The History of Mail-Order Houses and its Relevance Today

Aaron Montgomery Ward is considered to be the father of the modern Mail-Order Catalogs, as he is credited to make the first mail-order catalog. Every year on 18th August, the day when the first Montgomery catalog was produced, is celebrated as the National Mail Order Catalog Day in the US.

But when the Montgomery, Ward & Co. started its business, the Chicago Tribune reported, ‘Beware! Don’t Patronize “Montgomery, Ward & Co.” They Are Dead-Beats’. The Tribune was convinced that the business was fraud owing to the fact that they offered ‘Utopian’ prices on a huge range of products, and that they do not have a proper shop and employed no agents. Before coming to how the Tribune took a U-turn very soon, let’s first understand what Mail-Order Businesses are.

Mail- Order Businesses are retail outlets that sell their merchandise through mail. Their only sources of marketing are advertisements in newspapers or magazines and the catalogs which was made popular by Ward. They generally don’t have an official address or building where they sell products, but take orders through e-mail or phone no., and get their products delivered through post offices or banks. A very popular and close example of such business in India is Naaptol. (Although all e-commerce websites are modern versions of mail-order businesses, but Naaptol is very similar to it as we get to know about products through TV advertisement, order them using a phone call, and get them delivered through postal services.) Now coming back to where we were, the Tribune soon changed their mind. As Tim Harford explains in The Next Fifty things ThatMade The Modern Economy,

“It seems not to have occurred to the Tribune that Ward might be able to offer his ‘Utopian’ prices precisely because he kept no expensive premises and employed no middle men. But the threat of a lawsuit soon helped the editors to wrap their heads around Ward’s new business model, and a few weeks later they printed a groveling apology.”

Media is an important factor which influences people’s decision, as they are the source of information for them. But, what people don’t know is that their predictions/suspicions are often wrong. Take the example of economic forecasts of a country. As Ruchir Sharma writes in The Ten Rules Of Successful Nations,

“…I reviewed [The] Time covers published between 1980 and 2010 and found 122 featuring an economic take on a country or region. If the Time cover was downbeat, economic growth picked up over the next five years in 55 percent of the cases… On the other hand, if Time’s cover was upbeat, the economy slowed down over the next five years in 66 percent of the cases.”

A similar trend can be seen when media writes about businesses. The media negativity as in the case of Ward was wrong, and media hype, as I feel is the case with crypto is bad as well. And as an investor, one should take care that he/she does not fall into the trap of media negativity or media hype.

That is why it is advisable to invest in businesses that are fundamentally very strong. I know it is tough to predict how well the business will do in future, but if you know how the business you have invested in operated and that it works on a good model, then no matter what the current position is, the business may find its way to the top. The opposite of this is also true. At this point of time when anything and everything in the market is going up, it is difficult to identify good business models. If you have made a good amount of money in a very short time, it doesn’t mean you will continue to do so. As Vivek Kaul writes in his newsletter for LiveMint,

“Getting wealthy through investing doesn’t happen overnight, though one can get a good adrenaline rush in the short term… it is worth remembering that the stock markets can and do fall and sometimes very quickly. It’s just that financial memories are short. The stock market did fall in February-March 2020. It fell in 2008. On 8 January, it closed at 20,873 points. By 20 November, it was down by around 60% to 8,451 points. A similar story had played out when the dotcom bubble burst and many other times.”

To conclude, a small incident from the past can sometimes give us important lessons for the future.

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