Competing with the Real Competition

On a warm and sunny afternoon, you're shopping at Costco, Sam's or another warehouse club. You weave up and down the aisles, stopping to browse books, inspect luggage and sample those new chicken patties. Your last stop is the meat case located in the back.

You glance to the left and look down at the newly-filled case of shish kebabs, but something across the aisle catches your eye. No - it couldn't be - baskets filled with stationery and books, more baskets with cookies, biscotti and chocolates, and still more with gardening seeds, tools and supplies. And look at those low prices!

Suddenly, the shish kebabs don't seem so savory, and you leave the club empty-handed, dazed and depressed, wondering, "How can I compete with that selection and cost?"

Competition comes in all shapes and sizes, and there's another truth: every gift basket seller is not your competitor.

There are designers who live in your region and possibly on your block. They are your direct competition, the ones you must watch incessantly. They are small and/or homebased. They are after the same clients you have and want. They struggle with the same types of problems that you are also trying to solve or haven't yet experienced.

Then there are retailers who happen to sell gift baskets. This group is known as indirect competitors (Macy's, clubs, specialty stores, etc.). Their inventory is composed of thousands of products. Gift baskets are a small component of the inventory. Indirect competitors sell cookie-cutter gift baskets, the kind that look alike. Indirects don't deliver and won't let you customize anything. You like it, you take it, goodbye.

The next time you become rattled when seeing a store's gift baskets, ask yourself:

1. Do my customers buy look-alike baskets, or are they prone to buy baskets that are personalized by theme, color and style?

2. Does the retailer save customers' time by taking orders to ship baskets, or do customers drive to the store, buy a basket, buy shipping products, bring it all home, wrap and label it, drive to UPS or the post office, pay for postage, come back home and collapse?

3. What are the customer service differences between the retailer and me? I send a thank you note after each purchase with a photograph of the gift basket. I also mail quarterly flyers and birthday cards to each client. Does the retailer do this?

Don't let the retail price fool you. Each store's buyer purchases goods for hundreds of stores within the chain. When you start ordering merchandise to fill hundreds of stores, along with leasing space the size of football fields and hiring thousands of workers, then you can also price your baskets between $15 and $30, just like the retailer. Until then, keep your eyes on the direct competition. She's just down the street making a gift basket for a client that should be yours.

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