Nature and Importance of Mail-Order Business
The term “mail order” refers to that type of business in which orders are received directly from the customer by mail, without the aid of personal salesmanship. The advertising message may be carried by the mails, by periodicals, or by newspapers; the distinguishing characteristic is that salesmen are not used.
Many people confuse the term, “mail order,” with the term, “promoting sales by mail.” The former refers to the manner in which orders are received or in which the business is taken; the latter, to a method of carrying the advertising message to the prospective customer. “Promoting sales by mail” and “selling by mail” are loose terms for what may be more precisely designated as “direct-mail advertising.” Thousands of firms of every kind, among them mail-order houses, employ direct-mail advertising methods, but the number which rely upon the mails for bringing back the orders, without the help of personal salesmanship, is relatively small.
The mail-order house can effect sales economically because it groups together its merchandise, both for purposes of advertising and for purposes of shipping. By combining groups of articles in one catalog, it presents merchandise inexpensively to remote parts of the country, to homes never reached effectively by the advertising or salesmen of the retailers, and to people in rural districts who seldom go to the city to see merchandise displayed. This is a real service.
A number of firms that can cover economically only the larger cities, by personal salesmanship, depend upon mail order for business in the more sparsely populated sections.
85% of the merchandising in the
Importance of Analyzing Costs
One of the most important things to be done before launching a mail-order business is carefully to analyze costs. This is particularly true when attempting to build a business through the sale of only one product, a specialty of one kind or another.
Most things can be sold by mail-order methods if enough money is spent in the process, but no mail-order house is in business for the purpose of spending money. The problem of the prospective mail- order advertiser is that of determining how much to add to his production costs for advertising and follow-up, in order to allow him a fair and safe margin of profit. Many mail-order campaigns have failed because this question was not properly considered in advance. A manufacturer once started a campaign to sell an electric torch, by mail, for one dollar. The torch cost him less than fifty cents to manufacture and he felt that the difference between fair cost and selling price was sufficient to cover all expenses, and leave him a fair profit besides. He found it actually cost seventy cents to sell each torch. Consequently, he was in the annoying position of seeing twenty cents slip out of his pocket every time he made a sale.
What Can Be Sold by Mail-Order?
Many products are sold exclusively by mail order. The Dennison Manufacturing Co., makers of paper novelties, have depots for retail sales in the larger cities and their wares may be bought in department stores and stationery stores in other places, yet they invite mail orders in their advertising and do a large business in this way.
In considering articles that are not adapted to mail-order selling, we should doubtless list cattle as impossible, and dogs as improbable. Certainly precedent has indicated that dogs must be put on exhibition to be sold. To refute this apparent principle, there is the extremely interesting story of a man who began business with practically nothing and now does more than $75,000 a year in selling dogs by mail. “On an appropriation bf $500 a month, 600 inquiries and $5,000 worth of business (average) are secured,” said he. 99% of his business comes from following up inquiries produced by various forms of advertising. He has about 12,000 names on file and has followed up some of them as many as twenty times.
Now we are ready to learn that cattle also have been sold successfully by mail. One of the speakers at a meeting of the Direct Mail Advertising Association described a catalog which in eight years had built up an annual business of $100,000, selling cattle entirely by mail. In this instance, a peculiar method of getting added publicity was employed. A copy of the catalog was sent to every congressman and senator at
Handicaps of Mail-Order Selling
The handicap of mail-order selling in comparison with face- to-face, over-the-counter selling lies in the fact that the manufacturer or dealer cannot answer objections to the goods. lie cannot use the power of persuasion, in his salesmanship, to insure acceptance of the goods after they have been ordered and shipped. It is simply a case of the goods speaking for themselves, plus the guaranty of “satisfaction or money back,” of which men are not generally prone to avail them selves. Nor is he in a position to direct his sales talk into personal channels and tie up with the individual, as can be done by personal selling.
Most successful mail-order businesses have been built up on lines of merchandise rather than on single items. The “Potter’s Field” of mail-order is filled with the bones of companies that tried to sell small lines or single specialties and failed. The house that can offer a varied line can expect its average prospect to be attracted to some of its merchandise— enough, it may hope, to make the business profitable. The advertiser of a single specialty cannot depend upon any such law of averages.
Such small-line specialties as have won a fair degree of success in selling direct to customers by mail order have generally been articles of considerable value—enough to make the individual sale profitable. Shoe laces have been pointed out as a specialty which one could not logically expect to market successfully by mail order. The average purchase would be small in value. One of the problems of mail-order merchandising is to raise the amount of the average sale.
The expedient of offering a dollar assortment of shoe laces is shown to be void of promise when one considers the buying habits of the public. More and more, people wait for the bootblack or the repair man to put in new laces as they are needed. No advertiser can afford to ignore the buying habits of the people. If there is truth in the statement, frequently made, that year by year the public is depending more and more upon the services of others to do things that people formerly did for themselves, the trend cannot be ignored.
