Capitalize on the Market

Gift baskets are a good idea for your business. Just ask Terry August, owner of Fancifull Gift Baskets in Los Angeles. The retailer has profited from selling gift baskets to the movie and television industries in her area.

Shirley George Frazier, industry expert and author, predicts that the gift basket business will bring in around $4.8 billion in sales this year. As a retailer, you can capitalize on this market by either adding to or starting a gift basket line in your store.

Top 10 Reasons to Sell Gift Baskets

1. One of the top businesses for the 21st century (Entrepreneur Magazine)
2. $4.8 billion in sales in 2008 (giftbasketbusiness.com)
3. Exponentially increase customer base by marketing online and to corporate clients.
4. Increase sales per customer and sell excess inventory at full retail price.
5. Build loyalty by providing a service to busy customers.
6. Great for increasing holiday sales. Use items already in your store.
7. Good marketing.
8. Donate gift baskets to charity events.
9. Great way to create competitive advantage over other gift shops.
10. Good up-selling tool to customers in a rush.

An attractive package

Your customers give gift baskets for just about any reason—from Christmas to thank-you gifts. A prepackaged gift basket will cater to customers who are shopping for an easy, complete gift, says Mary Lake-Thompson, owner of Mary Lake-Thompson Ltd., in St. Oroville, CA.

Even better, gift baskets are a convenient way to improve store sales and even turn clearance items into fresh, full-priced, saleable items. To fire up customers’ imagination, put a grouping of products together and package them attractively. This reminds customers that they can group items already in your store to create a complete gift. Frazier says it is likely that using gift baskets will result in your customers buying more products, especially if you let them pick out items to be put into the baskets. August agrees. She says customers end up spending up to twice their original budget when they pick out gift items to be packaged together.

Offering customized gift baskets can expand your customer base with the potential to serve local corporations that often need convenient gifts for their customers and employees. August, who has designed and created gift baskets for the Emmy Awards, goes the extra mile by offering to store items, provide gift reminders and maintain recipient addresses. She assembles customized corporate gifts, based on her clients’ price points. These can include logo items paired with gourmet food, wine and even personalized cards. So if you are looking for a new way to invigorate sales, gift baskets may be just what you are looking for.

Starting out

Before building your gift basket business, you have some important decisions to make. First, will you make your own baskets, or buy gift packages already assembled and ready to sell? Will you offer delivery and shipping services? Will you offer customized baskets?

The decision on whether to make your own gift baskets depends upon you and the space you have, says August. She says pre-made baskets are a good way to start out and test the waters. If the gift baskets are successful, then make a couple of your own and see how they do. Donna Merrill, vice president of marketing and sales at All Wrapped Up, a gift basket wholesaler in Lauderhill, FL, finds that increasingly retailers prefer pre-made baskets to making their own because of the convenience.

If you are willing and able, Frazier suggests attempting to make your own baskets. She says it’s a great way to highlight products you already have in your store and the best use of your time and inventory. Frazier recommends buying a training DVD to learn how to assemble baskets. “It takes time to make gift baskets and get educated, but that time will soon turn into revenue,” says Frazier. In the beginning, she says, you may spend 50 to 60 minutes assembling a basket. But with practice you will be making a basket in five to 10 minutes. Dana Sonia, owner of the New Hampshire-based online retail business Gift Baskets by Your Design, advises retailers to create three designs at three price points. This way, she says, there are better chances at kicking off a successful gift basket business.

The best times to start your gift basket business include Christmas, Valentine’s Day and Mother’s Day, says Frazier. She suggests having your baskets displayed and ready to sell a month before each of these holidays for maximum exposure and sales. For Merrill, the end-of-the-year holidays are the best time to rack up big sales. “The end-of-the-year holidays are a great time for businesses to say thanks,” she points out.

Putting it all together

Now that you have a plan for how you will start, it is time to begin putting your gift baskets together. Choose the right components to create a competitive advantage and show your creative capabilities. Food is the most common, universally enjoyed component of a gift basket. It is popular because, whether the gift is personal or professional, almost everyone likes food, Merrill says. Pam Newell says that gourmet food items not found in standard grocery stores are ideal components because they provide instant gratification and a treat the recipient would not normally buy for themselves. Newell is an industry expert and the founder of Gift Basket School in Massillon, OH, and is an industry expert and wholesale gift basket product supplier. Newell says wine, vodka sauces and any unusual items that incorporate spirits are popular. Just be sure to consult local and state regulations regarding the sale and shipment of alcohol and food items. In general, says Diane Dennison, component sales manager with Blue Mounds, WI-based Dairyfood USA, meats, cheeses, crackers, cookies, chocolates and coffee are the most popular gift basket items.

Besides food, you can include just about anything in your gift baskets, including baby items, towels, kitchen accessories or a special collection of items from your current inventory. Spa and bath-and-body items have become increasingly popular components of gift baskets, says Dennison. August suggests striving to create a complete setting with your baskets; if there are candles, include the matches, and with champagne include the glasses. August has seen a rise in the popularity of food pairings in gift baskets. Often wine, cheese and fruit are specially paired.

