail order firms, large and small. But, like so many other things in this business, there are two sides to the story. If you have already heard about drop shipping, you have probably only heard one side...the side that merchandise promoters want you to know. As Paul Harvey might say, "Now you will hear the REST of the story."
Yes, drop shipping can be used profitably, but it is unlikely that you or anyone else can become wealthy in mail order this way. The reason is economic. Most manufacturers, wholesalers or suppliers offer drop ship discounts of 30%-40% and up to 50% to dealers. This is not enough to allow any great profit on which to build a business. The selling costs will usually outweigh the profit allowed on merchandise, so the more you sell, the more you lose. How then can you make money by using the drop shipping principle? By using it to get REPEAT business.
Here's how it would work:
Select what you think would be a good "leader" item and ask your supplier for his lowest price in quantities. The low price will give you greater flexibility in promoting it. The important rule here is to make sure this item represents the entire line of merchandise that you want to sell. Whether you sell it directly from an ad, run inquiry ads and use the two-step followup method of selling, or rent a mailing list...you will probably lose money on this first sale. Don't worry about it. If it's a good item at the right price, you will be building a customer base... people who will be happy with their purchase and will be willing to do business with you again.
Now is the time to use the drop ship method. From your original supplier or from others, get all the sales literature available on other good products that will appeal to your customers. Use this literature as individual sales pieces, or compile them into your own catalog. When filing your first order, enclose this catalog or sales literature with the order, along with an order from and your return address envelope. A percentage of customers will begin sending you additional orders for these new items. Here's an important point: To get the first order you had to spend a lot of money for merchandise, first order you to spend a lot of money for the merchandise, the advertising and shipping. This time you don't have these expenses. All subsequent orders are virtually FREE, except for the cost of the sales literature (possibly 2 cents to 10 cents each.)
At least 3 or 4 times a year, mail to your accumulating customer list with additional offers. All of these can now be drop shipped at a profit. Keep a close watch on items that are hot...those that sell exceptionally well. You might want to take advantage of the lower prices by stocking some of these to fill your own orders and enjoy the maximum profits from each sale.
This is how drop shipping can and should be employed. Of course, if you already manufacture or publish a product of your own, you're way ahead of the game. Use drop shipping to supplement your sales by offering other items to your customers on a regular basis. This is where the profits are in drop shipping.
THE ILLUSION OF PRINT/MAIL SERVICES
IF ever there was a lazy way to easy profits in mail order it has to be the concept of letting someone else do all the work for you.
In theory, it works like this:
You send a camera-ready circular or ad to someone who advertises a print/mail service and they will print and mail it (along with many others) to 1,000 to 25,000 names on their own list. You simply pay a one-time charge while they do all the work. Now, multiply this by 5, 10 or more such services and you could (still theoretically speaking, of course) have several thousand of your offers in the hands of prospective buyers within a few weeks.
The problem, is that it doesn't work that easily, at least not to the point of making it profitable for the dealer who expects to become delunged with orders. Even the very best mailers in the business can produce only a small percentage of return for their clients, so you would have to have a very high markup on your offer and reach millions of people if you hope to make it profitable. If you already have a test-proven offer that produces about 3% return when you mail the offer by itself, you will be lucky to get one-half of 1% when mailed by a mailer along with hundreds of others.
Yes, some offers can produce a profit, even with such a small percentage of return, but they are extremely few and far between. First of all, you would most likely have to be the high markup that is required. If the offer calls for $10 and you can produce it for 41 really is: That's 5 orders per thousand...50 orders per 10,000. Some offers might be able to survive on this, others cannot. You will have to do some figuring to determine whether it's worth trying.
On the down side of this practice, there has been quite a bit of speculation about such print/mail services as to their honesty and quality of their services. Many of them offer less than good printing, often smudgy or in various shades of gray instead of crisp black and white; some of the lists they use are so overworked, they have become virtually worthless. Even the best mailers use primarily "Opportunity" lists, so merchandise offers would hardly be appropriate. Another flaw in this idea that some crooked mailers are out there who simply don't mail the quantity they claim. It seems they print and mail only hundred or so, but claim to mail in the thousands. This is very difficult for anyone to prove or disapprove, so the entire idea of using a print/mail service is precarious at best.