Articles, like automobiles, which require expert local service after the sale, are not adapted to mail- order methods. A local dealer is the logical marketing channel. A complicated machine requiring a physical demonstration as a part of the sales presentation is, likewise, ill-suited to mail-order. On the other hand, several large companies are selling complete, ready-built houses by mail. They offer to deliver a home, to be erected on one’s own plot by local labor, and promise a very definite saving over any other method, while giving the buyer a wide choice of styles and sizes.
Who Can Sell by Mail-Order?
When mail-order business is mentioned, most people seem to think only of such well-known and established houses as Sears, Roebuck & Company, Montgomery Ward & Company, Butler Brothers, etc. As a matter of fact, mail order has been employed successfully by small concerns in many varied lines, even including the small-town retailer who is popularly thought of as only the helpless victim of mail-order competition.
A example of how the smaller merchant is competing with the larger mail-order houses, by following their methods, is seen in Fred Mann, a retailer located at Devil’s
Prior to the establishing of this store by Mr. Mann, sales in that community by the large mail- order houses reached a high volume but, by applying the same fundamental principle under which they operated, he reduced this volume more than 75%. The large mail-order houses thrive be cause they take advantage of the neglected opportunities that belong to the retail merchants.
Garver Brothers, at
Mooney Brothers of Temple, Oklahoma, another general store in a small town, also do a million dollars worth of business a year. operating on the same principle as the large mail-order houses.
Aside from the large mail- order houses and those department stores in the larger cities which conduct a mail-order business, there are hundreds of small concerns doing a direct- by-mail business. These houses are generally houses of “one line,” that is. they offer for sale by mail a single unit of merchandise, such as a knife, a game, a compass, etc. Among these are also publishing houses that have one book that they are pushing by mail-order sales. A large manufacturer of printing presses hi
It was the practice in the past for certain houses to obtain selling agents through mail-order advertising. They would advertise, “Send us your name and address and ten cents for a sample of X. Y. Z.”
With the sample would be forwarded literature dealing with the selling possibilities of X. Y. Z., and agents would be established thereby. Many firms conducting business along these lines would exchange lists, and compile a directory of names of persons who were likely prospects as agents for house-to-house sales, etc. Thus, if a person mailed his name and address for a sample, it was quite likely that, within a few weeks, he would receive a great mass of literature from different houses in this field. A great many large and reputable mail-order speciality houses advertise a unit as a “leader” merely to obtain names for future catalog and follow-up work.
Installment Sales by Mail-Order Houses
Retail mail-order houses are uncovering a vast amount of business through application of the installment credit system. In the beginning, mail order was necessarily a cash proposition. This worked well enough on the ordinary items, but it shut out the mall-order houses from a big and profitable trade in the larger and more expensive goods.
When an article runs pretty well up into money, the average person will hesitate before buying it for cash. He is going to shop around. Then, by the time he is financially prepared to make the purchase, he may decide that he does not want it, or he may buy it from some house other than the first one he had in mind. But he is likely to go without the article altogether.
Take, for instance, the complete furnishing of a home. The average cost of fitting out an apartment or a cottage for newlyweds runs into several hundreds of dollars, more money than the ordinary citizen has lying around loose when he gets married. He must either buy his furniture on the installment plan, or get it bit by bit. In the latter instance, he is likely to scatter his purchases among various retailers or mail-order houses. If this order could be secured at one time it would be worth-while business. The installment furniture houses in the large cities offer a way out for people living in those cities. But the family out in the small town likes good furniture as well as the one in
The same principle applies in the purchase of pianos, radios, and similar luxuries. People living in or near cities of any size have long had the privilege of buying these things on the installment basis. Dealers in these cities have reached out, to some ex tent, for the country trade within a radius of one hundred or two hundred miles. Not until the mail- order houses took up the installment business in this line, however, were pianos and radios at the disposal of the rural multitude. The resulting volume of business may be regarded as amazing when viewed from one angle, but it is only natural, after all. Previously, only the surface of the potential market had been scratched. Now, thanks to mail order, the country-wide demand is being met.
Today, a woman on the farm need not wait until her chicken money or egg money reaches a sum which will enable her to buy a cream separator. She can get it from a mail-order house on credit and pay for it by the month. If the farmer wants farm machinery of any kind, he can buy it on the same basis. The mail-order house will sell him a heating plant, a lighting system, or even a ready-built house, and collect from him in easy payments.
The credit policy of the larger mail-order concerns is very broad and liberal. Some manufacturers also have satisfactory installment dealings with farmers and others, but are somewhat more exacting in look 1mg up the credit risks.
The installment method appeals to people of means just as to the poorer classes. The mail-order houses were quick to sense this outlet that had previously been neglected. They are bringing about a new era in installment selling that is benefiting the en tire business of the country. It sells more goods to more people.
