Mail-Order Business

A mail-order business is one that receives and fulfills orders for merchandise through the mail. The terms "mail-order," "direct mail," and "direct marketing" are sometimes used interchangeably; in fact the mail-order category is a subset of the two other categories which include any and all kinds of solicitation by mail, be it of sales or contributions to causes. Prior to the introduction to the official North American Industrial Classification System (NAICS), the Bureau of the Census classified mail-order as "Catalog and Mail-Order Houses" with the Standard Industrial Classification (SIC) code of 5961. As a sign of the times, beginning in 1997 the Bureau began using NAICS code 45411 and calling these businesses "Electronic Shopping and Mail-Order Houses." Since that time both in governmental classification as well as in common reference, "catalog sales" are treated as a single category regardless of what form the catalog takes. Within the industry as well, many participating companies use both print and electronic catalogs to sell their products.

BY THE NUMBERS

Sales

Data from the Bureau of the Census for 2003 (the most current in 2006), indicated an industry with sales of $131,173 million that year. Of this total $90,794 million were traditional catalog sales (using printed media) and $40,379 million were e-commerce distribution (30.8 percent). The industry as a whole increased its sales by 7 percent over 2002, the print folks by 1.2 percent, the electronics people by 20.6 percent. Similar patterns of difference—e-commerce growing dramatically, traditional sales less energetically—were observable for retail sales as a whole. The chief difference was that in 2003 total electronic retail was around 2 percent of total retail but in the catalog category the e-share was ten times higher. This indicates that the "catalog shopping" mindset is more easily satisfied online than the "shopping" mindset generally.

Companies

In 2003 the industry had 15,172 participating companies. The industry was predominantly populated by small businesses. Firms with 1 to 99 employees numbered 12,688, and the majority of these had 5 employees or fewer (9,324). To these must be added 1,856 companies without any employees at all, the owners doing all the work—for a total small business participation of 14,544 companies.

Employment

The industry employed just under 265,000 people. Average earnings of employees were $24,800 in firms with 1-4 employees, $27,700 in firms with 5-9, $30,300 in firms with 10-19, and $33,000 in firms with 20-99 employees. The earnings of owners without employees were $77,000 per company. The largest employer category (2,500 employees or more) paid its employees $44,100 a year.

Products

In the catalog business as a whole, the top-ranking product category was drugs, health, and beauty aids ($27.2 billion). In rank order the next four categories were computer hardware ($23.7 billion), clothing and accessories, including footwear ($15.1 billion), furniture and home furnishings ($8.3 billion), and office equipment and supplies ($6.96 billion). In the electronic component of this business rankings were slightly different and the volume, of course, lower. Top rank went to computer hardware ($6.7 billion) followed by clothing and related ($5.5 billion), office and related ($3.47 billion), the furniture category ($3.4 billion), and electronics and appliances ($2.9 billion).

PERENNIAL MOTIVE: CONVENIENCE

Mail-order businesses date back to pre-Revolutionary War days when gardeners and farmers ordered seeds through catalogs. Early catalog sales of general merchandise drew their support from a predominantly rural population for which shopping usually meant a day-long absence from the farm; but the retail stores the isolated farmers visited in nearby towns usually stocked only necessities/commodities with but a rare item of luxury now and then. In the 19th century catalog sales filled a vacuum, the catalogs always at hand, Montgomery Ward being the early dominant merchant, soon yielding market share to Sears Roebuck and Company. Until the late 20th century and the rise of the Internet, catalogs were always on paper but transformed themselves by using color photography. Both the solicitation and the ordering were at first by mail but, as telephone service became universal, telephone ordering from a printed catalog became an alternative. Since the 1990s, catalogs have appeared on the Web. The same catalog may be accessible both in printed and in online formats. And ordering in the mid-2000s took place by mail, by phone, and by the mouse-click.

The driving force behind "distance sales," as this field is sometimes characterized, has always been convenience—in rural times isolation made the catalog handy; in modern times very busy lifestyles (not least high and increasing female work-force participation), have motivated shoppers. Catalog shopping has always shown peaks in busy holiday seasons. In addition to the perennial motivation of convenience, catalog sales have always also offered customers a greater variety of choices than those available in brick-and-mortar establishments—as evidenced by catalog sales counters inside large department stores.