Catalog and Mail Order Business

U.S. mail order sales in 1998 were $357.3 billion. That represents a 12 percent increase from one year earlier. Even when adjusted for the inflation rate, the growth was 10 percent. Consumer mail order sales were at $185 billion, and accounted for 52 percent of the total; business-to-business sales were at $104 billion, accounting for 29 percent; and charitable sales were at $68.2 billion or 19 percent. Consumer mail order sales were divided between product sales at $109 billion and services sales at $76.1 billion. Per capita consumer mail order sales were $685 over a population of 270 million. (Source: National Mail Order Association.)

Mail order is a lucrative endeavor for entrepreneurs. It offers a high potential with relatively low start-up capital requirements, according to Business Concepts’ Start Your Own Mail Order Business. The publication rates mail order as a medium risk business with solid profit potential.

Start-up costs depend on how much time and money you want to commit, how fast you want to grow and what your product requires.

American consumers are conditioned to shopping by catalog and now receive catalogs for most essential items. Mail order opportunities arrive regularly at virtually every household with credit card statements, as advertising supplements in the daily newspaper, in mass mailings and even with utility bills. Catalogs offer a way for anyone with a viable product or service in demand by consumers to compete successfully with bigger companies.

Some experts say that catalog presentation of products is simply mail order at its best. There are some considerations before rushing out to print up that catalog, however.

Deciding what product to sell is the most critical decision in mail order marketing. When deciding on an item to sell try to develop one or find one that will appeal to all ages. Look for items that work for men, women and children and search for goods that are low cost and frequently reordered.

How to Get Started
Assemble a team of people who have:
  • persistence
  • imagination
  • honesty
  • knowledge
Learn from other catalog operations:
  • study catalogs
  • visit other operations if possible
  • study advertisements for items in magazines, catalogs and newspapers
  • learn what your competitors are doing
Selecting product is critical. The ideal mail order product:
  • offers a large profit margin
  • appeals to broad segment of the population
  • is lightweight and does not break or spoil
A recommendation is to pick a product that will sell for three to four times what you pay for it. Price the product to attract customers. Use two-for-one deals, or one product for full-price and the second for half-price. Again, look at what your competitors are using for pricing strategy.

Testing helps to lessen the guesswork for finding a winning combination. For simple test marketing, spend a small amount on an advertisement or mailing and check the results. As you discover the combinations of variables that yield growing response, you will begin to get the feel for the right formula to reach your targeted market.

Advertising is critical to success. You may use print ads, photographed display ads or both. An ad should get attention through a good headline. Use proven headline words such as “amazing,” “bargain,” “revolutionary” and “sensational.” Actually, in the food business, you will look for stand-out words that meet the needs you’ve identified in your customers. These might include “most flavor,” “quick” or “in seconds” (when dealing with preparation aspects), “healthful” or “pure.” For a list of such words, check the book, by William A. Cohen, Building a Mail Order Business, 2nd edition (New York: John Wiley & Sons, Inc., 1985).

Develop interest and sell the benefits — sell the smell and sizzle of the meat. Here are some tricks to keep in mind.
  • Show the benefits and advantages of the product.
  • Build and maintain credibility.
  • Use testimonials or references if available.
  • Deliver a call to action, that is, ask for the sale.
  • Provide incentive for the customer to order immediately.
  • Include a toll free number to call.
  • Use a post office box to maintain privacy. (Response to a business address is actually better than response to a post office box - but if the business address is your home you should consider possible privacy and security issues.)
  • Accept the use of a major credit card .
Shipping Frozen Foods
Whether shipping items sold from a catalog or from items ordered over the Internet, the USDA does have guidelines for storage and shipping of frozen food items that should be followed.

