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An average mailing by a small, one
person mail order company is generally about a thousand pieces, and many
such operators rarely mail more than a hundred pieces per week. If you know
your conversion statistics, you know that the order return on mailings is
about 1% to 2% when using a rented list of names, up to 5% or more when
mailing to your own customer list.
Using those figures, the response rate would be about 2 orders from a
mailing of 100 when using a cold list, and about 5 to 10 orders when mailing
to your own customer list for each 100 pieces mailed.
Contrast this to a major catalog mailing house such as Miles Kimball,
Hanover House, Lillian Vernon, Johnson-Smith or L.L. Bean, each of whom
might consider a mailing of six million pieces a month or every few months.
Keep in mind that these are catalog merchandisers - mass mailers, not
manufacturers. Not publishers. Mailers!
They BUY what they sell from somebody. It could be from you!
WHAT ARE THEY LOOKING FOR?
Catalog houses are owned and operated by extremely sharp people and they are
highly selective in the products they choose for inclusion in their
catalogs, so to even be considered, your product must pass some pretty rigid
tests:
1. Since some catalog companies specialize in a certain type of merchandise,
they will choose only what they think their customers will buy.
2. Virtually all of them will want to test-market a product (possibly only a
hundred or so) before making a complete catalog mailing. If the test shows
promise, they will purchase a large quantity (1,000 to 5,000 or more) for
their roll-out mailings... and continue to purchase such quantities as long
as the product continues to sell.
3. Catalog mailers want to deal as close to the original source as possible,
such as inventor, the patent owner, copyright holder, manufacturer or
publisher. The reason for this is simply that these are people who can offer
them the largest discount on quantity purchases. If you are merely one of
many dealers who had to purchase the product from a wholesaler who purchased
from a distributor, who purchased the product from the manufacturer, you
would not be in a position to offer the lowest price to the catalog company.
4. The item in question should be new and unique, not something that's been
around for years. Naturally, it should be a good mail order item.
HOW YOU CAN QUALIFY FOR ACCEPTANCE
First and foremost, you must look and act the part of an established,
professionally operated business. This means you must have printed
stationery with a company name that coincides with the products you are
offering, and all correspondence must be typewritten.
If that seems trite and elementary, you would be surprised to see how many
companies receive scribbled hand written notes on ruled paper with wording
such as "I would like you to include my product in your catalog." Sorry, it
just doesn't work like that.
Even if you are not the actual inventor or manufacturer of the product you
are selling, you can qualify to have it included in a large mailers' catalog
where everyone can profit from it. Imports are very popular catalog sellers,
for instance, so if you locate a new item from overseas, you can arrange to
become the U.S. distributor. Yes, it means a sizable investment for stocking
inventory, but if you have faith in what you plan to sell, it should be
worth investing in.
Before offering it to any catalog mailer, however, it would be in your best
interest to test-market the item yourself. You certainly don't want to offer
a "loser" to a major catalog mailer. You'll want to be sure this is
something that will sell, so everybody is happy with the deal. Perhaps even
more importantly, it will bond your relationship with the catalog companies
and they will be eager to do business with you the next time you come up
with a new product.
PRICING YOUR PRODUCT
This is crucial. A price that's too high means it will not be accepted;
priced too low and you will not make a profit... no matter how many are
sold.
Keep in mind that some catalog mailers specialize in low priced ($10 or
less) items, while others have geared their sales to the higher bracket of
$50 or more. When making a list of catalog houses to approach, check their
catalogs for prices of their current merchandise.
There are three basic levels of retail prices:
1. The pre-established price by owner or manufacturer
2. Actual dollar value based on production costs
3. Perceived value by prospective buyers
If you are not the primary source for your product, the manufacturer may
have already set the retail price along with distributor and wholesale
discounts, so you will have to work those figures in any deals made with
catalog companies.
