The Demand and Driving Forces Behind The Gift Basket Business
The Demand and Driving Forces Behind The Gift Basket Business

When you begin a business, even a gift basket service, there are a few things that you need to ask yourself. Why are you doing this? What is it that you want to accomplish? What do you need to do for your business to be profitable? These are valid points that need to be raised when looking at the demand for the services you are planning on offering in order to ensure a sustainable and successful business.

Starting a gift basket service is one of the wisest business options you can choose from. After a brief decline, the demand for professionally produced gift baskets has continued to increase in the last decade due to a massive loyal customer base. Even during that time of decreased growth, gift baskets proved to be a top value industry with analysts estimating its overall value at over $3 billion dollars. In the years since, that value has continued to remain steady. Paying attention to the industry's growth is highly important as you set out to create your business, as this can be a key factor for your future endeavors. As you consider investing in a gift basket business, it is in your best interest to first ask if there is a demand for this service in the current market and what it can mean for your business.

Is There a Demand?

Confirming that there is a demand for gift baskets involves a bit more than simply saying "yes." The gift basket industry encompasses far more than what you may initially believe, often well beyond the level of gifting amongst friends and family. Many professional organizations and corporations employ the services of gift basket businesses on a regular basis as welcome and thank-you gifts for clients and collaborators. Major events such as Hollywood awards shows often contract gift basket services to help compile and design the goody bags given to their celebrity attendees. For any situation that requires a gift or token of appreciation, gift baskets are often high-up on the list of options.

A large portion of the demand involved with gift baskets is due to the fact that many people want to find the perfect gift with as little difficulty as possible. Entering into an industry that has a high demand for a product may give your business a boost towards success early on. However, this does not mean that you can enter into the industry and find success instantly. Not recognizing the demand for your industry and not responding to it accordingly can likewise lead to failure.

What Is The Demand For?

The demand for your gift baskets will depend on the wants and desires of your clients, so it is necessary that you have an understanding of your client base as you develop your business. This does not mean that you will be restrained in your options; the wide variety of consumers who are involved in the gift basket industry in some capacity allows for few limitations. However, the decision of what type or types of gift baskets that your business will make and sell is entirely up to you as the owner.

All of the items in a gift basket typically follow a certain theme. Each item will have a specific purpose within that theme that the customer--whether they are the sender or the recipient--will find appealing. The success of a basket or theme, and thus the demand for it, largely depends on the cohesiveness of the items. Take a look at the following themes that are common focuses of gift baskets that you may consider including in your business.

  • Food--One of the most common and popular themes, food gift baskets are usually the first type of basket that comes to mind. Almost every business that offers gift baskets, whether it is their sole product or one of many, will have ones that are food-based. Recent consumer reports have shown that the demand for food gift baskets, specifically ones containing fruit and nuts, is steadily growing.

The customers that choose gift baskets that are food themed tend to do so for the sake of variety and appeal. It goes without saying that everyone likes food, and a food gift basket is going to appeal to the widest audience. It is a rather broad category on its own that can be broken down even further with some creative assistance. Some clients may choose a food basket because its contents include some of their favorites, items that fit within certain dietary needs, or follow a trend like organics.

Interested in learning more? Why not take an online How to Start a Gift Basket Business course?

Food gift baskets may require additional attention to detail, as the stability and quality of the product's contents are crucial. There are more liability issues that arise with food gift baskets than any other theme, as any kind of mishandling of the ingredients can pose a danger to the consumer. Errors on the part of you as the business owner can result in spoiled or damaged food, or even the accidental introduction of allergens. Gift basket services that offer food baskets require certain equipment, resources, and employee experience in order to ensure that they are releasing the best product possible to their customers.

  • Alcohol--Alcohol themed gift baskets are often considered separate from food baskets due to consumer demographics. They can be viewed as a "classy" gift designed to impress the recipient. They are also flexible, as they can be modified and combined with other basket types. Offering alcohol gift baskets opens your doors to a wider network of resources, which can be highly beneficial for your company.

All laws must be followed when it comes to the buying and selling of gift baskets containing alcohol. This includes those in the area in which your business is located or based, the location of the consumer who is purchasing the basket, and the person receiving the basket. As the business owner, this may require you to do a little more research and preparation when filling orders. According to the National Conference of State Legislatures, three states--Utah, Alabama, and Oklahoma--expressly prohibit the direct shipment to consumers of any and all beverages containing alcohol.   Other states, like South Carolina and Georgia, allow only wine to be shipped directly to consumers, but only when they consumer has made the purchase at the business' physical location.

