Fritz: All Fritz/All Fritz.zip/All Fritz/FILES/BUSITION/MAILORDR.LZH/MAILCH4.DOC

Text File | 1992-01-11 | 13KB | 262 lines

                                    CHAPTER 4





                            FINDING PRODUCTS THAT SELL




                  Never forget that what you buy must be mailable. (This
             includes being able to send merchandise by carriers such as
             U.P.S. and Overland Express). At first glance, the fact that
             your product should be mailable, seems too obvious to men-
             tion.  If it's too big, you can't mail it. But the problem
             of a mailable product sometimes arises unexpectedly.  Other
             than sheer size, products can become unmailable due to being
             perishable, fragile or dangerous.  I remember discussing
             business with a worm farmer who never did discover an eco-
             nomic way to send worms by mail without them dying.

                  Some products have much greater sales potential than
             others.  All products which have a high consumer repeat
             business help to put your business on a solid basis.  These
             are products which the same people buy over and over again
             because they are consumable products.  There is no point in
             listing them, they are all around you, but to get you think-
             ing along the right lines, we are looking at food and drink
             - tea and coffee-, razor blades, pens and pencils, sprays of
             all kinds, batteries, etc. etc.

                  Thought:  I have seen quite a few advertisements of
             Conoiseur Coffee, where entrepreneurs have set themselves up
             in the Mail Order business supplying special coffee blends,
             but I can't ever recall seeing an entrepreneur selling tea
             blends, which is worth considering, especially as there are
             so many herb teas available.

                  Now the question of where to buy arises.

                  Where you buy product is to a large extent determined
             by what you want to sell. This applies particularly if you
             intend to specialize in a certain line of products.  I
             previously mentioned personal interests and you may be
             taking that route.

                  If you are interested in electronics, the knowledge you
             already possess together with your interest in the subject,
             will get you off to a flying start.  You know the 'what' and
             quite a few of the 'where'.

                  If you are interested in gardening, and know of a
             unique or recently developed product such as seeds from a
             rare hybrid or a pneumatic kneeling pad, you have a tremen-






             dous number of ready-made potential Mail Order customers.
             They will range from the week-end gardener who casually
             tends a small front yard to the enthusiast who grows exotic
             plants in half a dozen greenhouses. Even the apartment
             dweller living in a high-rise building complex would appre-
             ciate a self watering plant holder or a new type of indoor
             plant fertilizer.

                  While it is true that you sell best the products with
             which you are familiar, it doesn't tie you to a single range
             of products.  Knowing where to look for new items is more
             than half the battle.  It's also a lot of the fun of running
             a Mail Order business.

                  E. Joseph Cossman, one of the acknowledged Masters of
             Mail Order, will be very happy to tell you about the for-
             tunes he has made with the "Ant Farm" and the "Spud Gun".  I
             am certain he had no interest in these products until he ran
             across them in his search for new items to add to his Mail
             Order catalog.  Read his book, "How I Made $1,000,000 in
             Mail Order".

                  Fredericks of Hollywood has established an almost
             unassailable foothold in the exotic lingerie market, a
             foothold established originally by his Mail Order business.

                  Where do you find your products?  In the back of this
             book you will find sources for a wide variety of products,
             but your search should begin in the Public Library.  Consult
             the Directory of American Manufacturers for a specific line
             of products.  Magazines devoted to special interest groups
             will also supply leads to new products.  You will find them
             in the advertisements and in the pages devoted to a review
             of new products.

                  Researching magazines slanted towards specific sections
             of the public provides you with an extremely wide range of
             merchandise.  You can find magazines directed at people
             interested in Health and Fitness, Boating, Fishing and
             Hunting, Coin Collecting, Photography, House Beautiful, etc.
             These magazines often review new products on, or about to be
             introduced to, the market.

                  Here are few ideas for locating below market price
             merchandise:

                  A.  Going-Out-Of-Business sales and auctions.  Keep an
             eye open for these advertised in the Classified section of
             the Sunday newspapers.

                  B.  Make friends with a Job Buyer.  A Job Buyer is a
             person who buys surplus merchandise at throw-away prices
             from large department stores or manufacturers.  You can
             usually find them listed in the telephone Yellow Pages under
             "Surplus Buyers" or "Auctioneers".







