Gift Basket Assembly, Inventory and Pricing
Learn about gift basket assembly, inventory and pricing for your gift basket business.
There’s an endless number of gift basket themes you can offer for sale to your customers. If you’ll be running your gift basket business from your home, you’ll need to decide how many different themes you’ll offer – which may be dependent upon how much space you can dedicate to inventory storage, and work space.
You’ll want to build your inventory as your business grows. You should develop a specialty (or signature) gift basket theme, then build four to five other themes around your main specialty theme.
Once you’ve decided what your initial five gift basket themes are going to be – plan on developing three versions of each theme: small, medium and large. This way, you’ll be able to make use of the same inventory in each basket size, with a few additional products for the medium and large sizes.
Gift Basket Themes and Occasions
Once you’ve determined what your main themes are going to be, decide how many ‘occasion’ gift baskets you can create from basically the same products. Your inventory base can then be kept to a minimum and with just a few embellishments, you’ll be able to create a variety.
You could begin with a Coffee Basket, a New Home Basket, a Healthy Basket, a Chocolate Basket and a Snack Basket. Combine the components with coordinating containers to create a variety for different occasions.
Your customer target market will determine what your first five basket themes should be. As an example: if you plan to market to real estate agents, then a New Home Basket, or a Breakfast Basket would be appropriate. The Realtors will buy the gift baskets from you – and in turn, they’ll gift the baskets to their clients.
Basket or Container Filler/Stuffing
Sizzle or basket stuffing material can be ordered by 10lbs or 25lbs. A 10lb box normally runs under $30, delivered. There are many varieties to choose from: shredded tissue, dyed wood shavings, shredded mylar, or colored cellophane shred. Our preference is the crinkled paper shred called Sizzle. It comes in quite a few colors and looks nice in all types of arrangements. It’s also an excellent packing filler for shipping. Order one color, and develop that color into part of your company branding – use one color sizzle, one color bow, etc, as your company signature packaging.
If you’ll be offering mylar and latex balloons, either as a single balloon add-on or as balloon bouquets, decide which ‘messages’ you want to carry. You can rent a helium tank by the month. The helium company normally will come by once per month to bring a new tank. For latex balloons, purchase a product called Superfloat. This will extend the life of the latex balloons.
Cello wrap comes in rolls of various lengths, styles, patterns and prints. You have the option of buying a biodegradable variety, but the choice is yours. Cello comes in three different lengths – 24″, 30″ and 40″.
Clear cello is a classic choice – it allows you to showcase the products inside. Think of this: someone delivers flowers to you and they’re enclosed in paper or a printed tissue and the flowers are hidden. There’s no opportunity for oohs and aahs because no one can see inside. You don’t want to hide your design, you want everyone to see it, because everyone is a potential customer. Receiving a spectacular gift basket elicits the same response as receiving two dozen gorgeous, long-stemmed roses. The display and presentation must have an impact.
Ribbon and Bows
There’s hundreds of styles and colors of ribbon to choose from. What you buy will depend on the look you’re trying to achieve and the type of gift basket you’re selling. Check out your competition. What are their bows and embellishments like? Make yours look better.
If you’re unfamiliar with making bows, there are pull bows available through wholesale suppliers. They aren’t cost effective and don’t really look that great. Use your area resources and take instruction on bow making. A local floral wholesaler will have books on bow-making, as well as local craft stores (most craft stores offer classes in making bows).
If you do have a local floral wholesaler (fresh flowers) in your area, you may choose to purchase your ribbon from them. They will offer every conceivable color, texture and width, and their prices are competitive. Check out as many local (in your city or town) wholesalers as you can. Visit each one or call and request a catalog. Compare their products and pricing. Most of the larger floral wholesalers carry baskets, gift ware, balloons, a huge assortment of decorative containers, potpourri, candles, many of the items you’ll need. The advantage is you do not have to buy a minimum or in bulk. They’re an excellent resource for when you need something immediately. If you don’t have one in your area, but there is one is a neighboring city, ask if they ship, you can have what you need in a just a few days.
Gift Tags, Gift Labels, Business Cards, Brochures, Company Info Sheet, Photo Postcards
It’s very important to have these custom designed, and they should include your phone number. The initial cost will pay for itself in a relatively short period of time. These are items that will be placed both inside and outside of your basket design. They should project your professional image and are important advertising tools. Remember, every recipient is a potential customer.
