Starting a Mail Order Business

Starting a mail order business is challenging and fun, especially if you’ve got a product niche that is novel or has a real following. The best types of mail order businesses these days are ones that sell unique products for specialized use to sophisticated purchasers. They might be in the medical, industrial, educational, government, or business sectors. In addition, there are several key factors you should also consider.

The product decision is the most critical element initially in starting a mail order business. Your selection of products must have real sales demand. This is something you can research online by looking for the number of searches people do on several descriptive terms. For example, if you are thinking about selling alarm clocks via mail order, go to Google’s keyword tool and look up terms like “alarm clock”, “electric alarm clock”, “wood alarm clock”, etc. – any terms that describe the types of products you are thinking of selling. What you’re looking for is a large number of searches, probably over 100,000 per month. This means there’s a lot of demand for that product. If you find searches less than 20,000 per month it’s going to be difficult to make a profit after you factor in marketing and order processing expenses and just move on to another product idea. After you find your product set, make sure you can sell it for the price you need to make an adequate or decent margin. You’re looking for at least 20% gross sales margin here. Again, use a search engine and look for the specific products you intend to sell. Then come up with a range of prices. This will give you the upper and lower price range. If you can make a profit at the low price, the product is probably going to be profitable. If not, move on.

Deciding how to market your products is a major factor in starting a mail order business. Traditional catalog marketing has become very expensive due to rising paper, printing, and mailing costs. There is also a lot of junk mail in everybody’s mail box these days so your catalog will probably get lost. Finally, it’s very eco-unfriendly to kill trees for a catalog, 80% of which will be simply thrown in the mail. In other words, traditional mail order economics don’t work well anymore. The solution is to go online and mobile if you’re really adventurous. Selling online is the best solution for almost every product. You are looking for a customer base that works predominantly online, as opposed to many older people that still prefer paper and mail (although assuming every old person is like this would be a big mistake). Some types of business still operate with paper catalogs for good reason, for example carpet and fabric stores where the customer needs to see the product design and textures “in the flesh” as much as possible. Either way, you will need to source email lists, addresses, and other ways of contacting potential customers and delivering your offline or online catalog in front of them so they might buy from you. Pay per click ads are a good place to start, although online social networking sites have become extremely popular and useful.

Software and infrastructure setup is the next major consideration in starting a mail order business. When an order comes in, you have to record the order, process a credit card, send an invoice, possibly send the order on to a fulfillment house or drop-ship partner, and do accounting for the transaction. There are multiple systems out there to do this from standalone mail order software to fully automated online systems with built in payment processing and shipping logistics and pricing. When you’re just starting up it’s often best to use standalone software with either a standard order taking web form and shopping cart, or an 800 number to call in orders. Fax orders are still used for business transactions, especially for big ticket items. Mail orders might also come in. That’s why it is good to have a complete software package when you are starting a mail order business, since you get full control over the process regardless of the sales channel. Later on if your business growth merits you can invest in a fully automated online system with all the bells and whistles.

There are multiple factors for success when starting a mail order business. These include product choices, how you will acquire customers, the channels you use to take an process orders, and the technology systems you use. Making the right decisions early on will help your long term business success.