CHAIN LETTERS
It should hardly be necessary to include this mail order scam, but such letters continue flooding the mail every day. Chain letters are a total waste of time and money, appealing to the gullible and greedy, looking for fast, easy money. The easiest way to spot a chain letter is when you see a group of 4 or 5 names and you are asked to delete one and add your own, then send a specific amount of money. Chain letters are a sore spot on the business of selling by mail, and they are illegal. If it even looks like a chain letter, it probably is. Save your money and stay out of trouble. When you receive chain letters in your mail, trow it away...fast. Better yet, turn them over to your local Postmaster.
ESTABLISHING AN IN-HOUSE AD AGENCY
There have been several ads promoting books and reports on this subject, or included as part of the contents in several mail order books stating:
"SAVE UP TO 17% ON ALL YOUR ADVERTISING"
It's legitimate, practical and effective, but like so many other promises, there are pros and cons involved. The pros are fairly obvious. By setting up your own advertising agency and placing your advertising under your agency name, most magazines will allow you the standard 15% agency commission plus and extra 2% cash discount. If your annual ad budget is $5,000 this amounts to a saving of $850 a year, which is a considerable piece of change.
The negative side to this operation involves the initial cost of establishing your new agency, which isn't very difficult, but it might be considered time-consuming. To initiate an agency you will have to have a name for it other than your regular business name. Example: If your company name is Nationwide Electronics and your name is John Smith, you could call your agency John Smith Advertising or The J.S. Advertising Agency, The agency address will have to be different than your company's, but this can be resolved by renting a post office box one of them and using your home or office address for the other. Next you will have to open a separate checking account under the agency name because all advertising payments will be issued thru your agency, and you will probably be required to register your agency with your County Clerk as a new business.
Once these details have been taken care of, you're ready to begin placing ads. You'll have to have insertion order forms printed with your agency name and address, and a separate form must be prepared for each ad in each publication. When your advertising schedule involves only a few publications, this will not be a problem, but if you expand into 50 to 100 different magazines, it can really cut into your time. Of course, if business gets large enough, you can always hire a secretary to take care of that chore.
THE LURE OF CLASSIFIED ADVERTISING
The easiest, least costly and potentially most profitable entry into mail order advertising is thru the classifieds...yet there is probably more money LOST in classified advertising than in any other way, with the possible exception of direct mail. Why? Let's take a closer look.
Display advertising, the classy, artsy ads in magazines and newspapers, are difficult to create and expensive to place. The novice lacks the necessary talent, ability, expertise and (usually) the capital needed to venture into this area of selling. It requires a basic knowledge of advertising in general and mail marketing in particular, plus some background in artistic composition, layout and ad writing. The cost of running even the smallest display ad often runs $200 to $500 or more per insertion. The biggies, those full pagers, usually run $2,000 to $10,000 or more. Needless to say, the average newcomer isn't about to jump into such an investment on pure speculation.
So, the classified ad becomes very attractive, both in its ease of creation and the cost of running it. Such an ad can be scribbed on a piece of paper and sent to publication with payment in a matter of minutes, if necessary (although such a hasty move should be avoided) without any creative design or artwork.
The problem with using classified ads that they are often expected to do more than they were designed to do in the first place, and that's to build a prospect mailing list. Instead, probably 95% of all first-time classified users will try to sell their wares directly from the ad, and this is where they go wrong. With very few exceptions, every classified ad should, in one way or another, say "SEND FOR MORE INFORMATION." It should NOT say " Send $10 for this thingamabob"...yet many of them do.
Many authorities will tell you that you can ask for money in a classified up to $5 for certain offers, but this is misleading. Asking for money in any amount will automatically cut response by up to 50% or more. When you're paying by the word, every word must work hard for the money spent, and that means brevity is essential. But is also means you can only tell, not sell in the ad. By merely whetting a reader's appetite for more information, then sending the complete story in a well-prepared sales package, a classified ad can be used profitably to build a business.
If you don't ask a classified ad to do more than it was intended to do, you'll never be disappointed.
WEALTH FROM REPEAT BUSINESS
Most newcomers to mail order think in terms of finding a single, new "hot" product to sell...one which will capture the public's fancy and catapult them to fame and fortune. This fancy is soon shattered after a few attempts at advertising the new pet product, only to discover that sales are few and profits are even fewer, if any exist at all.
