Although The Sharper Image's 48- to 56-page catalog has a high-quality look and feel, a six-person in-house creative staff produces and mails it for 44? a copy, including postage and mailing-list rental. In contrast, the Direct Mail Marketing Association says the average cost for a 32-page catalog is 50?.
Thalheimer loses no opportunity to save money without sacrificing quality. He chose a standard size format -- 8 1/2 X 11 inches -- to save on printing. Finished catalogs are bundled by carrier route to save 2? on bulk-rate postage.
For each mailing, the company uses its house list of 400,000 names, then rents lists with an additional 2.7 million names. As people from the rented lists make purchases, their names are added to the house list.
For those new to the mail-order business, Thalheimer recommends asking a broker for lists of people who have an established track record of making mail-order purchases. He suggests ordering minimum quantities of several lists, then testing them. (A directory of list brokers, "List Supplier Register," is available for $5, plus 50? for postage and handling from the Direct Mail Marketing Association, 6 E. 43d St., New York, NY 10017.)
To handle telephone orders, The Sharper Image spends $40,000 for 20 toll-free lines, tended by 30 order takers. Once the order, including the customer's credit card number, is taken, the information is keyed into the computer; a printer in the warehouse automatically prints the order, packing slip, package labels, and the United Parcel Service manifest.
To minimize inventory financing and storage costs, the company negotiates large-volume discounts, coupled with frequent small shipments from its suppliers, so that inventory turns over once every three weeks on average.
Unlike many businesses, The Sharper Image claims it wasn't hurt by recent high interest rates. "The cash-flow situation in direct response is very positive," notes Thalheimer. Although customer payment is immediate, either by credit card or check, payments to merchandise suppliers, as well as payments for such services as printed and advertising space, are usually on 30-day terms.