smallbusiness.co.uk: Helping your business think big

Mail order is a fascinating way of selling goods. It works best for small businesses in my experience when products are aimed at a niche market. If this is the case, you can target your offer and your selling message in a very specific way.

To sell by mail order you have to advertise, either by direct mail or placing advertisements in newspapers, magazines, catalogues or directories. The essence of selling by direct mail is to use a list of people (made up of names and addresses) which you know will respond to direct mail and which you know will be interested in your specific product.

The price of lists can vary but a good responsive list costs around £150 per 1,000 names. On top of this the costs include postage and stationery. Postage costs can be reduced by using one of the Post Office’s cheaper tariffs for direct mail – Mailsort. However, this only becomes economic for mailers of 5,000 -10,000, as to use Mailsort you need to do the post office’s job and sort the mail according to postcodes. You also have to have envelopes pre-printed with the Mailsort symbol. A further drawback is that using these pre-printed envelopes drops the response because more people throw away the ‘junk mail’ without opening it!

What this all adds up to is that you need quite a lot of money to throw at direct mail (or advertising for that matter) to make a mail-order business work unless it is for a niche market with a really targeted group of likely buyers. I am wondering if your proposed business is likely to succeed without a significant investment on your part. In any case, what extra benefit are you offering over and above all the other retailers in computer games? Please talk through your idea with a local expert, say your Business Link adviser (www.businesslink.org; 0845-6009006) or bank manager, before you get started.