Prepackaged Food Products
Once you’ve decided on your main themes, make a list of what items you want to include in each basket, then make sure you keep the basic items in stock at all times. Listed below is just an example list, and will not necessarily be items on your inventory list:
- Bottles of Mineral Water or Fruit Spritzers
- Individually wrapped candies (in cellophane or foil)
- Smoked Salmon
- Cookies and Shortbread
- Snacks: nuts, trail mix, popcorn, bagel chips and/or pretzels
- Chocolate Bars
- Jams and Preserves
- Syrups and Honey
- Tea, Coffee, Cocoa mixes
- Pasta and Dried Tomatoes
- Regional Specialties from Your Area
Standard Gift Items: Mugs, Colander (for Pasta baskets), Bowls, Pens, Baby Toys, etc
All food products you stock should be nonperishable and have a shelf life of 6 to 12 months. If you have any local or state companies that offer gourmet foods, by all means, showcase them in your baskets. You’re looking for items not found in the grocery store, but in exclusive gourmet food shops. The exceptions may be designs for New Employee, Employee Recognition, and Snack Baskets.
If you plan to include alcoholic beverages (wine or champagne) in your baskets, or to ship baskets containing alcohol, you need to check with your local Department of Revenue or State Liquor Agency. In many states, it is illegal to ship alcoholic beverages out of state.
Placing An Inventory Order
After reviewing all your catalogs or wholesaler websites, and you’ve decided which items you want to carry – go ahead and place orders for your initial inventory. You’ll need your business Resale# (UBI#) to order. Write or type up a purchase order for the merchandise you’re ordering. You’ll find an order sheet inside each catalog or included with information the vendor sent you. Indicate product number, quantity, individual price and total price. You can fax or phone in your order. If you fax, request an order confirmation with the expected delivery date indicated. If ordering online, be sure to print the itemization of your order.
When the goods are delivered, match the contents against the invoice or packing slip to your original purchase order. Any errors the vendor made need to be called in immediately. Any damage must be reported within a specific time-frame and varies by vendor.
Maintain an inventory control sheet for each supplier you make purchases from. Each sheet should contain the following information:
- Name, address, phone number, fax number and contact person at the supplier company
- Stock number of the product item
- Case pack quantity
- Cost price of each merchandise item
- Opening inventory quantity
- Re-order quantity
Put into place a system to track your inventory usage. Establish a minimum re-order quantity, and place your re-orders accordingly.
Establishing Credit and Terms
As a new business, it will take time to establish a credit rating. Be prepared to pay COD (cash on delivery) for your inventory (most businesses will accept your business check). Many suppliers also accept credit cards, which gives you 20 to 30 days to pay, depending on when you make the purchase.
When you’ve ordered three or four times from a supplier, ask if they’ll place you on a credit program. Once you’ve established accounts with three suppliers, it’ll be easy to open accounts with other suppliers, as long as you pay your bill on time. Many suppliers give a discount if you pay with cash at the time of purchase, so when ordering, confirm this with each supplier.
Most wholesale suppliers have minimum purchase requirements. Minimums will vary by supplier, as will requirements to purchase in case packs. Some suppliers will split cases for an additional fee. Some will sell you mixed cases for a small additional fee. Most will send samples, with you just paying for shipping.
Gift Shows and Gift Centers
Attend regional Gift Shows, if at all possible. They’re normally held twice a year all over the United States.
Start a subscription with:
Gifts & Decorative Accessories Magazine
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51 Madison Avenue
New York, New York
Almost every Gift Show will have demonstrations on how to make gift baskets and you’ll find basket, gourmet, gift lines and packaging wholesalers. The wholesalers/suppliers pay the showrooms at the Gift Center to represent their products. New products come through the showrooms every month.
You may have a Gift Center in your area. Check your local Yellow Pages (or check online) under Gifts, Wholesale. Most of the Gift Centers are open one or two days a week. You can visit, view merchandise and set up accounts with these suppliers.
Gift Shows and Gift Centers are not open to the general public. You’ll need to register for admittance, so be prepared to show your business license, business card, company check, copy of a paid invoice from a wholesale supplier and personal identification. Once you’ve registered and are on file, you won’t have to go through this process again. You’re issued a member card. Always bring your business cards to leave one with the suppliers you place orders with.
Baskets and Containers
Being creative with your containers will ultimately set you apart from your competition. Many customers, when they think of a ‘Gift Basket’, an image of fruit in a cheap basket comes to mind. That was twenty years ago, but not today. Your customer wants something different, something original and something unique.
You should always have on hand a stock variety of baskets, but should also have a variety of containers.
- Heart Shaped Basket
- Ceramic Bowls
- Acrylic Ice Bucket
- Plastic Coated Wire Boxes
- Special Coffee Mugs
- Fabric Covered Boxes
- Terra Cotta Pots
- Good Quality In-Box Trays (new employee designs)
- Enamel Colander (for pasta baskets)
- Assortment of Tins (decorative)
- Wood Boxes or Crates
- Painted or Galvanized Metal Buckets
- Gold or Silver Trays (hotel/convention baskets)
- Wicker Bassinet or Chair (new baby)
- Metal Watering Can
- Hat Boxes
If you can’t afford all or any of these, begin with assorted baskets (small, medium and large) and a nice assortment of decorative tins.