                  It may be interesting to know why big stores get rid of
             merchandise at such low prices.  The answer is the cost of
             space. After merchandise has finished its run, - clothing
             goes out of fashion, fad products lose their appeal,  dated
             merchandise nears expiration date, - there are always re-
             mainders.  Large stores rarely sell down to the very last
             item.  From then it becomes a matter of storage.  Items that
             have stopped selling are removed from display to make room
             for newer, more popular, items.

                  Each square foot of space costs the store x number of
             dollars.  If a certain type of merchandise occupies ten
             square feet of display space, the cost of that space is
             calculated when arriving at the selling price of the merch-
             andise.  When the merchandise stops selling, the cost of
             space continues and unless that merchandise is disposed of
             quickly, the cost of space will eat up the profits generated
             by the items which have been sold.

                  Store managers will dispose of the surplus merchandise
             as quickly as possible, hopefully at the price they paid but
             well below if necessary, in order to stop the profit loss.

                  I once had it explained to me like this, and it was a
             lesson worth learning.

                  "If you buy 50 items at $100 each and sell them at $125
             each, what is the mark-up on each item?"

                  Quick as a flash I came back with the answer, "$25."

                  "So," he asked, "How much profit will you have made
             when you have sold, say, 35 of those items?"

                  My razor sharp mind went into top gear. 35 x 25. It
             took a moment.  "$875," I said proudly.

                  "Not so," my mentor said.  "You haven't made a penny
             yet.  You paid $5000 dollars for them. So far you have only
             taken in $4375. You haven't even recovered your costs yet.
             You don't start making any profit at all until you sell your
             41st item.  If you find they start to stick any time after
             you've sold item number 41, get rid of the remainder to make
             room for something that will sell faster."

                  "Get rid of them?"

                  "Yes.  Throw them away if you have to.  They're only
             costing you rent money while they sit there on the shelf.
             If you can, recover a little more profit by selling them to
             a job buyer, but if he won't buy them, give them away."

                  It sounded extreme. "I once heard you could sell any-
             thing if you kept it long enough," I protested.







                  He grinned.  "Depends how long you have to keep it.
             That's what you look for when you walk into a store.  In a
             business that is thriving, the merchandise always looks
             fresh and clean.  In a business that's going downhill,
             there's dust on everything.  That merchant is paying rent
             and taxes on things that aren't moving."

                  With this knowledge, you are in a strong position when
             it comes to bargaining with retailers for their surplus
             merchandise.

                  C.  Directly from the manufacturer.  Take a couple of
             days to tour round local industrial complexes and find out
             who is making what.

                  When Kaiser Steel Mills closed down, they left behind
             mountains of cinder from the blast furnaces.  They were
             happy to sell this remnant to cities and property developers
             who used it in street repair and house driveway construc-
             tion.  One smaller entrepreneur had the idea of coloring
             this cinder material with a waterproof dye and sold it
             packaged in smaller quantities to nurseries as a plant
             decorative material.

                  D.  Directly from the larger stores.  Here you take on
             the business of being a Job Buyer but instead of selling by
             auction you sell by Mail Order.  This is what we were dis-
             cussing a few moments ago.

                  E. The Trade Department of foreign countries.  You will
             find further information on this in the Appendix.

                  F. U.S. Government surplus sales. More information in
             the Appendix.

                  G. Import/Export firms.  Search out an Import/Export
             firm handling the type of merchandise you require and talk
             to them about new merchandise they are bringing into the
             country.  The telephone Yellow Pages or Public Library will
             provide you with a list of possible contacts.

                  H.  Swap Meets and Flea Markets.  Small retailers going
             out of business often try to dispose of their remaining
             merchandise at Flea Markets.



                  Finding and buying products is one of the most pleas-
             urable aspects of the Mail Order business. It becomes quite
             a challenge to keep ahead of the markets by being able to
             advertise a product long before people begin seeing it in
             the stores.

                  As you grow and your advertising becomes more wide-






             spread it will become possible for you to handle some merch-
             andise on a written contract which ensures you of exclusive
             sales for a year or longer.

                  Now we need to concentrate on ways to sell those
             products. In the next chapter we'll take a look at Power
             Thinking.