How to Start a Gift Shop Business in 2020 | Little or No Capital Needed

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I dread events like birthdays, weddings, baby showers and any event that requires gifting.

Why?

Because gifting should be easy but surprisingly it’s not. I blank out on options and nothing ever seems good enough.

If you are like me, you know how much gifting services save you at a time like this, especially when it’s a last-minute gift. With the right shop in mind, you almost never go wrong.

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But, from an entrepreneurial perspective, are gift shops profitable? I wonder!

With the thousands of events to celebrate worldwide, gifting sometimes doesn’t feel like a luxury but an expectation. 

In this post we highlight the benefits of starting your own gift shop business in 2020. We talk about the cost of this start up, profitability, trends and location.

Overview of Gift Shops Business in Kenya   

The business of selling gifts has more to do with the emotion it brings about rather than use. It stresses on function rather than form. You are better off concentrating on the packaging rather than the content.

The beauty of a gift is in the emotion and the feeling it brings out than anything else.

Because the items in gift hampers are assorted, the consumer may never know the actual cost of the items. They concentrate on the message that the items send. And that’s what the gifting business is about.

Types of gifting companies

There are several kinds of gifting companies in Kenya. The companies could be offline or online. In Nairobi, there are over 510 gifting services and still counting.

Online, gifting services market and sell through either a website, a social media platforms like Facebook, Pinterest, Twitter, and Instagram or through online marketplaces like Jumia and Kilimall.

In essence, a gift shop is one of those small businesses that you can start in Kenya in 2020 without investing any capital at all. If anything, you only need internet access, an online presence and the will to keep marketing your brand online.

Should you get clients, ask them for a down payment, go buy your hamper and packaging – deliver the gifts and take the difference as profits.

Makes sense right?

International platforms like shopify also offer a market for freelancers. Try them out.

Offline Gift Shops 

An alternative to operating an online gift shop is open an offline store.

This could be a vendor shop, or gifting services that is part of a larger establishment e.g. in a section of a supermarket or a mobile gift shop, moving from an event to the other.

For increased profits though, you may have to do both. Get an offline store and also sell online.

Choosing Items to Sell in Kenyan Gift Shops 

When picking, items in a gift hamper, it is important to consider the messages that the items sends.

Items for lovers may differ from gift hampers meant for the sick. Some gift hampers may be more functional, some are personalized. It all depends on what you’re the client wants.

It is sometimes important to place at least one unique item in your gift package so that consumers cannot put value to it.

The consumers should feel lucky when they purchase the items. Custom-made artsy projects are the perfect addition to gift packages as they are invaluable.

Some common items included in gift packages include flowers, baked goods, wine, chocolate, jewelry, notebooks, and stationery.

Buy these items from other businesses, repackage, sort and sell.

Gift Shop Suppliers in Kenya

Because your business as a gift service company is to put happiness in the faces of others, you will need to be creative.

You can create businesses relationships with businesses you find their products valuable.

Example: –

  1. A relationship with a wine seller would be important to your business as wines make almost every part of gift hampers.
  2. You’d can also alliance with bakers, flower sellers, sweets suppliers and curio shops.

Pricing for gift shop services 

Pricing is almost solely dependent on the target consumers, especially if your product and packaging are amazing. Some consumers like to avoid cheap products while others do not like to feel exploited by highly-priced goods.

Gifting services are highly biased towards the middle and upper classes in Kenya. That may be because it’s easier to make a profit that way and the assumption that low-income individuals wouldn’t purchase gift hampers.

It’s however important to be open minded in the business as ironically even low income earners can become your customers.

Choosing a market for gifting services 

Different gifting services target different consumers. The common ones include

Corporate gifting services: – They target organizations, companies, businesses, etc. Sometimes, they include organization logos and a few customized products. The items are general and office-related like pens, notebooks, calendars, clocks, pen-organizers, etc.

Individual gift services: – They target people who want to get gifts for an individual. The range is wide and unspecified. So is the price range.

Expatriate gifting services: – They target those living outside their native country and mostly reach their consumers digitally.

Diaspora gift services: – These are run to enable those living outside the country to select and send gifts to those within the country. They are run best online. An example is Mamamikes and Kikapu.com.