Gift Basket Assembly
Every Gift Basket designer believes their design technique to be the best method. You’ll eventually learn – not all designers are created equal. Use your eye for design and balance, combine it with your creativity, and you’ll learn to recognize a ‘good’ basket design from a ‘not so good’ basket design.
For the inexperienced basket designer, we offer tips to follow in your initial startup stage. As you become more experienced, you’ll automatically find which method works best for you. The goal is for your finished design to be Impressive, Colorful, with the appearance of ‘overflowing with goodies’.
The height of your design is important. Unless you’re shipping an array of items in a flat shipper box, you want to produce the maximum amount of layering and height possible. It doesn’t matter what size or shape your container is, think “height”.
To give your container a firm basis, upon which to build your design, it requires some type of base filler, before you use the more expensive basket Sizzle or Shred. An exception would be if you’re using a very shallow container, then just use the Sizzle. Purchase a bale of packing paper (found at moving companies) or a roll of white butcher paper. Crumple the clean paper and fill the container about two thirds. Cover the clean paper with tissue, the same color as your Sizzle. Cover the tissue paper with the shred stuffing or Sizzle.
Your individual products for the basket contents should be in front of you. Tallest items should be placed either in the center or near the back of the container. With each product addition, add a little more Sizzle. Products should be standing up or angled to show off their labeling. Layer products as necessary, to achieve maximum height. If your products sink into the basket, you need to add more packing paper. Fill empty spaces with individual candies or cookies.
Remember to nestle two business cards and your company information sheet or brochure, in with the basket contents. On the outside, once wrapped, place a high-gloss sticker with your company name and phone number on the upper portion of the cello plume, above the bow. The gift card or gift tag can either be attached to the outside of the basket or placed inside.
Measure your cellophane so you have approximately six to eight inches of overlap on the basket top. Place the container in the middle of the cello. Gather the cello around the container, holding one section tightly and adding to it until you have enclosed the entire container. If there are areas that seem loose, pull up the cello from the center tightly. Tie and secure with a length of ribbon. We recommend using a #3 ribbon width, the same color as your bow. Cut a length of #9 ribbon or the same width as your bow, and tie around the first ribbon. Cut these streamers into a “V” shape on both ends. Secure your bow around the neck of the basket. Study the cello plume, above the bow. Pull out, up, sideways, positioning for the fullest effect. If necessary, snip cello with scissors to create an even, full plume.
Filling large volume orders is extremely labor intensive. You’ll want to employ the assembly line method. Cut all your cellophane, make all your bows, layout all inventory you require, place the packing paper and tissue covering in all of the containers. Then, fill each container, wrap and secure bow. This method is faster and more efficient than making one complete basket at a time.
Pricing Your Baskets
Many new gift baskets business owners find it a difficult task to price their product. You must be competitive, but you also need to have a firm idea of costs as well. Again, if you’ve researched your competition, you know what they’re charging for their baskets. If they’re a company that processes huge volume orders on a monthly basis, they are paying less for their product, and paying less for their shipping. They are able to offer their baskets for a lesser amount than you are, and still make a profit.
By setting yourself apart from the competition and offering a higher level of quality, the customer will be less apt to compare prices with anyone else.
Here’s an Example Pricing:
You have one case of 1.5oz preserves shipped to you at $1.00 each, 12 jars to a case. Your invoice lists the charge as $12.00 for the case of preserves. The shipping costs are $5.00. Total you’re paying is $17.00. Divide the shipping charge amount by the number of units in the case.
$5.00 divided by 12 = 0.416 or .42
Each jar of preserves has cost you $1.00 each plus .42 each for shipping.
Total = $1.42 (total cost) Selling price = $3.26 (1.42 x 3)
Your Retail mark-up will be three times your wholesale cost.
Don’t forget to add the Shipping into your Retail calculation.
If you pay $10.00 for an inventory shipment, add that $10.00 to the cost of the inventory.
Other Costs You have to Include into the Equation
- Remember to include your costs for:
- Content products
- Filler Paper
- Sizzle or Shred Filler
- Ribbon and Bow
- Gift Tag and High Gloss Sticker
You may decide to set a flat fee amount for the ‘Wrap’. This flat fee would include the filler, tissue, sizzle, cello, ribbon, bow, gift tag, sticker, brochure and business card. Maybe set a rate of $4 or $5. You should calculate exactly how much it costs you for all of these separate items, per basket. Then multiply by two or three.
Pricing Large Volume Orders
When you receive volume orders from corporate clients, you should offer a % discount. If you offer a 30% discount, add on a 10% labor charge. Just be sure to total the wholesale cost of everything and base your discount amount on the % of profit needed to support your specific overhead and operation.