The secret in this case is that costs a considerable amount of money to secure each new customer. Sometimes a modest profit can be realized from the first sale, but more often a break even situation or small loss is the true outcome. This is the crucial point...the stage where most beginners in mail marketing become confused, disillusioned with the entire idea of mail order. It's at this point the faint of heart throw up their hands in disgust, claiming that mail order is just another scam. The more stouthearted (stubborn) dealer will try again with another idea, another ad, maybe a new selling proposition, only to experience the same disappointment as the first time. The smart person will begin to realize that it's vital to begin with at least TWO related items, preferably five or more products, all appealing to the same type of buyer.
TO ILLUSTRATE THE POINT:
Suppose you place an ad for a $5 item at a cost of $100. To recoup the ad cost you'll need 20 orders. Depending on fulfillment costs you'll also need an additional 5 or 10 orders to show profit. But suppose you receive only 10 orders? This means $50 LOSS each time you run the ad. But wait: it also gives you 10 new customers. When filling the original order enclose additional offers of a related nature. Assuming customers are happy with the first purchase, about 10 to 20 % of them will order something else from you. It have cost you &100 for the original ad, but the additional order will cost only a few cents. This is where the profits come from.
Naturally, you hope you DON'T lose money on the initial ad. You would much prefer to show a profit right up front, but this example was used to present the worst picture and how it can be turned around. Keep in mind that, as long as your ad is running, you will be building your customer list. At least two or three times a year, send these customers a new offer. Satisfied customers will stay with you year after year, and this is where the wealth is in mail order.
It's not in the advertising; it's in the customers.
PROFITS IN THE PRINTED WORD
A good line of information books and reports can be the most profitable items in mail order. The field is enormous and the possible subjects are wide and diverse, as are the individual markets for each subject: financial, home business ideas, health, home & auto repair, investments, spare time money making ventures, do-it-yourselfers, mechanics, electronics, collectors, etc.
One of the big secrets here, of course, is to decide exactly which market you want to serve, then offer information only to these people. Don't try cross-selling by offering a handy auto repair manual to someone who has expressed interest in better health or attaining greater income. Equally as important is to offer useful information; new ideas or uncommon information that isn't readily available elsewhere.
Next in important is the price/profit margin. Stay away from publishers who offer the standard 40% discounts. You need a minimum of 50% if you plan to operate on a drop ship basis, and 70% discount if you want to stock merchandise and fill your own orders. This may not seem important to you now, but you will soon realize that you need the high discounts to help offset the selling costs of whatever you are selling. Your selling costs involve the original advertising placed in publications, printed sales literature and postage needed to answer inquiries.
The next step toward success in the mail order information field is to use advertising and sales material that are geared to the information you are offering. Nothing sells itself by mail, it's in the words, ideas and graphics in the advertising that will draw inquiries and sales.
How will you sell your information--
Through classified or display ads? By direct mail? with a combination of all methods? Will you try to sell directly from a magazine ad, or ask for inquiries and use printed follow up material to make the sale? These are questions that deserve careful consideration before you go too far. If you are inexperienced in advertising or new to mail order, you should enlist thee services of a competent mail order specialist to get the answers to your questions.
When all the facts are in, are there really big secrets to selling by mail? Not really!! There are only established principles of operation, proven ideas, methods and techniques that work...others that have been proven unworkable and unprofitable. There are no hard rules, just helpful guidelines. The true secret is to learn and follow the methods that have proven to be successful, use whatever knowledge and skills that you can bring to your new business, and get professional help in areas where you lack the ability to do it on your own.
The mail order graveyard
is scattered with the
bones of those who didn't!
This report will attempt to clear away some of the fog and reveal mail order the way it is in the real world, not as some crafty promotor would have you believe it is.
We will cover a wide territory in just a few concise pages, and present both pros and cons of various mail marketing ideas, methods and pratices within the large sco-e of selling by mail. Many books on the subject, some consisting of hundreds of pages do not include the informatioon you will find here.
CAPITAL INVESTMENT
You've probably seen the ads:
"Start your own mail order business with just
$10 and make thousands of dollars at home in
your spare time"
You don't really believe ads like that, do you? of course not. You're much too intelligent to fall for such misleading promises, but there are many people who are not as smart as you, and it's to this audience these ads are directed.
some shrewd promoters of mail order plans, schemes and other questionable programs prey upon the gullibility of the public. They appeal to humanity's inherent greed...the dream of making a fortune without investment, risk or effort.
Just for the record, there still is no free lunch. The amount necessary to begin will depend on what you hope to accomplish. If you plan to buy or rent a small building, stock it with merchandise, hire a few employess, we're talking upwards of $50,000. To begin at home in spare time, using a spare room and operate as a sole proprietorship or with the help of family members, you can trim that figure by many thousands of dollars.
