Do you want to start a direct mail order business from home? If YES, here is a complete guide to starting a mail order business with NO money and no experience.
Okay, so we have provided you an in-depth sample mail order business plan template. We also took it further by analyzing and drafting a sample mail order marketing plan backed up by actionable guerrilla marketing ideas for mail order businesses. In this article, we will be considering all the requirements for starting a mail order business online. So put on your entrepreneurial hat and let’s proceed.
Why Start a Mail Order Service Business?
The emailing system has not in any way taken over mail order services. So, if you are into retailing of goods and services, there are innovative ways you can reach out to your target market and one of such means is via mail order. Loads of entrepreneurs are making millions retailing their goods and services via mail order marketing and you can as well start your own mail order business.
Starting a standard mail order business just like starting any other business might not be entirely easy, but one thing is certain, it can generate huge and steady profits if well positioned and properly managed. With this type of business, you can choose to operate from any part of the country as long as there are businesses and people who will patronize your goods.
It is quite pertinent that you analyze the existing mail order companies in and outside of your area. Also, you would be required to check the existing competition to know their strengths and weaknesses. Knowing the weaknesses of the existing mail order companies mean that you would be able to learn from their mistakes and in turn come up with a better mail order business devoid of the mistakes and weaknesses of others.
So, if you are serious about starting your own mail order company, all you need do is to read this article and you will be well equipped.
Starting a Mail Order Service Business Online from Home – A Complete Guide
- Industry Overview
Companies that operate in the Mail Order industry basically make use of mail catalogs or TV to attract clients and exhibit their merchandise. Related businesses that generate sales through door-to-door marketing, brick-and-mortar retail or e-commerce are not part of the Mail Order industry.
If you are a close observer of happenings in the Mail Order industry, you will agree that the industry has struggled in recent time. Because of the rapidly increasing competition from online retail outlets and a decrease in female participation in the labor force, the industry has experienced slow revenue growth.
In order to survive the slowing industry revenue and increasing demand for online retailers, many mail order companies have begun to offer web and mobile e-commerce services thereby increasing sales generated by industry-specific channels.
Going forward, external competition from e-commerce and brick-and-mortar operators will continue to hamper industry revenue growth. In addition, a decline in the number of cable subscriptions will threaten TV home shopping networks.
The Mail Order industry is indeed a thriving industry and pretty much active in countries such as United States of America, United Kingdom, Canada, Australia, Germany, France, Italy and Switzerland et al. Statistics has it that in the United States of America alone, there are about 57,574 registered and licensed mail order companies responsible for employing about 227,248 and the industry rakes in a whooping sum of $147 billion annually. The industry is projected to enjoy 0.5 percent annual growth. Express Scripts is the market leader in this industry not just in the United States of America, but also on the global stage.
A recent report published by IBISWorld shows that the Mail Order industry has a low level of capital intensity. IBISWorld also estimates that for every dollar spent on wages, industry operators will spend $0.09 in capital investment. The report also stated that over the previous five years, capital intensity has decreased slightly from $0.10.
The industry has a relatively low amount of capital intensity when compared with other retail industries because of its lack of physical location. However, companies do spend money on items such as computers, warehouse, shipping equipment and other physical goods, though this is a common expenditure across all types of retail companies.
Any aspiring entrepreneur or investor that is considering starting this type of business whether on a small scale or large scale should ensure that he or she conducts thorough market survey and feasibility studies so as to get it right. The truth is that this type of business does pretty well when it is strategically positioned.
The mail order industry will continue to blossom because people and organizations will not relent in purchasing goods that are displayed in mail order catalogues especially if they are cheap and affordable. Despite the fact that the industry seems over-saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend starting their own mail order company.
The mail order industry is a profitable industry and it is open to any aspiring entrepreneur to come in and establish his or her business; you can chose to start on a small scale by operating on a local and national level, or you can chose to start on a large scale with several outlets in key cities servicing clients on both national and international level.
Starting a Mail Order Service Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services and products of mail order companies cut across individuals, households and businesses as long as they make use of the services and goods that you have for sale.
So, if you are looking towards defining the demographics for your mail order business, then you should make it all encompassing. It should include individuals, households, corporate organizations, students, and business owners cum entrepreneurs within and outside the city you are operating in who have the capacity to purchase your products.
List of Niche ideas Within the Mail Order Service Business That You Can Specialize in
Most mail order companies tend to operate general services and products that involve every business activity that a standard mail order company is expected to offer, that is why it seems like there are no niche areas in the industry. But on the other hand, some mail order companies may decide to major in some key areas such as;
- Health and beauty products
- Computer hardware, software and office supplies
- Clothing, jewelry and accessories
- Home furnishings
- Sporting goods, toys, games and hobby items
The Level of Competition in the Mail Order Industry
The competition that exists in the mail order industry goes beyond competition amongst mail order companies within your location of operation. You are expected to compete with major players all across the United States and even in the globe who have a stake in the country you operate in.
