Thursday, December 15, 2011

Diversification: Everybody's Doing It.

Once upon a time I thought it was funny to walk into a Music/Vacuum Cleaner Repair shop, and look at CDs while surrounded by broken vacuum cleaners.  I guess the owner had a talent, and a love for music, and couldn't decide which to follow.  Today, you walk into a bookstore, and there are toys, coffee, CDs and DVDs, etc.  Walk into a coffee shop and there's assorted snacks, CDs, mugs and other stuff.  In today's economy, it makes sense to have a variety of items to sell, since once you get the customer in the shop, you want him or her to buy something, anything.  Every store is a variety store these days.

The same applies to online stores.  Amazon and Target have thousands of items to buy, from food to clothing to books, so you can do a lot of shopping with them.  This blog is all about running a small business, though, and we especially need to think about diversifying.  But how much, and when are just two of many questions.  I've talked about Cost of Goods Sold before, and inventory, and these require a lot of thought before you go buying stuff with intent to sell.  And don't forget shipping.  The big stores can afford to offer free or discounted shipping, where such an offer from a small business can kill any thought of a profit.

Every cartoonist out there wants to sell not only their books, but t-shirts, mugs etc.  Merchandising is where the bucks are, even for the big name cartoonists. This is where Bill Watterson of Calvin & Hobbes fame had his biggest disagreement with the Syndicates, who wanted to merchandise his strip, but he felt it would compromise the strip's integrity and charm.  Which leads us to our Hot Topics for today:
Should we diversify?
If so, when?
And how much?

So should you?  Probably. Eventually.  If you've just started putting cartoons on the web, it's a bit too soon to try selling t-shirts.  Wait until you build a loyal audience, and you have some genuine interest in your stuff.  If you're running your business as a real business, and not a hobby, then those t-shirts will sit around a while, and you cannot deduct the price of them until you actually sell them.  Please read my earlier posts about Cost of Goods Sold, Pricing, and Inventory.

Print on Demand online shops allow you to put your image on just about anything these days, but I would choose a few items wisely, and focus on them.  Quality over quantity, without exhausting your audience with too much to see.

Which brings us to a point that I've discussed before about publishing, that applies to merchandise. Print on Demand is expensive.  If you price your merchandise too high, you won't likely sell it.  Price competitively, and you make no profit.   This brings us back to that earlier point about quality over quantity.  Choose an item, like a t-shirt, and look around for quality shirts at a good price.  More than likely you can even save by buying in bulk, but again, watch out how much you buy, because you may have them awhile.  You can do this with anything, of course, although to get truly competitive prices, you really need to order a lot.  Be sure you have that supportive audience.

Finally, don't forget the bottom line.  You cannot deduct the cost of items you buy to sell until you actually sell them.  The more you offer, the more inventory you have, which takes up space, and costs money that you do not get back until the merchandise is sold.  And to sell it takes time to set up a shop, to get the word out, and requires advertising.

So make sure you're really ready to take that next step into diversifying your online shop.  If you want to become a retail type store, that could work for some people, but make that your business plan.  If you're an artist, cartoonist, writer, or other creative, then it may be easier to sell your books or art through a place like Lulu, or set yourself up with a printer, get a few thousand copies of your book, and really focus on selling it.  It's simple to have a link or two on a blog or website.  It's a whole other enchilada to actually have an online shop with changing and growing merchandise.

For the right person or group, though, that online shop can keep customer interest, spread sales out throughout the year, and create focus for your advertising.

With that in mind, please consider visiting my online shop where we now offer many fine things, from books to t-shirts, and artwork and more. :0)

And did I mention that we're currently offering FREE SHIPPING for the next week or so?

Happy Holidays!    JOHN :0)

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