Many people selling meat products through direct sales have found mail order to be an effective way to merchandise meat products. However, all meat that crosses state lines must have been harvested and processed at federally inspected plants. The USDA provides these food safety suggestions:
  • Pack it safely. Perishable foods will stay safe at a frozen temperature longest if frozen solid first. After frozen, pack your food gift with a cold source, such as a frozen gel pack or purchased dry ice.
  • Use a sturdy box. Use heavy foam or corrugated cardboard. Fill up any empty space with crushed paper or foam popcorn. Air space in the box will cause the food and cold source to thaw faster.
  • Clearly label your box “Perishable: Keep Refrigerated.”
  • Ship frozen items packed so that they arrive with ice crystals still visible.
  • The food should ideally be shipped overnight.
  • Tell the recipient of a promised delivery date or alert the customer if the item has been shipped so someone is there to receive it.
  • Do not send to a business address unless you are sure a refrigerator is available for immediate storage of the product.
  • Do not send packages at the end of the week when they may sit in a post office over the weekend. Try for early in the week shipments.
The Federal Trade Commission has a Thirty-Day Delivery Rule. This rule states a firm has 30 days to ship an order once it is received. If you can not ship within 30 days or by your stated shipping time, you must notify the customer of the new ship date before the original date passes. In the notification to the buyer you must include a stamped, self-addressed envelope for the customer to use to cancel the order.

The following web site contains further resources on mail order:
An Example of Opportunity
Schwan’s is a Minnesota-based company that started in 1952 with a farmer, Marvin Schwan, who was not satisfied with the market he was receiving for his milk products. Since then, Schwan has grown his business to now include delivery in the 48 continental states plus Canada and Mexico. Mark Gaddis is head of purchasing for pork and beef items. While this is more than a catalog mail order operation, Schwan’s does have a catalog they leave with customers who can use it for ordering when they miss the route truck.

A Conversation with Schwan’s…
In early March 2000, a member of the team authoring this manual spoke with Julia Handeland, assistant to Mark Gaddis, at Schwan’s Marshall, MN, headquarters. While the conversation was directed at another project, the outcome may apply to businesses like yours and is printed here. The specific question asked was:

What is the process for selling products to Schwan’s?
The answer was:
  1. Send a letter of introduction and product brochure to Mark Gaddis. (Do not send samples unless requested.)
  2. The brochure will be reviewed by the buyers.
  3. A meeting will be scheduled or a request for samples will be made – if there is an interest.
Other things learned during the conversation:
  • The product needs to be unique for it to have a chance of acceptance.
  • USDA and HACCP certifications are absolute requirements.
  • Everything handled by Schwan’s is packaged under their name.
  • Route trucks return to customers every two weeks - portions should be of a size that promotes an order by the time the truck returns.
  • Precooked is fine; but not a requirement and not always an advantage.
  • All packaging is done at supplier’s plants per Schwan’s specs.
  • Schwan’s picks up its own products from the suppliers.
  • Families are the target market.
Gaddis’ phone number is (507) 537-8688. The general number is (888) 724-9267.

Gift Giving
In addition to the catalog sales, the gift giving business offers significant opportunity to market high end products. Experts say the best approach for these types of markets is to:
  • Pick profitable small- to medium-sized companies in the area.
  • Schedule a meeting with the plant manager, owner or human resource director.
  • Explain that you are able to supply a high quality gift item for them to give to employees or valued clients.
  • Show how and why the company will benefit by giving your product.
  • Explain that you ship all your product next day delivery – then be able to do it.
Other Opportunities to Explore
Omaha Steaks
The company was started more than 80 years ago as Table Supply Meat Company: a Meat Wholesaler in Omaha. In 1952, the company began the mail order business. The company changed its name to Omaha Steaks International in 1966. In 1975, Omaha Steaks built an inbound call center, giving customers a quick and toll free way to order. In 1991, the company went on-line at http://www.omahasteaks.com. New enterprises might wish to visit some of the Omaha Steak stores to become familiar with products,
displays and methods.
  • Omaha Steaks
  • Phone: (402) 331-1010; fax (402) 593-4230
Stock Yards
Stock Yards is a small Chicago-based company. Most of the products it carries are beefsteaks. Contact: Nicole at (800) 621-3607.

For Additional Information
Check the National Mail Order Association homepage at http://www.nmoa.org/ for all kinds of great tips about mail order.


References
“Mail Order Marketing”
http://www.smartbiz.com
“Starting A Mail Order
Business,” Business
Concepts, 1994.
http://www.sba.gov
http://fsis.usda.gov