Before we get too specific about dollar amounts, let's pose a few questions:
* How much do you know about mail order? Do you have knowledge and experience in advertising, graphic arts, printing, accounting, record keeping, taxes?
* Have you selected your product line, and have you determined who your prospective customers will be? Do you know which publications to advertise in, what size ad to use, which mailing lists to rent?
* Do you have a reliable supply source for what you will be selling, or will you be your own supplier as manufacturer or publisher?
* If you must rely on an outside supplier, will you purchase products wholesale to stock and ship your customers, or will you operate on the dropship method, having orders shipped directly to your customers from supplier's stock?
Your answers to these questions will help in figuring your initial cost. For instance, if your knowledge of mail order and the other related subjects consist of what you might have read in a book about 10 years ago, you're not ready to begin. Plan to invest at least $100 in a few mail order books, reports, subscriptions to a couple of mail order journals, maybe even subscribe to a newsletter. Learn as much as you can about mail order selling, now and on a continuing basis, because there are always new ideas, changes and innovations that you must keep up with. Never think you know all there is to know.
Obviously, it will require more capital to produce whatever type of item you sell than if you purchase ready-made products, and it will cost more to buy and stock what you sell rather than doing business on a dropship basis.
We haven't established the selling price of the products in question, either wholesale or retail, but it will require more capital to maintain an inventory of $50 items than if they are to sell for only $5 so this must be taken into consideration.
When purchasing inventory from an outside supplier, you can probably buy in dozen quantities, but the picture changes if you produce your own product line. It would not be practical to produce only a dozen of anything because the production costs would be prohibitive. To enjoy the lowest possible production costs, you would be required to turn out a minimum of a thousand at a time.
On a dropship basis, inventory costs would be zero. If purchasing items to stock yourself, you should maintain an inventory of about $500. If you plan to manufacture, publish or otherwise produce your own products, you should figure a minimum of $3,000.
The biggest chunk of your initial capital--and this is important, because most newcomers don't realize this until it's too late--should be reserved for advertising and promotion. So, if you invest $500 in products, plan to keep about $1500 for promotion. This will include space ads, classified ads, mailing lists (if you opt to take the direct mail route), circulars, brochures, sales letters and envelopes.
If you are operating on the dropship method, you should still plan to invest a minimum of $500 in advertising to get your business off the ground.
As you can see, there is no exact answer to the capital question, but now you should have a working estimate as to how much capital will be required, based on the direction your are investment for your particular objectives.
ADVERTISING--THE GOOD, THE BAD AND THE UGLY
To the mail order newcomer, all advertising looks pretty much alike. Each ad represents a person or company who is trying to sell you something or get you interested in what they have to offer. You normally don't try to judge the sales copy, layout or graphics. Either you buy, inquire or pass it by.
As you become an active advertiser, yourself, all ads begin to take on a new perspective. You see ads interesting or boring; one will zoom out at you with sparkle and zest, while another leaves you cold. All this analysis will be based on your own experience in creating and placing advertising for whatever you are selling.
In the final analysis, however, personal opinion or judgement means nothing to the success or failure of advertising. It's the results of each ad which determines its power and effectiveness.
WHAT MAKES ADVERTISING SUCCESSFUL?
MANY INDIVIDUAL ELEMENTS COME INTO PLAY MAKING A SUCCESSFUL AD:
1. PERSUASIVE SELLING COPY. The wording is the single most important element in determining a successful ad. What counts most is what you say and how you say it.
2. PLACEMENT IN APPROPRIATE PUBLICATION. This might seem obvious, but it is often neglected. If the right people don't see your ad, they can't respond.
3. SPACE/PRICE IN PROPORTION. You simply can't sell high priced merchandise from a small classified or one inch ad space. These should be considered as a low cost means of building a mailing list by asking readers to write for more information. If you expect to sell directly from an ad, the size of the ad will have to increase in proportion to the selling price. Two or three inches of space for items selling for 42 to $5... half or full page for items selling for more than $5 up to $20. When the price goes above $20 it is usually best to run inquiry ads and follow up with a printed sales presentation. There are exceptions, but this is a fairly safe rule to follow.
