Starting a Gift Basket Business

August 22, 2013 | By | 2 Replies More

Starting a Gift Basket Business
Creating gift baskets is one of the fastest growing types of businesses today that you can start from home. Gift baskets have enjoyed explosive growth in popularity over the past several years as the number of home-based businesses and independent shops catering to the corporate market has increased.

Businesses and individuals looking for that “perfect gift” now choose to give gift baskets. Gift baskets can be customized to suit the giver, the recipient, the occasion, and the desired price. Hence, it has become a gift of choice for birthdays, weddings, special events, anniversaries, housewarmings, and romantic occasions. It has become a way of expressing thank yous, sympathies, and the congratulatory message for a new baby, and other celebratory milestones in life. Businesses, recognizing gift baskets’ versatility, now forms a large part of the gift basket business and are sending them to their employees, sales force, and business clients.

The gift basket business is a low-cost, low-overhead business that depends primarily on your creativity and imagination. The more creative you are, the greater your chances to prosper.

Like any other business, however, success in this business requires marketing skills, business acumen, and financial savvy. More than the fun and creative part of making the baskets, you need to combine the skills of running a business (e.g. record keeping, purchasing, cash flow management, marketing and advertising) with a strong dose of excitement and enthusiasm.

Starting Your Gift Basket Business

As with starting any new business, you will have to make a number of decisions:

  • What kinds of gift baskets will you offer?
  • Who is your target market? Why will they buy a gift basket?
  • Will you be working from home or leasing a retail space?
  • If you will work from home, do you have enough space for creating your baskets and running your business? Do you have space for your inventory?
  • What is your target market; and how will you reach them?
  • How will you price your gift baskets?

These are but some of the questions that you need to think about when starting this business.

If you are starting on a shoestring budget, it is advisable to go slow and start the business from home. Working from home will allow you to save on overhead expenses and save on rental rates. Plus, you can work flexible and longer hours, and can even opt to work on a part-time basis.

Register your business name and get the needed requirements and licenses that your city or county mandates. For more information on the common operational requirements of starting a business, read the article “10 Things You Need to Know When Starting a Home Business”

gift basket

Gift basket from Gift Favor Baskets

Should you decide to lease an office space, consider being near your target market. If you are targeting the business sector, try looking for a space in the downtown area where most corporate offices are located. A good location should be accessible, enjoys significant walk-in traffic, has an adequate parking space, and within your budget. Also, consider the presence of competition and retail regulations governing the area. If you decide to locate in a mall, read the article Are You Ready to Move Your Home Business To the Mall?

Income Potential of a Gift Basket Business

Opportunities for home-based and small businesses abound in the gift basket business. Your income potential depends on how hard you work, particularly in conceptualizing your products and marketing your business.

Industry insiders estimate potential revenues to range from $10,000 or more annually working part time from home, or $1 million and up operating a retail store or mail order business full time. According to a survey conducted for the Gift Basket Review magazine, 72 percent of the respondents reported annual gross sales of at least $50,000, with about 27 percent indicating that their sales reached $200,000 or more. The survey also found that profits averaged 22 percent of sales.

Your Gift Baskets

You can either offer a wide selection of gift baskets or focus on a smaller segment. Some of the common baskets being offered include the following:

  • Gourmet/Food Baskets. These are the most popular gift baskets businesses and customers give to their clients, friends, and family. A gift basket can be filled with gourmet food, snacks, chocolate, wine, and cheese, etc.
  • Bath and Body Baskets. Also very popular, common ingredients of these baskets tend to include toiletries like scented soaps, fragrances, oils, lotions, and new candles scents, even aromatherapy products.
  • Shower Baskets. Perfect for either lifestyle changes like weddings or baby showers. Many online entrepreneurs focus on a single market. For example, you can find a number of retailers selling exclusively baby gift baskets.
  • Customized Baskets. A number of your customers will want items in their gift baskets that are not currently included in your item list. Instead of your current offerings, they want a customized gift basket. Be sure to properly price your customized gift basket, given the added cost of shopping especially for the basket.

Inventory Needed

Your inventory level should grow as your sales grow. However, it is prudent to start small, keeping inventory at a realistic level.

You can buy your items for gift baskets either through wholesale or retail means. It is advisable that you buy at the wholesale price the items and supplies that you use in large quantities, such as baskets, “filler” items such as tissue paper, and items common to several baskets.

Retail purchases will typically consist of the merchandise you accumulate when you go shopping for customized basket materials. As much as possible, buy your items for your gift baskets in bulk. Many retailers give quantity discounts for purchases over a specific amount.

Shopping is a major activity for a gift basket business and may take you anywhere from one to four hours a day on average. You may find your craft suppliers and ‘hard to find’ gifts by attending local and regional gift shows, various trade publications, and telephone directory listings under wholesalers. Adding your name to supplier mailing lists is also a good way to learn about new products and those that are on sale.

Marketing Your Gift Basket Business

The goals of your marketing strategy should be to spread the word about your business, create a desire for your products, cultivate the image that you want for your business, and convince buyers that your gift baskets are the best.

The two best techniques for marketing your gift basket are a favorable word of mouth and customer’s satisfaction. The quality of your craftsmanship in creating the products, the selection of items in the basket, how you deal with your customers, and the timeliness of product delivery will determine the level of your customer satisfaction and kind of word of mouth that your business will generate.

Other marketing strategies that work for this business include advertising (e.g. newspapers and coupon inserts), direct mail, and brochures. If you are targeting businesses, you can request for a personal presentation of your business and products. Be prepared to do some cold calling. You can even send them a complimentary gift basket, with your sales materials to help ensure that your business will be at the top of their minds should they need to send a gift to their own clients or employees.

Pricing Your Baskets

Pricing your baskets is a challenging proposition. Price your baskets too low and you run the risk of undermining your profits. Set your prices too high and you run the risk of losing your customers. You may be able to set higher profit margins for some baskets, and low in some others to make your inventory moving. According to the Entrepreneur Magazine, you can “expect to net 15 to 30 percent of their gross revenue, and they typically reach this goal by applying a 100-percent markup to the cost of the items in the basket.”

When setting your prices, be sure to cover your profit, labor, materials, the cost of merchandise in the basket, a percentage of your overhead costs, and all other expenses that you incurred. Many gift basket operators make the mistake of short-changing themselves when calculating their labor costs into the price of the product. Be sure to include the time it requires you to assemble the basket, package and get it ready to be delivered, giving due consideration to the complexity of the product. You also need to include in your cost computation the shipping or freight charges that you will incur to deliver the products to its destination.

To guide you in the setting of prices, it is often useful to check the prices of your nearest competitor to ensure that you are not pricing yourself out of the market. If you are offering similar types of baskets yet the competitor can offer their products at a much lower price, seek out ways you can reduce your costs. This will allow you to price your baskets within a reasonable amount relative to your competitor. Be careful though not to engage in a price war at the risk of your profitability: some competitors may drive their prices down despite the rising costs of making the baskets.

Recommended Books on How to Start a Gift Basket Business:


Jenny Fulbright

Jenny Fulbright

Jenny Fulbright is a writer for

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Comments (2)

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  1. Reynaldo Olliff says:

    Top-notch information it is really. I’ve been awaiting for this information.

  2. ratchet says:

    I am starting a business during the summer where I work with kids individually or during a camp. I was wondering how I could start a website for my clients parents to look at during the summer..

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