Perfect Presents

Basket of Profits

The most typical gift-basket buyers, according to the Gift Basket Review survey, are women between the ages of 35 and 49, who account for more than 76 percent of gift-basket sales. Next in line are corporate customers, who account for approximately 20 percent of sales. Because prices for gift baskets run anywhere from $15 to $1,000, customers tend to come from the moderate to upper-middle income levels.

Despite the baskets' widespread appeal, running a successful gift-basket business can pose a few challenges. "This is an incredibly competitive business," says Jo Masterson, owner of Mountain View Gift Baskets in Redmond, Washington. "The main thing that surprised me when I entered this industry five years ago was the amount of competition that's out there. In my area, for instance, we have more than two pages' worth of gift-basket provider listings in the local telephone book, and there's another gift-basket shop just three blocks down the street from mine."

Other gift-basket services aren't your only competitors. Masterson notes that florists offer similar convenience and prices and target the same market. Masterson has succeeded in this competitive environment by focusing her marketing efforts on corporate rather than individual clients.

"When I started out, I targeted my offerings to individuals rather than to businesses, because that's who I already knew. But my intention from the beginning was to gradually shift my focus to the corporate market," Masterson explains. "That's because a company that uses your service regularly tends to place five or six gift-basket orders a month, whereas most individuals order only one or two times a year. In short, for the same amount of marketing and physical effort, you generally get a bigger return with the corporate market."

This doesn't mean, however, that Masterson turns her back on individuals. "Today, I sell about 20 percent to 25 percent of my items to individuals," she says, "many of whom learn of my business through the workplace."

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This article was originally published in the April 1998 print edition of Entrepreneur with the headline: Perfect Presents.

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