Assuming you have pricing control (granted by the original source, or you
are the originator) you can set the retail price according to the production
costs which can be a 5-to-1 or 10-1 ratio. If the item costs $1 to make, you
can set a retail price of $5 or $10 on it, depending on what you think it is
worth to the consumer.
SIMPLIFY YOUR PRICE STRUCTURE TO COMPANIES
The most common price structures are usually set in various quantities like
dozen or gross; or, 100, 500, 1,000, etc. Don't use these price structures
when trying to interest catalog companies in your product. Right from the
start, give them your rock bottom lowest possible price.
For examples, if your usual prices are:
100 @ $4.50; 500 @ $3.75; 1000 @ $2.75 and 5,000 @ $1.95
give them your 5,000 quantity price no matter how many they order for their
original test. Even if they only want 100 for testing, give them your $1.95
price... but be sure to tell them this is your lowest price that is for
regular 5,000 quantity purchases, so they know they're getting the good
deal.
TIME TO CREATE YOUR PROMOTIONAL PACKAGE
Company buyers are busy people, so you'll want to make your presentation
quickly, clearly, and distinctly, eliminating all fluff and extraneous
material or wording that might tend to bog things down.
Here's what you'll need:
Descriptive folder or flyer about the product (Information sheet)
Glossy photo of the product
Possible advertising copy (although they will probably re-write it)
Terms of your sale, including freight charges
Brief cover letter
(Optional) Sample of your product IF it is small, light weight, inexpensive,
and if you think it will impress the company.
Send this mailing package via First Class Mail!
How many of these promotional packages should you mail? Only you can answer
that question, but here's a tip: Don't expect only 10 or 12 to produce much
response for your product. It might require 50 to 100 or even 500 such
mailings before you begin to see worthwhile results. Of course, a lot
depends on the product itself and whether it is for the general public or
restricted to a more selective audience.
Whenever possible, try to determine what type of merchandise each catalog
house offers before sending them your offer. If they cater only to men and
your product will be used primarily by women, why waste time and money? The
same would apply to a low priced item such as $5 offered to a catalog house
whose clientele happened to be sophisticated or wealthy people accustomed to
buying merchandise in the hundreds of dollars. Match your product with the
catalog company's line as closely as possible.
HANDLING THE BUSINESS
If your product is a good one and if you have made a good impression in your
promotional materials, sooner or later you will get an order for a trial
quantity.
Fill the order promptly. Use sturdy boxes and have your own shipping label
(printed with your company name & address) on each carton, typing the
catalog company's name and address with the customer's shipping number above
the name.
SELLING ON CREDIT
Unlike the conventional mail order business, selling to catalog houses is
not a cash-with-order type of operation. It's conducted on credit, so you'll
need invoices to send to your customer after shipment has been made. There
are a few variations of credit terms, but the best for you will be "Payment
due EOM or 2% discount within 10 days. "EOM means end of the month following
the date of shipment.
Use your best judgment whether you will ship prepaid or bill your customer
for the shipping charges.
HERE'S A FINAL TIP
If you can get some free publicity for your product along the way, it can
help you reach catalog houses in addition to bringing you additional sales.
Check magazines that are read by the type of people who will use your
product and look for departments such as "New Products." Many magazines
carry such a department under different titles.
Send a publicity package to the editors which will include the glossy photo
of your product, News Release that tells who will be interested in the
product and why, and a brief cover letter.
If you get a few magazines to accept your offer, they will give you a
mention in their New Products department. This will in turn bring you a few
or a few hundred orders, depending on the circulation of the magazines and
how much demand there might be for your product.
More importantly, it can link you up with some catalog houses. They often
scan magazines looking for new products to be featured in their catalogs.
Thus, instead of you contacting them... they will contact you.
The end result is that it can bring you many retail orders as well as
attract a few catalog house buyers who will ultimately sell your product in
their catalogs.
If each catalog house mails 10 million catalogs a year, and your product is
featured inside, I shouldn't have to tell you how many products can be sold
this way. Better stock up now!
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