Mail-Order Coffee Supplier The Buzz


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.

Jumpin' Java

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 effort.

Worldwide Java

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.

Why Online?

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 base.

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

Conclusion

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.

Links

Specialty Coffee Association of America
Everything you wanted to know about coffee, but were afraid to ask

Fresh Cup Magazine
Packed with articles and industry links