4. TESTING ALL THE ELEMENTS. Unlike institutional advertising (toothpaste, cars, soap, etc.) which must rely on extensive market research, analysis, surveys and a lot of psychology to achieve success, mail order selling has a built-in "watchdog" to guard against waste and loss, and to help assure that every dollar spent will produce a profit...or at least tell you why it didn't, so you won't make the same mistake twice. This method (unique to mail order) is called KEYING. By inserting a number or letter (or combination) into every ad you run, you can tell which ad works in which publication and in which issues it works best. More sophisticated forms of this testing technique can be carried thru by trying a new headline, a different testimonials, guarantees, etc. The testing technique know no limits, but there is also danger in becoming test-happy. To use the testing principle effectively, be certain that the results will justify the time and expense of making the test. If it merely means adding to your paperwork without adding profit or reducing cost, it isn't worth it.
DROP SHIPPING
Theoretically, you can offer a million dollars worth of merchandise by mail without ever buying or stocking a single item. The trick to this is by using the drop ship method of selling. Simply stated, this means that you merely do the advertising, receive orders at your address, then forward the orders to your suppliers with your wholesale price and they send the item to your customer. It's an easy way to sell, it's effective and it works for many mail order firms, large and small. But, like so many other things in this business, there are two sides to the story. If you have already heard about drop shipping, you have probably only heard one side...the side that merchandise promoters want you to know. As Paul Harvey might say, "Now you will hear the REST of the story."
Yes, drop shipping can be used profitably, but it is unlikely that you or anyone else can become wealthy in mail order this way. The reason is economic. Most manufacturers, wholesalers or suppliers offer drop ship discounts of 30%-40% and up to 50% to dealers. This is not enough to allow any great profit on which to build a business. The selling costs will usually outweigh the profit allowed on merchandise, so the more you sell, the more you lose. How then can you make money by using the drop shipping principle? By using it to get REPEAT business.
Here's how it would work:
Select what you think would be a good "leader" item and ask your supplier for his lowest price in quantities. The low price will give you greater flexibility in promoting it. The important rule here is to make sure this item represents the entire line of merchandise that you want to sell. Whether you sell it directly from an ad, run inquiry ads and use the two-step followup method of selling, or rent a mailing list...you will probably lose money on this first sale. Don't worry about it. If it's a good item at the right price, you will be building a customer base... people who will be happy with their purchase and will be willing to do business with you again.
Now is the time to use the drop ship method. From your original supplier or from others, get all the sales literature available on other good products that will appeal to your customers. Use this literature as individual sales pieces, or compile them into your own catalog. When filing your first order, enclose this catalog or sales literature with the order, along with an order from and your return address envelope. A percentage of customers will begin sending you additional orders for these new items. Here's an important point: To get the first order you had to spend a lot of money for merchandise, first order you to spend a lot of money for the merchandise, the advertising and shipping. This time you don't have these expenses. All subsequent orders are virtually FREE, except for the cost of the sales literature (possibly 2 cents to 10 cents each.)
At least 3 or 4 times a year, mail to your accumulating customer list with additional offers. All of these can now be drop shipped at a profit. Keep a close watch on items that are hot...those that sell exceptionally well. You might want to take advantage of the lower prices by stocking some of these to fill your own orders and enjoy the maximum profits from each sale.
This is how drop shipping can and should be employed. Of course, if you already manufacture or publish a product of your own, you're way ahead of the game. Use drop shipping to supplement your sales by offering other items to your customers on a regular basis. This is where the profits are in drop shipping.
THE ILLUSION OF PRINT/MAIL SERVICES
IF ever there was a lazy way to easy profits in mail order it has to be the concept of letting someone else do all the work for you.
In theory, it works like this:
You send a camera-ready circular or ad to someone who advertises a print/mail service and they will print and mail it (along with many others) to 1,000 to 25,000 names on their own list. You simply pay a one-time charge while they do all the work. Now, multiply this by 5, 10 or more such services and you could (still theoretically speaking, of course) have several thousand of your offers in the hands of prospective buyers within a few weeks.
The problem, is that it doesn't work that easily, at least not to the point of making it profitable for the dealer who expects to become delunged with orders. Even the very best mailers in the business can produce only a small percentage of return for their clients, so you would have to have a very high markup on your offer and reach millions of people if you hope to make it profitable. If you already have a test-proven offer that produces about 3% return when you mail the offer by itself, you will be lucky to get one-half of 1% when mailed by a mailer along with hundreds of others.
