Small Business

Before Mail-Order, Try Online

If you want to start a catalog company, you stand a better chance of success if you first use the Web to create a brand and establish a solid customer base

I am interested in starting a mail-order catalog company. How would I go about this? —J.S., Emeryville, Calif.

Starting a catalog business is not a project for the faint of heart, says Mark Lee, a veteran catalog marketer who recently began consulting. In his experience, most successful catalog startups are offshoots of established retail or Internet businesses. "At the moment, I am working with a true, from-scratch startup client, but I believe they will have spent more than $1 million by the time their first catalogs arrive in homes. The principals have years of experience in the catalog and Internet industries and have solid capital behind them," says Lee, of Mark Lee Group, based in Charlottesville, Va.

Your first order of business may be to rethink your plans and start your company online (BusinessWeek 9/5/06), where the costs are smaller and risks lower. "The basic framework for an e-commerce Web site can be had for $10,000 to $15,000—without the copy or photos," Lee says. If you can get an online customer base established, you'll also have a customer mailing list, which is crucial when your catalogs may cost you more than $1 each to create, print, and mail.

While mail-order catalogs are not going extinct, successful kitchen-table startups are a rarity these days because of increased competition from offline and online retailers and the thousands of established catalogs already crowding the market. "Catalog response rates have been in a more or less steady decline since the 1950s," Lee says. "It

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