Start a Gift Basket Business

Are you a creative type? Do you have a flair for presentation? Are you looking for a business that combines your design talents with a relatively low-cost startup? Then perhaps the gift basket business is exactly what you’re looking for.

Gift baskets are not a new idea, however they have remained popular over the years and the demand shows no sign of letting up. In fact, who has not had the opportunity to give or receive a gift basket at some point in their lives? One of the biggest advantages to giving someone a gift basket is the fact that you can choose from dozens of themes and products to suit your needs. It really is the ideal gift for just about anyone, and any situation. In short, it has mass appeal.

For an entrepreneur, the gift basket business can be exciting, inspiring, and very lucrative. It has just about anything you’d want from a small business, including high demand, variety of products, and a very decent profit margin.

Getting started

If you’re on a limited budget, you’ll want to start small by working in your home making gift baskets for friends and family. This is the ideal way to get going, especially if you don’t have any experience. At this point you’ll have the luxury of experimenting with different design ideas and themes, while becoming familiar with the products available, your cost, and how quickly your supplier can deliver. It’s also an excellent time to start thinking about your profit margin and what you will be charging for each basket. Ideally, you want to have a good balance of quality, quantity, presentation, and profit.

Having a little experience in designing and putting together gift baskets will ensure that you hit the ground running when you open for business. Spending some time working in the industry will be priceless – however, it’s not an absolute necessity. If you spend some time looking at different gift baskets in retail stores and on-line, you can get a pretty good idea of what is selling, how to put it together professionally, and how much you can charge.

Setting up your gift basket business at home means that you’ll have to designate an area where you can store your product and manufacture your gift baskets without being too cramped. If you’re able to set up a few folding tables and build some shelves, that’s a great way to start. The area must be free of smoke and other odors such as cooking smells – this is a must.

When starting out, don’t purchase more inventory than you can use within a week. You must also make absolutely sure that any packaged food items are not beyond their freshness date. You can be in for a world of legal and financial hurt if your product makes someone sick.

Themes

One of the biggest pluses when it comes to gift baskets is the variety of themes available. This gives the gift basket industry mass appeal – your customer base can be huge and very diverse. Here’s some of the most popular gift basket themes and what you might expect to see in each basket:

Baby – teeshirts, rattles, stuffed animals, bottles, pacifier, gourmet baby food, photo album, diaper gift bag, bib, feeding set, candles, lotions/powder, washcloth, cotton swabs, baby oil, baby shampoo, soap, blanket, diapers, toy blocks.

Housewarming – coffee/tea/hot chocolate, stationary, restaurant guide, wine, chocolate, mugs/glasses, cookies/cakes/biscuits, cheese, gourmet foods, books, candles.

Wedding – candles, soaps, potpourri, champagne glasses, candle holders, wine/champagne, monogrammed hand towel, slippers, massage oils.

Bath and Beauty – soaps, loofha terry puff, loofha round sponge, bath oil, bubble bath, bath beads, foot massager, neck pillow, body brush/sponge, hand towel, soap dish, powder, tub toy, bath salts, manicure set, hand cream, shampoo, conditioner, body wash.

Generic Food Basket – coffee/tea/hot chocolate, chocolate, crackers, cheese, processed meats, gourmet jams/jelly, chips/pretzels, fruit, gourmet sauces, pickles/olives, pasta, gourmet nuts, popcorn, candy, cake/brownies.

And the list goes on… as you can see, the variety of gift baskets you can create is really only limited by your imagination and creativity.

Suppliers

Finding a good supplier is critical to your business success. Ideally, you should eventually hook up with a wholesaler that can provide a quality product, lots of choice, and a decent price. They should also be able to ship your items quickly.

Most of the larger supply companies have a full on-line service. In fact, many only service on-line customers period. The advantage of dealing with a large, established internet based supplier is that they have much more variety and larger inventories. This means that fewer items are back-ordered and the prices are usually very competitive.

Test a few by buying a small quantity and eventually you’ll find someone that can provide everything you need.

Above all, don’t underestimate the importance of having an inventory supplier that can ship your product on time. When you get busy, you’ll appreciate being able to rely on getting what you need, when you need it.

Advertising/Marketing

Well, you’ve finally set up your work area, you’ve purchased an initial inventory of supplies, and you’ve succeeded in creating a few very attractive baskets – now you just need customers.

It’s probably worth mentioning at this point that your success is not only dependent upon creating an attractive, reasonably priced product; it’s also heavily dependent upon your marketing efforts. In fact, you can say that the success of your business hinges (almost entirely) on your success as a marketer.