Yes, some offers can produce a profit, even with such a small percentage of return, but they are extremely few and far between. First of all, you would most likely have to be the high markup that is required. If the offer calls for $10 and you can produce it for 41 really is: That's 5 orders per thousand...50 orders per 10,000. Some offers might be able to survive on this, others cannot. You will have to do some figuring to determine whether it's worth trying.
On the down side of this practice, there has been quite a bit of speculation about such print/mail services as to their honesty and quality of their services. Many of them offer less than good printing, often smudgy or in various shades of gray instead of crisp black and white; some of the lists they use are so overworked, they have become virtually worthless. Even the best mailers use primarily "Opportunity" lists, so merchandise offers would hardly be appropriate. Another flaw in this idea that some crooked mailers are out there who simply don't mail the quantity they claim. It seems they print and mail only hundred or so, but claim to mail in the thousands. This is very difficult for anyone to prove or disapprove, so the entire idea of using a print/mail service is precarious at best.
CHAIN LETTERS
It should hardly be necessary to include this mail order scam, but such letters continue flooding the mail every day. Chain letters are a total waste of time and money, appealing to the gullible and greedy, looking for fast, easy money. The easiest way to spot a chain letter is when you see a group of 4 or 5 names and you are asked to delete one and add your own, then send a specific amount of money. Chain letters are a sore spot on the business of selling by mail, and they are illegal. If it even looks like a chain letter, it probably is. Save your money and stay out of trouble. When you receive chain letters in your mail, trow it away...fast. Better yet, turn them over to your local Postmaster.
ESTABLISHING AN IN-HOUSE AD AGENCY
There have been several ads promoting books and reports on this subject, or included as part of the contents in several mail order books stating:
"SAVE UP TO 17% ON ALL YOUR ADVERTISING"
It's legitimate, practical and effective, but like so many other promises, there are pros and cons involved. The pros are fairly obvious. By setting up your own advertising agency and placing your advertising under your agency name, most magazines will allow you the standard 15% agency commission plus and extra 2% cash discount. If your annual ad budget is $5,000 this amounts to a saving of $850 a year, which is a considerable piece of change.
The negative side to this operation involves the initial cost of establishing your new agency, which isn't very difficult, but it might be considered time-consuming. To initiate an agency you will have to have a name for it other than your regular business name. Example: If your company name is Nationwide Electronics and your name is John Smith, you could call your agency John Smith Advertising or The J.S. Advertising Agency, The agency address will have to be different than your company's, but this can be resolved by renting a post office box one of them and using your home or office address for the other. Next you will have to open a separate checking account under the agency name because all advertising payments will be issued thru your agency, and you will probably be required to register your agency with your County Clerk as a new business.
Once these details have been taken care of, you're ready to begin placing ads. You'll have to have insertion order forms printed with your agency name and address, and a separate form must be prepared for each ad in each publication. When your advertising schedule involves only a few publications, this will not be a problem, but if you expand into 50 to 100 different magazines, it can really cut into your time. Of course, if business gets large enough, you can always hire a secretary to take care of that chore.
THE LURE OF CLASSIFIED ADVERTISING
The easiest, least costly and potentially most profitable entry into mail order advertising is thru the classifieds...yet there is probably more money LOST in classified advertising than in any other way, with the possible exception of direct mail. Why? Let's take a closer look.
Display advertising, the classy, artsy ads in magazines and newspapers, are difficult to create and expensive to place. The novice lacks the necessary talent, ability, expertise and (usually) the capital needed to venture into this area of selling. It requires a basic knowledge of advertising in general and mail marketing in particular, plus some background in artistic composition, layout and ad writing. The cost of running even the smallest display ad often runs $200 to $500 or more per insertion. The biggies, those full pagers, usually run $2,000 to $10,000 or more. Needless to say, the average newcomer isn't about to jump into such an investment on pure speculation.
So, the classified ad becomes very attractive, both in its ease of creation and the cost of running it. Such an ad can be scribbed on a piece of paper and sent to publication with payment in a matter of minutes, if necessary (although such a hasty move should be avoided) without any creative design or artwork.
The problem with using classified ads that they are often expected to do more than they were designed to do in the first place, and that's to build a prospect mailing list. Instead, probably 95% of all first-time classified users will try to sell their wares directly from the ad, and this is where they go wrong. With very few exceptions, every classified ad should, in one way or another, say "SEND FOR MORE INFORMATION." It should NOT say " Send $10 for this thingamabob"...yet many of them do.