For instance, a mail order company from the United Kingdom whose product is highly competitive can compete for clients in the US with other mail order companies. So, it will be right to say the competition in the mail order industry is tough.
The truth is that no matter the level of competition in an industry, if you brand and promote your products or business properly, you will always make headway in the industry. Just ensure that you position your business properly, display quality goods for sale with competitive prices, adopt safe and swift delivery process and you know how to attract and reach out to your target market.
But over and above, there are several small, medium and large scale mail order companies scattered all around the United States. So, if you choose to start your own mail order company in the United States, you will definitely meet stiff competitions amongst mail order companies within and outside your business location. Besides, there are larger mail order companies that determine the trends in the industry and you should be ready to compete with them for customers.
List of Well – Known Brands in the Mail Order Service Industry
In every industry, there are always brands that perform better or are better regarded by customers and general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years.
These are some of the leading mail order companies in the United States of America and in the globe;
- Lands’ End
- L. Bean
- Chadwick’s of Boston, Inc.
- Oriental Trading Company
- Victoria’s Secret Direct
- Paul Fredrick
- Coldwater Creek
- Woman Within
- The Company Store
- Blair Corporation
- Orvis Company
- CDW Corporation
- TravelSmith Outfitters
- Pottery Barn
- Ballard Designs
- Harry & David
- Hammacher Schlemmer
- Daedalus Books & Music
- Plow & Hearth
- Home Decorators Collection
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
Mail order business is not a green business. As a matter of fact, you will come across several small, medium and large scale mail order companies all across major cities in the United States of America. So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and costing of the required amount needed to purchase the products you want to retail and the cost to successfully run the business.
Over and above, if you are considering starting a mail order business, then your concern should not be limited to the cost of purchasing the goods you want to retail but also on branding and how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
Starting Your Mail Order Business from Scratch vs Buying a Franchise
If you are starting a mail order company, you would have to start from the scratch because you can hardly get a franchise of a mail order company to buy, if you do, it will be way too expensive.
Besides, starting a mail order company from the scratch is less stressful when compared to other small scale retail businesses which usually require detailed groundwork before launching the business. With a mail order company, you should just try as much as possible to secure supply deals from manufacturers of the goods you intend retailing, build business relationship with organizations and then leverage on every marketing tool within your disposal especially the internet to market your products.
Please note that most of the big and successful mail order companies around started from the scratch and they were able to build a solid business brand.
Possible Threats and Challenges You Will Face When Starting a Mail Order Company
If you decide to start your own mail order company today, one of the major challenges you are likely going to face is the presence of well – established mail order companies in your business location and also any other business that retails the goods you are retailing. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely going to face are economic downturn and unfavorable government policies. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
Starting a Mail Order Service Business Online – Legal Matters
- Best legal entity to use for this type of business
You have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or even a sole proprietorship for a business such as mail order company. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale mail order company especially if you are just starting out with a moderate start – up capital and operating in a small neighborhood.
But people prefer limited liability Company for some reasons. As a matter of fact, if your intention is to grow the business and sell your products all across the United States of America and other countries of the world, then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your mail order company; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your mail order company with the ability to retail and deliver goods, parcels and documents et al all across the United States of America and other countries of the world, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Catchy Business Name Ideas Suitable for a Mail Order Company
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own mail order company, here are some catchy names that you can choose from;
- Lamar & Gracias Mail Order Company, Inc.
- Kiddies World Mail Order Company, LLC
- New Horizon Mail Order Company, Inc.
- Home Affairs Mail Order Company, LLC
- Cash Back Mail Order Company, Inc.
- Bookworm & Stationary Mail Order Company, Inc.
- Vintage Group Mail Order Company, Inc.
- Mary Barker Mail Order Company, LLC
- Anthony Brown Mail Order Company, Inc.
- Green Marketing Mail Order Company, Inc.
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your mail order company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own mail order company in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Risk Insurance
- Credit insurance
- Motor vehicle insurance (comprehensive insurance)
- Deposit insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own mail order company, usually you may not have any need to file for intellectual property protection/trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
Is Professional Certification Needed to Run a Mail Order Service Business?
Aside from the results you produce as it relates to swift and safe delivery of goods purchased via your mail order marketing platform, professional certification is one of the main reasons why some mail order companies stand out. If you want to make an impact in the mail order industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in this competitive market. These are some of the certifications you can work towards achieving if you want to run your own mail order company;
- DAS Certification
- Degree or Diploma in logistics and transportation related courses
Please note that you can successfully run a mail order company in the United States and in most countries of the world without necessarily acquiring professional certifications as long as you have adequate experience cum background in the mail order industry.