Don’t let that scare you. You don’t have to be a natural salesperson or have a marketing degree in order to be successful with your gift basket business. You also don’t have to have the gift of gab. If you can talk to others in a normal conversational way, that’s all you need.

When first starting out, your marketing methods are going to consist of face-to-face promotion of your product to your friends and family. Over time, you should start getting word-of-mouth customers. With any luck at all, this could slowly snowball into a full-time business. If you have a good product, people will start talking about it and the word will get out naturally.

If you choose to market your gift basket business more aggressively, here are a few ways to really jump start your company:

Consignment

No matter how good your product is, when you’re first starting out you need exposure. One of the best ways to get that exposure is by selling your gift baskets by consignment. Make a list of some of the better gift stores in your city or town and try to get an appointment to talk with the owner. As long as they’re not already selling gift baskets, you’ve got a great chance at getting your items in front of their customers.

On-line

Try selling your gift baskets through some of the online auction sites. Although you’re going to have to discount your prices because of competition, the volume should be much greater than anything you’ve experienced so far.

Alternatively, you can try to get your product listed on one of the more popular gift sites by making a deal with the site owner for a percentage of the profits. If you’re web savvy, you can create your own website to sell your baskets (or have someone create the website for you).

These days it’s much easier to sell online due to the fact that there are many payment processors that don’t require that you have a merchant account – PayPal is a good example.

Craft shows and flea markets

This is the next best thing to actually opening a retail store. For less than $100 a day, you can rent a booth, set up an attractive display, and really get a feel for what it’s like to sell in a high traffic environment – all this without a major financial commitment. The only disadvantage with this method is that you’ll need an initial inventory so that your booth doesn’t look empty.

Retail store

You never really know how successful your little enterprise is going to become. If things progress to the point where you’re outgrowing your home location, it might be time to think of a retail location. One of the easiest ways to do this is by leasing a cart or kiosk in a busy mall. While not quite a retail store, these semi-permanent locations can really generate a lot of income due to the high traffic. You’re going to have to negotiate lease terms with the property manager just like you would with any other retail store. While the per square foot rate is going to be higher than a retail store, you’ll be paying less because of your small footprint.

If you experience a decent amount of success, it should take nothing to convince management to upgrade your location to a permanent retail outlet. Keep in mind that you’ll be required to make a serious financial commitment by signing a lease. At this point, you will most likely have employees taking care of production and sales while your duties will consist of managing the business.

Challenges

While there are few challenges to starting a gift basket business, there are a couple things that can trip you up along the way. Here are a few:

Failure to check government regulations – before you start any business, it’s always a good idea to check with your local, state, and federal governments (not to mention your local heath department) for any regulations you need to follow. This is particularly true if you plan on running your business at home, or you are selling food items. Don’t assume anything. In the case of your gift basket business, make sure you get the go ahead to sell prepackaged food items in your baskets. Since you haven’t actually prepared the food, and it is prepackaged, you should be okay in this regard – but it never hurts to check.

Failure to establish a reliable inventory supply – while this may not be critical when you’re first starting out, an unreliable supplier can quickly sink your business when you’ve committed yourself to deliver your baskets at a certain time and your supplier is unable to provide the required items to complete your baskets. Remember that many of your customers are going to require that the baskets be delivered in a timely fashion. Birthdays, retirement parties, weddings, Christmas, business functions – these are all events that simply can’t wait for a late gift basket. It only takes a few late deliveries to tarnish your name in this biz.

Quantity – Quality – Presentation – Price – It doesn’t take long to send the price of a gift basket through the roof. While your number one priority should be quality and presentation, you’ve also got to develop a knack for doing more with less. The products you’re going to be putting in your baskets are expensive. Having a flare for creating an amazing gift basket while staying within your budget will ensure that you turn a decent profit for every item sold. While you may have the occasional customer that wants no expense spared in the creation of their basket, they must know ahead of time that they will be paying for it. You’ll find that most people are not willing to spend exorbitant amounts of money.

Does this mean that you should use cheaper products? Not at all – you can still maintain the highest quality and turn a decent profit.

You will succeed in the gift basket business by providing unique products at competitive prices. Start out small and use the power of word-of-mouth to get your business name out there. The real money is in repeat customers. Therefore, it’s in your best interest to attract customers that have a need to use your service on a frequent basis. Real estate agents, business owners, corporate clients, sales professionals are all examples of people that have a need to use your service on a regular basis. This is where the real money is in this business.

Here is a 220 page guide to starting a gift basket business.