It wasn't long ago that a can of coffee from the grocery store
shelf was good enough for discerning coffee drinkers. Flavored, gourmet and
other specialty coffees were the domain of the rich and well traveled.
But today, people all over the world have access to the best beans,
the richest roasts and the most exotic flavors. They don't even have
to leave the comfort of their own homes.
Even before the Internet, companies used direct marketing to attract customers.
Mail order, or catalog shopping, is a multimillion-dollar industry that involves
compiling a database of potential and existing customers, sending them a catalog,
and having them call a number to order.
Starbucks, credited with reinventing the coffee experience worldwide, was
one of the first coffee-related businesses to test the waters of mail order.
Seattle-based Starbucks discovered much success, and gained an international
following, through mail order. The company began serving customers through
the mail in the 1970s, with a customer base of travelers who had visited one
of the stores in Seattle.
"At first, we just mailed out a simple brochure listing our products,"
says chairman and CEO Howard Schultz in Pour Your Heart Into It: How Starbucks
Built a Company One Cup at a Time.
"In 1988, we developed our first catalogue and began expanding our mail-order
base to targeted demographic groups. In 1990, we invested in a small phone
and computer system to set up our 800 number."
According to Schultz, mail order provided his company with a "wonderful
vehicle to nurture loyal customers and to build awareness across America.
Since they had to make a special effort to obtain our coffee, mail-order buyers
were often the most loyal customers."
Mail-order catalogs played an integral role in the company's brand-building
In 1996, the export of coffee beans brought almost $2 billion to the people
of Colombia and $2.4 billion to the people of Brazil. Simply put, coffee is
big business worldwide. Take a look at these statistics:
- Across North America, 57 percent of people between the ages of 18 and
24 drink coffee on a weekly basis
- Over 85 percent of people over 65 drink coffee on a weekly basis
- Coffee is a global industry, and is the second largest commodity-based
product after oil
People who want to start their own coffee-selling businesses, especially
mail order, will be interested to know that 69 percent of all coffee is consumed
in people's homes, 13 percent of coffee is consumed at work or school,
and five percent in a restaurant setting.
Mail-order coffee is part of a growing, thriving industry.
The Internet and mail order go hand in hand. Many traditional mail-order
companies have found that the Internet complements their existing businesses
without much added cost. Revenues vary, but you can expect to wait at least
two years before becoming profitable.
For start-ups, loans and other sources of financing are available to cover
costs, employees and material costs during this initial phase. Check with
your bank or a local small business development center.
With the advent of Internet commerce, and its predicted multibillion-dollar
status, mail-order companies can develop a Web site that immediately gives
them a new avenue for direct selling.
Still others use the Internet as their primary selling avenue. Freshbean
Coffee Co. has chosen the Internet as its primary means of building a customer
And it's not alone -- Brown Paper Coffee Co. and Caribou Coffee are
taking advantage of the inexpensive, far-reaching potential of the Net.
The key to any successful mail-order business lies in a mailing list of
potential and existing customers. You can purchase them from list brokers,
or build one of your own by compiling a list from contacts, customers and
information obtained from incoming calls about your catalogs and Web site.
Why Mail Order?
According to the National Mail Order Association:
- U.S. mail-order sales in 1996 were $290 billion
- 1996 mail-order sales represented an increase over 1995 of seven percent.
Adjusting for inflation of three percent, the growth rate was four percent
- Consumer mail-order sales hit $151 billion, and accounted for 52 percent
of the total
- Business-to-business mail order was $78.4 billion, accounting for 27 percent
of the total
Mail-order coffee entrepreneurs should have no problem following the first
of six mail-order pointers from the NMOA -- specialize!
According to the organization: "If you look at a majority of companies
that market via mail order, they specialize in a specific product category
or group of products.
"This way, they have a clear idea of who their potential customers are
and how they can be reached. Products should be unique and not readily available
at retail outlets."
When you start your own mail-order coffee business, take a discerning look
at the businesses in your area and on the Internet that are already in the
coffee and mail-order fields.
What products are they selling? How are they marketing themselves? How
are they handling fulfillment issues? How much are they charging? By doing
this, you'll take the plunge into entrepreneurship with a clear idea
of what to expect.
Specialty Coffee Association of America
Everything you wanted to know about coffee, but were afraid to
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