List of Legal Documents You Need to Run a Mail Order Company
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own mail order company in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Non – disclosure Agreement
- Commercial Vehicle Operator’s Registration
- Appropriate driver’s licenses for drivers (Commercial driver’s license (CDL)
- Assistant’s licenses for assistants
- Proof of ownership, proper identification and vehicle license
- Copy of license for the service support facility (warehouse) and/or a recent inspection report
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Franchise or Trademark License (optional)
Financing Your Mail Order Business
Starting a mail order company can be cost effective especially if you choose to start on a small scale with just one delivery van operating within a community or city and getting goods on credit from manufacturing companies. Acquiring delivery van/truck, or bike or drone et al is part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale with fleets of delivery vans/trucks, bikes and drones, then you would need to go source for fund to finance the business because it is expensive to start a standard large scale mail order company with networks spread across the United States of America and the world.
No doubt when it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your mail order company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Suitable Location for your Mail Order Company
When it comes to choosing a location for your mail order company, the rule of thumb is that you should be guided by the demand for the products you want to retail and the demographic composition of the location. Of course, if you are able to start your mail order company in the right location for such business, you won’t struggle to make headway with the business.
It cannot be overemphasized that the location you chose to start your mail order company is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people and businesses with the required purchasing power and lifestyle. If you make the mistake of starting your mail order company in an area where you can hardly find access good roads, a location that is hidden and difficult to locate, then you will struggle to grow the business.
These are some of the key factors that you should consider before choosing a location for your mail order company;
- The demography of the location
- The demand for the products you want to retail in the location
- The purchasing power of the residents of the location
- Accessibility and road network of the location
- The number of mail order companies and other retail businesses that retail same products you retail in the location
- The local laws and regulations in the community/state
- Traffic, parking and security
Starting a Mail Order Business Online – Technical and Manpower Details
On the average, there are no special technologies or equipment needed to run this type of business except for customized logistic and deliver software, tracking device and software apps, Point of Sales (POS) Machines, and other relevant software applications. So also, you will definitely need distribution vans/trucks, bikes and drones, computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
As regards leasing or outright purchase of a warehouse facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with short term rent/lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.
When it comes to hiring employees for a standard mail order company, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Transport and Logistics Manager, Merchandize Manager, Warehouse Manager, Sales and Marketing Officer, Delivery Van Drivers, Accounting Clerk, and Cleaners. On the average, you will need a minimum of 5 to 10 key staff members to run a medium – scale but standard mail order company.
The Business Services Process Involved in a Mail Order Company
Mail order is a sales model that deals with buying of goods or services via mail delivery. The buyer places an order for the desired products with the merchant through some remote method such as through a telephone call or web site.
Thereafter, the goods or services are delivered to the customer. The products are typically delivered directly to an address supplied by the customer such as a home address, but in some cases the orders are delivered to a nearby retail location for the customer to pick up. Some merchants also allow the goods to be shipped directly to a third-party consumer, which is an effective way to send a gift to recipients who are not within your operational location.
It is worthy to mention that aside from quality products and swiftness, there is need for safe delivery hence the need for all mail order companies to install trackers on their delivery vans, bikes, and trucks and also leverage on reliable logistics and delivery software apps. This will enable them keep track of the goods that are on transit and also give an almost accurate timing of delivery.
It is important to state that a mail order company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated mail order company business process is not cast on stone.
Starting a Mail Order Service Business Online – The Marketing Plan
- Marketing ideas and strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a mail order company, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands determining the market direction for the mail order industry.
These are some of the marketing ideas and strategies that you can adopt for your mail company;
- Introduce your mail order company by sending introductory letters alongside your brochure/catalogue to individuals, corporate organizations, households, students, schools and business owners cum entrepreneurs within and outside the city you are operating in
- Advertise on blogs, forums and on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on social media or those who read blogs can know who to call when they need to purchase the goods you retail
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in road shows in targeted communities from time to time to create awareness of your mail order company
- Join local mail order company associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Strategies to Boost Your Mail Order Brand Awareness and Create Your Corporate Identity
If your intention of starting a mail order company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on the promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your mail order company;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your billboards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your mail order company
- Distribute your fliers and handbills in target areas
- Contact individuals, corporate organizations, households, students, schools and business owners cum entrepreneurs within and outside the city you are operating in informing them about your business and the products you retail
- List your mail order company in local directories
- Advertise your mail order company in your official website and employ strategies that will help you pull traffic to the site
- Position your Flexi Banners at strategic positions in the location where your mail order company is located
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans, bikes and drones et al are well branded with your company logo