Many authorities will tell you that you can ask for money in a classified up to $5 for certain offers, but this is misleading. Asking for money in any amount will automatically cut response by up to 50% or more. When you're paying by the word, every word must work hard for the money spent, and that means brevity is essential. But is also means you can only tell, not sell in the ad. By merely whetting a reader's appetite for more information, then sending the complete story in a well-prepared sales package, a classified ad can be used profitably to build a business.
If you don't ask a classified ad to do more than it was intended to do, you'll never be disappointed.
WEALTH FROM REPEAT BUSINESS
Most newcomers to mail order think in terms of finding a single, new "hot" product to sell...one which will capture the public's fancy and catapult them to fame and fortune. This fancy is soon shattered after a few attempts at advertising the new pet product, only to discover that sales are few and profits are even fewer, if any exist at all.
The secret in this case is that costs a considerable amount of money to secure each new customer. Sometimes a modest profit can be realized from the first sale, but more often a break even situation or small loss is the true outcome. This is the crucial point...the stage where most beginners in mail marketing become confused, disillusioned with the entire idea of mail order. It's at this point the faint of heart throw up their hands in disgust, claiming that mail order is just another scam. The more stouthearted (stubborn) dealer will try again with another idea, another ad, maybe a new selling proposition, only to experience the same disappointment as the first time. The smart person will begin to realize that it's vital to begin with at least TWO related items, preferably five or more products, all appealing to the same type of buyer.
TO ILLUSTRATE THE POINT:
Suppose you place an ad for a $5 item at a cost of $100. To recoup the ad cost you'll need 20 orders. Depending on fulfillment costs you'll also need an additional 5 or 10 orders to show profit. But suppose you receive only 10 orders? This means $50 LOSS each time you run the ad. But wait: it also gives you 10 new customers. When filling the original order enclose additional offers of a related nature. Assuming customers are happy with the first purchase, about 10 to 20 % of them will order something else from you. It have cost you &100 for the original ad, but the additional order will cost only a few cents. This is where the profits come from.
Naturally, you hope you DON'T lose money on the initial ad. You would much prefer to show a profit right up front, but this example was used to present the worst picture and how it can be turned around. Keep in mind that, as long as your ad is running, you will be building your customer list. At least two or three times a year, send these customers a new offer. Satisfied customers will stay with you year after year, and this is where the wealth is in mail order.
It's not in the advertising; it's in the customers.
PROFITS IN THE PRINTED WORD
A good line of information books and reports can be the most profitable items in mail order. The field is enormous and the possible subjects are wide and diverse, as are the individual markets for each subject: financial, home business ideas, health, home & auto repair, investments, spare time money making ventures, do-it-yourselfers, mechanics, electronics, collectors, etc.
One of the big secrets here, of course, is to decide exactly which market you want to serve, then offer information only to these people. Don't try cross-selling by offering a handy auto repair manual to someone who has expressed interest in better health or attaining greater income. Equally as important is to offer useful information; new ideas or uncommon information that isn't readily available elsewhere.
Next in important is the price/profit margin. Stay away from publishers who offer the standard 40% discounts. You need a minimum of 50% if you plan to operate on a drop ship basis, and 70% discount if you want to stock merchandise and fill your own orders. This may not seem important to you now, but you will soon realize that you need the high discounts to help offset the selling costs of whatever you are selling. Your selling costs involve the original advertising placed in publications, printed sales literature and postage needed to answer inquiries.
The next step toward success in the mail order information field is to use advertising and sales material that are geared to the information you are offering. Nothing sells itself by mail, it's in the words, ideas and graphics in the advertising that will draw inquiries and sales.
How will you sell your information--
Through classified or display ads? By direct mail? with a combination of all methods? Will you try to sell directly from a magazine ad, or ask for inquiries and use printed follow up material to make the sale? These are questions that deserve careful consideration before you go too far. If you are inexperienced in advertising or new to mail order, you should enlist thee services of a competent mail order specialist to get the answers to your questions.
When all the facts are in, are there really big secrets to selling by mail? Not really!! There are only established principles of operation, proven ideas, methods and techniques that work...others that have been proven unworkable and unprofitable. There are no hard rules, just helpful guidelines. The true secret is to learn and follow the methods that have proven to be successful, use whatever knowledge and skills that you can bring to your new business, and get professional help in areas where you lack the ability to do it on your own.
The mail order graveyard
is scattered with the
bones of those who didn't!
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