Richard Thalheimer has reason to trust his instincts for picking mail-order products that sell. In 1975, when he was 26 years old and a door-to-door salesman for office supplies, Thalheimer decided to try his luck at direct-response advertising. He placed a $103 ad for a $30 digital stopwatch in Runner's World magazine and realized a small profit. That was only the beginning.
Today, Thalheimer's San Francisco-based mail-order firm, The Sharper Image, employs 110 people, publishes 15 million catalogs a year, and has launched its own cable TV show to demonstrate and sell its wares.Company sales have grown from $3 million in 1979 to more than $35 million in annual sales for fiscal year 1982, which ended April 30.
The Sharper Image is one of the most successful participants in a mail-order bonanza that saw merchandisers take in more than $40 billion in sales last year, according to the Direct Mail Marketing Association, the industry's trade group. Firms offering high-priced, high-quality luxury goods have led the boom largely because of the increase in two-income managerial and professional households that have lots of money but little time to shop.
Thalheimer's success results largely from an uncanny knack for picking products that appeal to affluent business and professional people, then promoting them in glossy full-color catalogs, and finally making them as easy to order as a carry-out pizza. His approach also illustrates how an individual or a small business can get into mail-order sales by combining a modest investment with marketing and merchandising savvy.
Thalheimer had picked the stopwatch as his first mail-order product after spotting it in an ad in Runner's World, then failing to find it in retail stores. "It was a classic direct-mail opportunity," Thalheimer says. He approached the manufacturer and received permission to run a mail-order ad for the watch.
"Most manufacturers astutely realize that they're not equipped to handle mail-order fulfillment as well as manufacturing," explains Thalheimer. "They're two entirely different businesses." Thalheimer received about 10 stopwatches -- approximately 25% of what he expected to sell -- at the wholesale price, with the manufacturer's assurance that more merchandise would be provided on short notice if the ad drew well.
To design his first ad, Thalheimer enlisted the services of an advertising agency in his office building but wrote the copy himself. Today, Thalheimer still writes many of the company's ads and relies on his own instincts, not those of an agency, to choose the best publications in which to advertise.
"Owners of businesses shouldn't be afraid to decide for themselves what media to use. They usually known more about the market than they think but don't have enough confidence in their own abilities. Unless a product is highly complicated and needs a lot of explanation," advises Thalheimer, "start with a small ad in several magazines, then put more dollars into the most productive publication. Try to target your audience very narrowly so you're paying only for those you want to reach." Today, Thalheimer describes his primary audience as "80% male, between the ages of 27 and 55, with median incomes of more than $35,000 -- professional and upscale types."
Though most business now comes from catalog sales, The Sharper Image still spends $100,000 a month on space advertising in publications ranging from the Wall Street Journal to Road & Track. For advertising to be effective, Thalheimer feels he must make $2 gross profit for every $1 he spends on advertising. (Profit margins on merchandise average about 40%.)
Until 1979, The Sharper Image experienced rapid growth by selling only a couple of items through ads in a handful of magazines. "We realized that we had to diversify to spread the risk," says Thalheimer. But when the company branched out by publishing a catalog in 1979, it barely broke even on the venture.
"I had only 12 products," recalls Thalheimer. "While I was good at selling, I'd never learned to buy well. Buying has to be done on a regular basis, and as we grew, I didn't take the time to attend trade shows and keep up with the newest products on the market." Although he has since hired a marketing director in charge of buying new products, Thalheimer takes an active role in finding new merchandise by attending electronics, gift, and jewelry trade shows and poring through consumer and trade publications.
A recent catalog displays more than 150 items aimed at young hedonists. Almost two-thirds are sophisticated electronic gadgets, watches, or jewelry; all are temptingly presented in highquality, full-color photographs printed on glossy paper. Product descriptions are straightforward and emphasize product features and advantages without puffy adjectives.
"Our approach is to state as many factual things about the product as possible, then let the customer draw his own conclusions," says Thalheimer. "Most catalogs make the mistake of drawing too many conclusions and leaving out too many facts."
The latest sales wrinkle for The Sharper Image is cable TV -- the next hot area in direct-response merchandising, Thalheimer predicts. He cites the rapid growth of cable TV systems and their ability to reach audiences who can afford such Sharper Image offerings as $85 designer sunglasses and a full suit of armor at $2,450.
On March 1, Richard Thalheimer, businessman, became Richard Thalheimer, TV talk-show host. His new half-hour program, "The Living Catalog," features Thalheimer engaged in what he calls "a lively discussion of the newest and most innovative products" with his guests, including experts in product-related fields, Sharper Image employees, and sundry media "personalities."
Thalheimer hopes that people in the 4 million homes that receive the show through the SPN Satellite Program Network, a division of Satellite Syndicated Systems in Tulsa, Okla., will call the toll-free number displayed on the screen and order some of the products being demonstrated, such as a $99 air ionizer and a watch that automatically takes the wearer's pulse.
"We'll start off real modestly, then if we get a formula that works, expand -- the same thing we did with catalogs," says Thalheimer.