Contain the excitement

Now you need to choose the containers in which the gifts will be showcased. Customers love unique container ideas, says August, who has used photo boxes, bamboo trays, ice buckets, movie tins, punch bowls and trunks.

Sonia says that just about “anything can act as a container, from a mug to a box of product, such as a box of tea with chocolate on top.” She has also used trays, an aquarium, a coffee pot, a teapot and even a lemonade pitcher with lemonade mix and cups inside. Wholesalers such as All Wrapped Up create virtually limitless container designs. Merrill says that All Wrapped Up’s holiday line featured containers in the shapes of poinsettias and deer. For a corporate gift, there was a globe container that once emptied could be used as a desktop keepsake. Wald Imports, a company based in Kirkland, WA, wholesales a wide variety of gift containers including suitcases, fish tackle boxes and even wagons.

Frazier has worked with items such as a flower pot, a wok, a salad spinner, a wagon and an upturned umbrella. August says that when shipping gifts, she prefers more enclosed containers such as decorative boxes to reduce cost. Thompson uses a standard white metal bucket for many of her gift baskets, then designs a beautiful label for the bucket.

Once you have your container and components, it’s important to remember a few design tips.

• Use a smaller container to make the gift look overflowing and abundant.
• Design with various shapes and heights, says Newell.
• A taller, more vertical display has a higher perceived value and will sell for more, says Sonia.
• Include creative accents to give your baskets that extra, thoughtful touch, like including an attractive cheese slicer in a wine and cheese basket, says Stacey Owen from Cole and Ashcroft, a Houston, TX-based supplier of gift basket materials.

Storage headaches?

Storage is already a challenge for many retailers, and adding gift baskets can make it worse. If storage is a major issue, a benefit of selling pre-made baskets is that after displaying a few, most can usually be stored in the shipping boxes in which they arrive, says Sonia. She manages her storage issues by storing seasonal items and moving inventory based on the season. Even though Sonia has no storefront, she has a limited amount of space that gets very crowded, especially around holidays like Christmas and Mother’s Day. August rents an off-site storage unit for the Christmas season. Sonia uses stackable bins and shelving to help make use of a small work area. She also finds it useful to hang as much component material, such as ribbon, on the wall above her work area. August likes to use trays as containers because they stack easily and are easier to store in large quantities. She has also found that timing deliveries of materials coming in and completed baskets going out is crucial to ensure that she has enough room for everything. Newell recommends that retailers keep a close eye on food expiration dates, and that they store food in climate-controlled areas.

Marketing and merchandising

Once you have some sample baskets assembled, place them strategically around your store in various displays. Include gift baskets as part of various vignettes in your store. For example, if you have a baby area, include a gift basket that groups some of the baby items you sell. Some retailers, like August, have a gift basket section where all the different varieties of baskets are displayed together. She displays them on different levels, where they can be easily viewed.

Renee Schouten, sales and marketing director of Too Good Gourmet, a wholesaler of gift containers and components, recommends including a tasting of gourmet gift basket items alongside the displays to attract interest. Include clear signage that lets your customers know that you have baskets available, and that you can create custom baskets. Sonia recommends that retailers include signs with messages such as, “If you don’t find what you’re looking for, ask us and we’ll design it for you.”

Schouten suggests messages that let customers know you hand-select your items. She also suggests giving examples of how you design your gift baskets. And remember when pricing baskets that you are offering a service and will need to include the cost of labor in your price. According to Frazier, the average price of a single gift basket is $45 to $50. This of course will depend on your particular clientele.

Corporate clients

Marketing to corporate clients is a great way to exponentially increase your customer base. It’s not as difficult as you may imagine, Frazier says. Start out by taking stock of the companies located near your store. Get information from your customers about their employers’ human resources and public relations departments. August recommends joining your local Chamber of Commerce and attending networking events. Once you have identified some companies you would like to market to, call or send a postcard with information about your gift basket service. Invite them to your store for a tour and consultation, at which time you can show them samples and offer a tasting. Steven Rose of burton + Burton, a wholesaler based in Bogart, GA, recommends identifying a core group of target companies, then delivering baskets with information about your services. Schouten recommends that you advertise in the local newspaper and perhaps in a special food or gift issue. Frazier says that networking and word-of-mouth reign supreme when it comes to growing your business, so you should call your friends and neighbors, and talk to your current customers about your gift baskets.

Online presence

Having an online presence can be a great way to increase your gift basket business. Most of your customers likely live hectic lives and the convenience of shopping online and buying a complete gift at any time of day can increase sales and customer loyalty. Sonia has created a successful business online and says she’s hardly had to market it, even though she operates out of a small town in New Hampshire. Whether you plan to sell your gift baskets locally or around the world, having a website will offer your gift basket customers the convenience for which they are likely searching. For retailers looking to add corporate clients, a website is paramount, says August. “They always look online first,” she says.

Consider learning how to make gift baskets, choose a few key occasions, make up a small number of designs at a few price points, and begin marketing to individuals and corporations in your area. You may just end up with a wildly successful gift basket business.