If you choose to include alcohol in your gift baskets--whether as a special theme or as an item in another basket--you must ensure that you have the correct licensing for your business. Failure to do so may result in penalties for your business and affect any relationships you have developed with your customers.

  • Beauty--Gift baskets with beauty or cosmetic items are typically marketed towards women, yet men are also a large part of the customer base. Many cosmetic companies will release several items from the same product line in the form of a gift basket, typically as a means of marketing and to boost sales of lesser-known or -used items.

Beauty-themed gift baskets are actually considered to be one of the easiest baskets to make. They can be as simple or as complex as you or the customer wants them to be, and items can be easily coordinated based on scent/flavor, color, brand, or use. Like with food gift baskets, beauty baskets can be compiled according to trends like organic products.

Gift baskets that include beauty products may require additional issues to be taken into account. Disclosure of potential allergens that may be present in certain products included in a basket may be necessary. You may also need to pay attention to any recalled products, which may result in major changes in an available basket, and any additional licensing that may be required by the manufacturer of an included product.

  • Novelty--Baskets that are classified as "novelty" usually comprises custom-made and niche-specific themes. While food gift baskets may be the most commonly known theme, the most commonly sold baskets are novelty-based. They provide more flexibility for businesses and customers, both of whom can tailor the order to the needs of the recipient.

Success with novelty baskets requires an attention to detail for the sake of ensuring that the basket is appropriate for the custom theme. Customer service skills and creativity are often valuable tools for success. Those who consider including novelty or customized gift baskets in their business' available themes should speak to their suppliers and expand their networks in order to increase their potential range.

Many novelty baskets are customized for specific events, such as the award show goody bags mentioned previously. They may cater to a specific age group, like children, or those with special hobbies or interests. A popular choice, novelty gift baskets can include combinations of other common themes in order to create something new. Largely, the only limitations present with novelty baskets is your own creativity and accessibility.

What Are The Driving Forces For These Services?

In order to understand what the driving forces are for gift baskets, it may help to understand why people give gifts in the first place. The two are naturally connected and the industry would most likely not exist were the driving forces behind gift giving not involved. It should be noted that while commercialism and consumerism do indeed play a significant role behind gift giving, you should not see them as the sole or main driving force for these services.

The occasions in which people send gifts, be they baskets or something else, often are the places to look in order to look to determine the driving forces for these services. Events, such as holidays, special occasions, and milestones are popular instances that prompt gift giving.  It is not so much the event that drives gift giving, but the emotions behind it. This is also the case with gift baskets, and it can affect what is included in a basket and why a customer may chose it.

A notable driving force behind the gift basket industry is gratitude. Many gift basket purchases are done with the intent of thanking someone. As stated earlier, companies have sent gift baskets to their clients and associates as a reward for doing business with them or for attending an event they organized. This has become one of the biggest driving forces for the industry, with several gift basket services using it as their main selling point with their customers. One such company, New Jersey-based Gratitude Goodies, has even made it the main focus of their business, boosting their annual sales into the thousands despite being based solely online and through word of mouth. 

Gift baskets have also been purchased as part of a celebration, usually as a means of congratulating someone on an accomplishment or milestone in their life. Congratulatory baskets for events like graduations, births, and anniversaries are common customizations available. Baskets that are on the opposite end of the spectrum, those sent in sympathy for things like the passing of a loved one, are also common. Regardless of the nature of the event the basket is for, it is often sent with a great deal of affection from the sender to the recipient and the relationship that they have.  

What Is The Potential Impact on Your Business?

As you develop an understanding about how this industry has continued to be so successful and what factors have contributed to that success, you can use that information to your advantage. This can be especially important should you narrow your offerings to specific themes or clientele. The more information you have on the gift basket business, the more likely you will be able to apply it to whatever direction you choose to take your company.  

Recognizing the roles that industry and consumer demands can have on your business can greatly affect your rate of success. Few businesses of any industry manage to find success by disregarding the demands of their customers. More often than not, a lack of understanding about the demands and driving forces behind the services you are providing results in failure.

Think back to those questions from the start of this article. Why are you doing this? What is it that you want to accomplish? What do you need to do for your business to be profitable? The answers to those questions depends on you and how you approach this industry and all of its aspects. Knowing the needs and demands of your customers and what brings them to you can make all the difference for if your gift basket business will succeed or fail.