Operating Gift Shops 

How you run your gifting business is very important as it could be the reason you succeed or fail.

Example: –

There are different ways of stocking products.

  1. You could stock on demand – this means you only buy when needed and it works best for perishable goods.

2. You could also buy in wholesale – enables you to get a discount on the items. Another benefit? You get to operate faster and be more efficient with delivery.

3. Some shops only offer a few of each item. They present samples that can be sold as they replace the items on purchase. It is a mix of both methods and easier except when items are needed in bulk.

Shopfronts do not purchase any products. They market products sold by others and act as middlemen, only sourcing the products when ordered by the consumers.

You may decide whether to include delivery or not. However for offline businesses, delivery is not optional. Some businesses offer free delivery. Others include an additional cost. It all depends on the method of delivery and the distance that has to be covered.

Luckily, nowadays, many services make delivery easier for both the consumer and the recipient. A good example is the GLOVO app.

However, that too is restricted by distance. It is always best to state as a business the scope of delivery – distance-wise to avoid promising more than you can handle.

What’s the Cost of Starting a Gift Shop in Kenya?

When it comes to cost for starting a gifting business, here’s what you’ll have to consider;

Rent: – For physical shops, you’ll need to find a location.

Of course, the location needs to be somewhere with high foot traffic. This may be expensive especially since gifting services tend to target high-income individuals and are therefore based in expensive areas.

Rent in a mall may go up to 50,000 shillings a month.

Stock: – This depends on what you want to sell. Flowers are one of the most affordable but are sold according to seasons. Chocolates and wines depend on the quality while other products depend on the supplier.

Furniture: Includes all the storage shelves, display shelves, seats,  packaging materials, and office stationery.

Staff: – This business doesn’t need many employees, mostly one or two people, one being the delivery person is enough.

The staff is paid minimum wage, ranging from 10,000 to 25,000 shillings. Sometimes, the payment is commission-based.

Advertising: – Advertising could be done online, by word of mouth, posters, brochures, etc. On the internet, you could use the free channels or paid advertisement.

Newspapers charge an average of 500 shillings per classified line and on malls, notice boards may cost 400 to 2000 shillings. Other advertisement methods include free samples,  marketing personnel, branding, etc.

Delivery: – Delivery costs depend on courier services.

Competition and survival – Is this business viable?

Not all gifting services survive. There is competition and unlike other products in other businesses, gifts are not very fast-moving in Kenya.

You could live days on end with your stock if you cannot find your way to your target.  Also, gifting services only survive in specific areas of the country, cities mostly, with the largest consumers being the Nairobi population.

To survive in the gifting business, you will need to master;

Marketing

You ought to get the word out about your product. The higher the number of people who know about your product, the better the chances you have at selling. Find different ways to bring awareness about your product, either through brochures, word of mouth, social media or even signboards.

Marketing should also be done in the packaging of your product and your business operation. Go for attractive packages, unique products that sell themselves and creative gift combinations. Make an effort to be aware of what’s going on around you e.g seasons like Christmas, Valentine’s, Mother’s day, random trendy products, trendy messages that could be included on items like T-shirts. Giving offers like discounts also helps with reaching consumers.

Product differentiation

I cannot emphasize enough how important this is. This is your entire gifting business.

As said, uniqueness is key. Do not offer what everybody else is offering. You can include the common items like flowers and chocolates but add that element that no one will find elsewhere. This will work very well for you as a beginner.

Also, let your products have a good mix of functionality and aesthetic appeal. It will work in your favor.

Group items together carefully. Do not mix items for different target consumers. For example, packages for females should not have items for males.

Operation

Your service company will survive if it serves it’s consumers efficiently. Work on managing orders carefully, fast service, fast delivery, and customer service.

Trends

Today, the gifting business has grown. Companies offer so many services along with gifts. Besides delivery, some companies include a delivery group as part of their marketing. They represent the brand and are trained to carry themselves effectively as they hand the gifts to the gifted.

Gifting services do not only include tangible products. They include services such as music performances, acts, facials, vouchers, etc. Someone could have a make-up artist delivered to you at your door for a special event. There is no limit for entrepreneurs nowadays. To start a gifting service business, you need to stand out.

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