Retail 101 | How To Offer Free Gift Wrapping Service That Won't Bust Your Budget

Retail 101 | How To Offer Free Gift Wrapping Service That Won't Bust Your Budget

At Satsuma Kids Shop in Seattle we show up each day to give our guests the best experience possible. We work to ensure that they leave our company a little lighter and brighter than when they arrived.

Each of the elements in our process is designed to delight our guests. From a welcome smile and offer of help to complimentary gift wrapping and holding the door for them as they exit, we love treating our guests as friends.

We've been celebrated for our gift wrapping and I know it's a draw for repeat business. But how to do you create a generous gift wrapping program that's also cost effective?

I want to share the tools that I use to create a one-of-a-kind shopping experience that have my guests coming back each week for the Saturday afternoon birthday gift and Sunday morning baby shower.

If you're a merchant like me, you're uptight about every penny and dime that leaves the shop which is why a review of the numbers is always in order. In fact, this post has been a wonderful reminder of how evaluating process and standards that we take for granted can really help the bottom line.

The Basics

The first place to start when creating your retail gift wrapping program is to evaluate your numbers and see what size of supply budget makes sense.

Take a look at your average ticket price for gift items and let's back out from there. Your average ticket price is the total amount a customer spends excluding taxes. At Satsuma Kids Shop an average gift ticket price is $30-$40. We do a great business in the $20 kids birthday gift space and we offer additional gift toppers that help us reach that consistent $30 ticket price.

Looking at the math, our Cost of Goods Sold (COGS) is $15, which leaves us $15 for overhead, payroll, utilities, marketing and our complimentary gift wrap! 

When I'm working on pricing my wholesale items, I will add at least $1.50 per unit for packaging and labeling: hangtag, poly bag, sticker, etc... The same holds true in my retail environment. 

I've set below the per unit cost of all the elements that go into our complimentary gift wrap program.

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Supply Per Unit Costs

You'll have to add the freight cost by dividing the shipping price by the number of units.

Gift Wrapping Expenses at Satsuma Kids Shop

  • Small Box - box + tissue + ribbon + sticker = $.84
  • Large Box - box + tissue + ribbon + sticker = $1.06
  • Apparel Box - box + tissue + ribbon + sticker = $.77
  • Kraft Paper - paper + ribbon = $.24

You might think the kraft paper option would be my favorite, but in fact, on a busy Saturday or Thursday afternoon, I prefer the box gift wrapping because it's so fast! Don't get me wrong, I will always LOVE wrapping a perfectly square box in kraft paper with clean edges and a pretty ribbon!

I really consider our complimentary gift wrap offering a marketing expense as well as a packaging supply expense. 

Saying Goodbye

Once we've gift wrapped an item, we add a branded bag so that our guests walk down the street with our logo jumping out for all to see - yet another branding and marketing opportunity. I have tried many combinations of shopping bag sizes and 99% of our products will fit appropriately in one of these three bags: #6, Cub and Vogue. 

  • #6 - 6.25"x9.25" - $.03/bag
  • Cub - 8"x4.5"x10.25" - $.25/bag
  • Vogue - 16"x6"x12" - $.28/bag
  • Custom stamp and jumbo stamp pad - $50

You'll see from the numbers above that the all come in under that $1.50/ticket target. As a percentage of cost, here's how they stack up using a Vogue bag in each case at $28/bag.

  • Small box - 7% of net margin
  • Large box - 8% of net margin
  • Apparel box - 7% of net margin
  • Kraft paper - 3% of net margin

As you'll see in the range of numbers above, the 3%-8%, is a significant cost, but one I believe is well worth the expense for the long term benefit to the business. The real benefits include branding and marketing to the gift recipient and the pass along branding from word of mouth. Additional real benefits include creating happy guests that come back because they know they can count on Satsuma Kids Shop to take care of their gift giving needs.

Remember, every moment is precious, so why not put a bow on it! Until next time, enjoy it all. 

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 how to offer free gift wrapping that won't bust your budget

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