To sell toys or not to sell toys, that is the question I get asked. A lot. Yes, by all means, diversify your income, please diversify your income, but please do your homework. I thought it may be interesting to put my thoughts to paper on this topic and share up some tips for those…. who are thinking about selling toys?
Let’s set the scene a bit before I launch into the discussion. Back in the day, I ran a large private practice that delivered therapy services AND educational toys, books and resources. We had a large online store, no mean feat back in the 2000’s and a large real physical toy shop. Our clinic room was upstairs above the toy shop and office, however, the vast majority of our services were community-based. Let the retail fun begin.
o Initially, we didn’t know what we were doing
o Local therapists loved it
o Clients loved it
o It was lots of fun
o Down the track we still didn’t know what we were doing
o The store was a huge amount of work.
o It was hard to make it profitable
The store started with the development of coloured dotted third writing lines, of which I have spoken often. Other early products include pencil grips, therapy putty, posture wedges. I collaborated with the producer to develop the later. Construction toys, family games, bats and balls, activity books and the full catastrophe followed. We attended the trade fairs and discovered suppliers, we stalked proper toy shops and read the back of boxes to find out where products came from. We didn’t want to purchase from China directly, importing, duties and taxes, communication, issues with quality, safety, Australian standards, and the like scared us off. We also couldn’t afford to purchase the massive number of units typically required. Instead, we sourced flexible fun loving local agents who readily visited us and were genuinely interested in our work, our clients and what we were setting out to achieve. Relationships were important, we wanted to enjoy our new project.
When I glance in the rearview mirror and revisit The Store here are my thoughts:
Buy a big calculator as you will be crunching numbers constantly, delivery costs, mark up percentages, GST, weight, postage, website updates, catalog printing and more.
Set up a separate chart of accounts for the store part of your business. This way you will honestly see whether it is a viable business when you pull your monthly profit and loss. We had many many months of that bottom number being enclosed by brackets.
Remember to calculate the % of overheads and salary running the store demands and include these hidden costs on your expenses. We allocated a percentage of admin salary, rent, utilities and the like to keep the numbers real.
Engage an online marketing advisor, your social media channels will have to hum constantly to get your brand and produce out there. The competition is big and daunting nowadays.
Explore POS Point of Sale software and or the extent to which your current practice management software can handle the addition of stock items. Will it manage inventory, stock levels, supplier details, purchase orders……
Critically what sales reports will you be able to get, how often will you need to know what is selling and what is not, make yourself familiar with product quite cycles and discounting methodology.
Stocktake is not always fun and needs to be done more often than June 30. A glass of wine helps.
If you are going down the physical ship route, definitely engage a store fit out consultant and a merchandise display specialist from the get-go. Shelving and storage are critical.
Storage, calculate what you will need and then double it, finally add locks.
For those setting up for online sales, make sure you are within walking with trolley distance of a post office. This proved a godsend.
What is your tolerance for risk, we would typically have $35k worth of stock on hand?
Prep you therapy team with marketing, sales, and upselling 101 knowledge, they will be your mobile sales force. Will a sales incentive program help?
It was wonderful to be able to give generous gifts to referral partners and clients at wholesale prices.
Consider negotiating affiliate links with other established toy and therapy providers.
Consider starting small.
Hmm, lots to think about. The big take-home messages are to complete your financial and marketing/competitor homework thoroughly with an external advisor. Finally, check in with yourself, do you have time to manage it all and what is your level of commitment to developing a whole new and really interesting retail management skill set.
Just let me add these lovely educational toys to your therapy account.
Never say never.