Mail Order

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As America turns more and more away from the typical 9 to 5 job that often comes with a painful commute attached, much has been written lately about the mail-order business, perhaps because it seems to lend itself well to a home-run operation. Theoretically, anything can be sold through the mail, be it a product or a service anything from decorative pieces, to long-distance phone service, to legitimate "How To" books, to illegitimate chain letters, and so on. And the business does indeed require little capital to start, making mail-order an attractive "side business" for supplemental income. After all, you don't need to rent a huge warehouse to store your inventory (the garage or the basement will do), and you don't need a large staff to answer the phones (the answering machine will do the job just fine).

However, there is no such thing as a free lunch. And as a corollary, any time something is easy to start, there are probably good reasons for it. First, the mail-order industry still suffers somewhat from a poor image. Although the industry has cleaned up its act over the years, memories of mail-order con artists and promises-gone-sour still linger in many a mind. So, there is a segment of the population that is very suspicious of mail-order ads and would simply not reply to any. This segment comprises potential customers who are effectively lost to the mail-order entrepreneur.

Furthermore, precisely because there is no "store- front" in a mail-order operation, advertising becomes essential to a successful start-up. Word-of-mouth as an initial means of generating meaningful and substantial business is really not applicable to a mail-order start up. Ironically, because of its "sheltered" nature, a mail-order operation does not receive enough publicity and does not achieve name recognition until it is a large and successful operation. In the meantime, the only exposure linking a mail-order operator to the outside world is advertising. Yes, there are the free publicity press releases and the networking clubs, but when it comes down to generating the revenues needed to sustain the operation, solid, methodical and repeated advertising is the life-line to a mail-order business. And anyone who has ever attempted to advertise in any medium knows that it does not come cheap.

There are various media to consider for your advertising campaign, from print media (newspaper and magazines) to direct mail to radio to T.V., and recently, the Internet. Of course, advertising is a whole art and science unto itself, and a thorough discussion of the topic is beyond the scope of this article. But, suffice it to say that advertising is the pivotal point of success to a mail-order operation. Slip on the advertising and you will jeopardize the entire operation. Ironically, advertising also happens to be the largest over-head expense in a mail- order start up. Many operations fail in the infantile stage simply because the operators do not have the financial stamina to launch and maintain an adequate advertising campaign. It is a fact that most businesses fail for lack of operating capital than for any other reason. And this could not be more true of a mail-order business than any other.

Although it is true that there is no legal requirement that a mail-order operation be incorporated, running such business as any other entity would legally be imprudent, since it would expose the operator to personal liability as a result of the normal operations of his/her business. There are various forms of a business corporation, such as the run-of-the-mill C corporation, its cousin the S corporation, and more recently the LLC (limited liability corporation). There are advantages and disadvantages to each of these corporate forms, and the reader is referred to a competent attorney and a tax advisor for the legal and the tax ramifications of each, since a discussion of this subject is beyond the scope of this article. However, suffice it to say that in the process of incorporating, a mail-order startup will incur filing fees and attorneys costs ranging anywhere from $500 to $1,500 dollars and up, a fact that is seldom publicized by those who sell How To Start Your Own Mail-Order Biz informational manuals. The cost (as well as the protection you are afforded by incorporating) will often depend on the state in which you incorporate, termed the state of domicile, and the state(s) in which your business operates, termed foreign state(s).

The mail-order business has also become very competitive in recent years, especially in the area of selling information. All you have to do is look at the massive number of catalogs and newsletter subscription solicitations you receive in your mail-box in a week to be convinced of the stiff competition. To be successful in this business, you need to find a niche. That is, you need to identify a need (or a want) that few other mail-order operators are fulfilling, and then take advantage of it while the good times last. Chances are that your competition will soon identify the same niche and will move in on you fast, taking away part of your market share. There is really no way to stop this intrusion. Being the first in line will certainly give you an edge over the competition, but you will need to work hard to maintain your stronghold. A generous customer satisfaction policy and periodic addition of novel lines of products and services in-tune with public demand will help keep you one step ahead of the competition.

As with any other business, there are no guarantees for success in the mail-order business. An easy start-up does not equate with easy money. Mail-order, much like any other operation, must be approached with open eyes and only after an informed decision as to its suitability to the given individual has been made. The approach should be to have products or services in mind (and ready to go) before major expenses are incurred in setting up a mail-order business. Starting the operation in hopes of finding products later is a sure-fire way to failure. Often, one must conduct small market tests of a given product or service before large quantities of same are manufactured or ordered. And all of this requires that the mail-order entrepreneur possess marketing and advertising as well as analysis skills, or lacking these, have the desire and the means to hire such experts to help make his/her operation a successful one. Still, anyone thinking of starting a home-run mail-order business should be prepared to face many unanticipated obstacles, must be willing to deal with these as they arise, and must have the foresight to recognize when referring to a professional for help is in order. When done correctly, the rewards, both personal and financial, of such an operation can be tremendous.

Reproductions of this article are permitted by the author as long as such reproductions are accompanied by this caption. I.E.I. can be reached for questions and/or comments by writing to P.O. Box 974, Alta Loma, Ca 91701, by e-mailing fqgq66a@ prodigy.com or beatlelvr@aol.com, or by calling 1-800-NU N EASY.