Stamping Out Mail-Order Myths
Make millions in mail order!
Almost everyone dreams of opening the mail and sorting through piles of checks and money orders. But that dream rarely comes true in the real world, according to one of America’s most successful mail-order entrepreneurs.
If you think you can start a mail-order business at home, in your spare time and with about $10,000--forget it, says Ruth Owades, founder of Gardener’s Eden and Calyx & Corolla, two upscale botanically oriented catalogue companies.
Owades, who built Gardener’s Eden into a $15-million-a-year business before selling it, said it takes marketing savvy and heavy capital to crack the $120-billion-plus, mail-order marketplace.
It’s easy to see why starting a mail-order business seems so attractive. About 92 million people did some of their shopping by mail last year, according to the Direct Marketing Assn. in New York. Those shoppers bought everything from outdoorsy clothes from Lands’ End in Dodgeville, Wis., to fossil skull replicas from Skullduggery, a Tustin firm.
Specialty catalogues are growing in popularity, not only because they provide unique merchandise but also because mail-order companies can cut costs by targeting specific groups of consumers.
“Our customers are busy, upscale shoppers, who are primarily women,” said Owades, who founded San Francisco-based Calyx & Corolla, her mail-order flower company, in 1988. By dealing directly with growers and providing special packaging for shipping via Federal Express, Owades said 98% of their orders arrive fresh and on time.
Even after creating two successful small businesses, Owades admits that she never planned to be an entrepreneur.
A 1975 graduate of the Harvard Business School, she was working as marketing director for a major catalogue company in Boston when she proposed a new upscale catalogue for gardeners.
She spent six months developing the catalogue, convinced that it would be a hit. At the last minute, her bosses nixed the project. Disappointed and angry, Owades made an appointment to meet with the chairman.
“I asked him if I could pursue the idea on my own,” Owades recalled. “He patted me on the head and signed a letter drafted by my attorney. I think if I were a man, he wouldn’t have said yes.”
In 1978, she raised $200,000 from a group of business leaders to launch Gardener’s Eden. In 1982, Owades sold the company to Williams-Sonoma and moved from New England to San Francisco to continue at the helm for a few years.
In 1987, she began exploring the feasibility of shipping fresh flowers directly from the grower to the consumer. Everyone she met told her she would be crazy to sell fragile and perishable flowers by mail.
But careful market research confirmed her belief that there was room for a new method of flower distribution besides retail flower shops, supermarkets and national wire services such as FTD.
She turned to a group of private investors to provide the $2 million necessary to launch Calyx & Corolla in May, 1988. (The company is named for two parts of a flower.) This year, the company will send out 5 million catalogues, offering everything from roses to orchids.
Potential mail-order entrepreneurs should be aware that U.S. postal rates are expected to increase about 20% in the next few years to keep pace with escalating costs. But there are ways to keep costs under control, including making sure the lists you create or rent from others are up to date and accurate. It also pays to address and label catalogues carefully to ensure their prompt delivery. Your local postmaster can answer any questions you have about rates, discounts and ZIP codes.
Mail-order experts recommend computerizing your new business from the start. There are more than a dozen computer software packages designed for mail-order businesses. Choosing the right one depends on many factors: how many orders you plan to process each month, how many products you offer, how many order takers you have, how orders will arrive, how long it will take to process orders and whether you will mail products overseas.
Because many mail-order shoppers prefer to call in their orders, training your staff to correctly answer the phone is essential, according to Nancy Friedman, founder of the Telephone Doctor consulting firm in St. Louis, Mo.
“You only have four to six seconds to make a good impression on the phone,” said Friedman. “The message to your customers has to be, ‘You have called the right place.’ ”
Whether you contract with an outside firm to take orders or hire your own staff, it’s important to train your salespeople to share information about other products in the catalogue.
“I may not want to buy anything else, but I think, ‘Boy is that person sharp.’ ”
MAIL-ORDER TIPS * Begin with comprehensive marketing research to make sure what you want to sell is what consumers want to buy.
* Have enough money. Entrepreneur Ruth Owades recommends having at least $1 million in start-up capital.
* Feature a complete product line with at least 75 items that represent your catalogue’s theme.
* Offer nothing priced less than $10 and aim for an average sale of at least $30.
* Rent mailing lists from reputable list brokers and do some test-marketing before a major mailing.
* Mail at least 200,000 catalogues.
* Expect about a 1% return on orders, increasing to 1.5% later.
* Have at least 25% of all the items you expect to sell on hand.
* Fulfill orders promptly. The Federal Trade Commission requires orders to be shipped within 30 days.
* Send at least two, but ideally, four catalogues a year.