Buying Advertising by Test Only
Mail order is the only kind of business in which returns from advertising can be accurately checked—the advertiser knows that all his business comes through advertising alone. From the results received, the mail-order advertiser can find out definitely the particular size of space he can most profitably use, and the appeals that bring the most inquiries or orders. Different sizes of space are experimented with in different publications, and the actual cost per order carefully tabulated for each. The space that brings the best results is then adopted as the standard, and the publications that show profitable returns are used regularly.
The constantly rising cost of magazine advertising, together with the ever- changing habits of the buying public, and even the changing character of media, make it essential to the advertiser to keep adequate records of his advertising activities, so that he can constantly watch for any change in conditions affecting his results.
Reports on media and copy should be studied periodically to discover any upward or downward swing in advertising costs. Thousands of dollars have been wasted in advertising simply because advertisers have continued to use a particular medium after it had ceased to be a paying one; likewise, many organizations could have increased their profits had they kept in closer touch with their results, and made full use of unusually productive media.
The value of watching results is well illustrated by the experience of the Woman’s Institute at
Practically the same steps are taken with a new piece of copy. It is given a one-time test in the three or four different types of publications on the Institute’s list. The copy may prove successful in one type of medium, but fail in another. Gradually, the records indicate in what types of media it will prove most productive and that piece of copy is scheduled accordingly. Mail-order advertisers, when they discover a publication which brings unusually profit able returns, will frequently insert several individual advertisements in different sections of a single issue of that medium.
From the foregoing, the conclusion might be drawn that only mail-order advertisers can and do key their copy. On the contrary, many other national advertisers do the same thing. The practice of keying advertisements is valuable to all advertisers who get inquiries from the final users of the product, or who offer anything in the advertisement—sample or booklet—in order to obtain inquiries from prospects. Only in this way is the advertiser able to measure the relative productivity of both copy and medium.
The methods for keeping account of keyed advertising vary. One large advertiser gives each issue of a magazine an individual key number and enters the inquiries as fast as received on a card record. This consists of a card for each issue of a magazine. The card shows, in addition to the record of the inquiries and orders, the magazine, issue, cost, title of advertisement, and a number for that advertisement, which is designated the very moment the copy is ready for publication. As inquiries and orders develop, they are entered daily on these record cards.
With such a report, it can be readily noted how easy it is for this advertiser to evaluate his media and copy. For instance, the above tabulation indicates that, while publication A is a good inquiry producer, it does not pull inquiries from the proper sort of prospects, because the conversion into orders is unusually low for this type of product.
The same figures can also be used in analyzing copy. From the above, it would seem that Copy No. 24 should be discontinued. It pulls a large number of inquiries, but it does not bring inquiries of high quality because the percentage turned into orders is much lower than in the case of either of the other two pieces of copy that follow.
When records of this sort are continued over a long period of time, and the results of various insertions in the same magazine are averaged and compared with averages from other media, the advertiser can definitely pick the publications and the copy appeals which bring the most results for the least money.
Building a Mail-Order Catalog
The mail- order advertiser’s problem in building his catalog is chiefly an individual one. In some lines of business, one catalog will suffice for years, with an occasional change when an article is dropped from the line or a new product added. Such lines are firearms, sporting goods, billiard tables, etc. On the other hand, some mail-order houses issue as many as four catalogs a year and, in addition, special gift catalogs for the Christmas holiday season and at Easter.
The mail-order catalog is virtually a “show-case” for the seller’s wares. His own good judgment and his business experience must tell him what to put in his show-case, and how to arrange and proportion the display. In this decision, he must be guided by sea son (when more than one catalog is issued yearly), and by the adaptability of his merchandise to the section of the country in which lie finds his greatest volume of sales.
The catalog of men’s or women’s wearing apparel is thus a much simpler proposition than the preparation of a catalog for a general mail-order house that sells everything from darning needles to farm machinery and boats. Some of the questions that confront an advertiser of this type are:
(a) How many different catalogs shall we publish?
- Spring, fall, wearing apparel, agent’s samples, etc.
- Number issued of each edition.
- Date of issue of each
(b) Are seasonal or divided catalogs possible?
(c) Make-up of each catalog:
- Stock used: covers, inside pages
- Number of black and white pages
- Number of color pages
- Number of order blanks
- Number of pages devoted to stimulating business and building confidence in house
(d) Cost of each catalog per copy, per page
(e) Cost of preparation of catalog, taking largest fall catalog, for example:
- Editorial preparation
- Art work
- Color pages
(f) Relative success of showing many variations on each page of various classes of merchandise, i.e., many or few styles of waists
The catalog must speak the language of the prospective customer. In doing this, it may even be couched in technical terms. A very successful plant nursery catalog lists the offerings by their botanical names. Could anything be less interesting to the layman? But this nurseryman’s customers know their botany; he speaks their language.
Goods Must Be As Advertised
The successful mail-order house owes a large part of its success to its adherence to a policy of fair dealing and correct representation of merchandise that inspires confidence and goodwill. Mail-order business, like any other business, depends for its success on customer’s continuing to do business with the house, and to bring new business by word-of-mouth advertising.