Week 16 2008

Make back end sales a priority!
Yes, it's fun. But it's also a business. If you can include products that have a limited life-span, but can be easily replenished, then you will make more sales.

Check back next week to find out how...

There are a number of big decisions that you will have to make as a business owner. Gift basket businesses come with their own unique set of things to think about.

Here's quick rundown of some of the most common gift basket business start-up decisions that you will have to make.

The Product

Do you make your own gift baskets, or do you resell other's? On the one hand you have to source, assemble, wrap, and send the finished product, and on the other - someone does it for you. But can you deal with the loss of control?

The Market

Are you going to sell the gift baskets direct? Or over the internet? Or to catalog companies, or through stores, or uniquely to corporate clients? Answering these questions will lead to more questions, and you need to keep narrowing down and refocusing until you know who you are going to sell to, and how.

The Suppliers

This is linked to the product question. If you are reselling, do you dropship directly to clients, or do you buy in bulk and re-ship them?

Is it Scalable?

What happens if you get 1,000 orders tomorrow? Can you scale up operations to cope with demand - if you want to, you'll need a process that anyone can follow to assemble, or acquire, the gift baskets that need to be sent out.

The Financial Plan

At the most basic, the financial plan needs to work out if your gift basket business i going to make any money. Will it pay the rent? Can you cover returns? How many gift baskets must you cerate, ship and sell in order to break-even? Often answering these questions reveals holes in your original idea. For example, you might find that you can not put together enough gift baskets in a single day to cover the cost of renting the premises!

One of the most popular kinds of gift basket is the organic fruit basket. As a case study, fruit baskets illustrate a few salient points to debate when deciding what kind of gift baskets your business is going to create and sell.

Fruit does not travel well, and goes bad. So, any gift basket that is assembled by the business has to use the freshest (preferably local) fruits, and make sure that the basket not only looks good but protects the fruit being transported.

If organic fruit baskets are being sold, then the cost of the fruit itself will be relatively high. Therefore, this cost has to be recouped in the price of the basket.

However, people don't pay more for the word 'organic' but they will pay more for something that looks as if it should be more expensive than it actually is.

After all, it's a gift for someone, and they'd like the recipient to believe that their generosity knows no bounds.

The organic gift basket can be sold at a premium if it looks wonderful - and you'll make a tidy profit by ensuring that the presentation hasn't cost the earth.

Assuming, of course, that the fruits arrive in one piece, fresh, and taste delicious!

Golden rule : always send one to yourself before expecting people to send it to someone else!

Dropshipping gives you flexibility. You can have any kind of basket made and sent to your clients, without ever being involved. Each product can change with the tastes and desires of the market. Above all, you can easily follow the changing seasons and event calendar without getting stuck with unsold stock.

However, nothing beats the fun of designing and making your own gift baskets! For some people, that is the reason they got into the business in the first place. Plus, it means that you keep an eye on the quality, and can customize each and every gift basket that you send out.

A happy compromise might be for you to find a company that will let you choose products from their range, and build a virtual gift basket which they can then sell on your behalf. Everybody wins!

There are two sides to the business end of gift baskets. The first is product research, and the second is marketing.

They are, of course, related, as you will never be able to sell an unwanted product to a chosen market, and it is sometimes hard to find a market that fits a product.

So, find out what gift baskets people are shopping for online, using Google AdSense (for example). Then try to find gift baskets that match this desire, and then go one better.

Match the product experience to your chosen market, and then decide how you will reach that market.

When the marketing and product development come together, success will usually follow!