How to Start a Gift Basket Service Ⅲ

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The flexibility of a gift basket business gives you a lot of choices in where to locate your operation and how to get it set up. You can opt for a retail store, a warehouse location, or to work from home. Regardless of your location, you can sell face to face, via mail order or on the internet--or use a combination of these methods.

 

Though industry surveys indicate that more than half of all gift basket businesses have retail locations, the locations of basketeers who participated in the research for this book showed just the opposite--more than half of them are homebased. Solid research is limited, but anecdotal evidence suggests an abundance of successful homebased gift basket operations.

 

Because of the room required to store inventory and assemble baskets, homebased gift basket businesses will find their growth limited by the available space. Whether or not this is a problem for you depends on your own personal goals. If you're looking to create a sizable company with several employees and generate hundreds of thousands of dollars each year in sales, you'll need a commercial location. But if your goal is a small business that generates a comfortable income for you, being homebased may be the ideal situation.

 

 

Your initial inventory should be focused on baskets and other containers and the items that will go in them. As your business grows, you can expand your inventory to include other specialty gifts, such as local arts and crafts, personalized linen, jewelry and so on. You may find suppliers through various trade publications and may even find them listed in your local Yellow Pages under "wholesalers."

 

Your inventory will consist of items you buy at both wholesale and retail prices. Wholesale purchases will include items and supplies you use in large quantities for your most popular basket arrangements and as filler items. Retail purchases will typically consist of the merchandise you accumulate when you go shopping for customized basket materials.

 

For a gift basket business, shopping is a major behind-the-scenes activity. Depending on your volume, expect shopping and ordering to take anywhere from one to four hours a day on average.

 

Your revenue will be limited only by how hard you want to work and how much you want your business to grow. You can easily gross $10,000 or more annually working part time from home, or $1 million and up operating a retail store or mail order business full time.

 

About half of your business will be holiday-based, and the majority of that will be Christmas-related. One of the fastest-growing segments of the gift basket industry is corporate holiday orders. When the Christmas rush is over, Valentine's Day, Easter, Mother's Day, Thanksgiving and Secretaries' Day are the most profitable holidays.

 

 

Pricing can be tedious and time-consuming, especially if you don't have a knack for juggling numbers. If your prices are too low, you rob yourself of profits or are forced to reduce the quality of your product to maintain your profitability. If your prices are too high, you may lose business.

 

Theoretically, you should price every item you carry to cover its wholesale cost, labor costs, freight charges, a proportionate share of your overhead and a reasonable profit. In reality, some items will warrant a high gross profit and others will require a low or no gross profit for you to move them quickly.

 

Gift basket business owners often short-change themselves on labor when setting prices. Be sure you know how long it really takes you to assemble, package and deliver or ship a basket; put together several of varying complexity, and time yourself--don't estimate. Then figure out how much you want to earn for your labor, and add that to the cost of the basket.

 

Most gift basket business operators expect to net 15 to 30 percent of their gross revenue, and they typically reach this goal by applying a 100-percent markup to the cost of the items in the basket.

 

Marketing is something many people don't like to do, but it can be as creative and as much fun as actually making the baskets. And no matter how clever and attractive your baskets are, they won't sell themselves--you need to market them.

 

According to Gift Basket Review magazine, the preferred types of advertising among established gift basket businesses are networking/word-of-mouth; telephone directory (Yellow Pages listing); direct mail; brochures; and newspaper advertising.

 

There's probably no business where customer service works better as a marketing tool than in gift baskets. You'll have a lot of opportunity to interact with your customers; take advantage of each contact to demonstrate your superior service. Then take it a step further. For example, one business owner we know sends handwritten thank-you notes to new customers, customers she hasn't heard from in a while, and customers who place special orders.

 

• Carry a handful of brochures and business cards to hand to people in elevators, hallways and even on the street who will stop and comment on the basket you're carrying. 

 

• When you meet someone with the potential to become a good customer, send them a complimentary basket with your brochure and several business cards. 

 

• Rewarding customer referrals with a discount or small gift can be a smart investment--one that builds client relations and encourages future referrals. 

 

• Christine M. periodically schedules a day to make cold calls in industrial parks or office buildings. She takes a brochure, her business card and any pertinent seasonal information, and visits as many businesses as she can. 

 

• Be sure gift basket recipients know how to reach you when they need to send a gift by including your company name and telephone number in or on every basket you prepare at least three times. 

 

• Help your customers find reasons to send gift baskets by promoting lesser-known holidays. Just about every occupation has a "day" to honor it. 

 

• Direct-mail advertising is an excellent tool for gift basket businesses. One business owner sends a postcard to her entire database at the beginning of every month. If there's a holiday during that month, the card focuses on gift ideas for that holiday. If it's a no-holiday month, the card might focus on birthdays or an area of her business that's been slow. 

 

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