Start-up Made Simple

by Dan Rafter

A cart or kiosk might be a lot smaller than a traditional store, but specialty retailers have to grapple with many of the same issues as the big chains when planning for opening day. No matter how big or small, every retailer has to figure out how much product is needed to create a well-stocked and attractive location, find eye-catching props and displays that will draw shoppers closer, and create various point-of-sale marketing materials that will help salespeople turn browsers into buyers. And that's just the short, short list.

To complicate matters, a lot of money usually has to be spent well before the first sale generates the first dollar of revenue—not to be confused with profit, which may or may not follow.

But what if the degree of risk could be lowered, start-up costs easily anticipated and kept in check, and hundreds of "the little details" worked out by someone else who knows a lot about the product's target buyer and, more importantly, what prompts them to buy? What if the timeline for start-up could be compressed so the first dollar lands in the till sooner rather than later? If you're thinking, "Now you're talking!" then a cart or kiosk start-up package might be right for you.

Here's a closer look at three of the 140+ start-up packages included in this year's Guide to Start-ups on page 98. Miche Bag has a fresh new handbag concept; Indo Imports focuses on unique handcrafts from Bali; and the Wow Smile Express teeth-whitening technology is now offered on a custom kiosk built just for mall shoppers' privacy. These companies are ready for you to join their growing base of independent operators, if you're ready to hit the ground running with your own cart or kiosk start-up package.

A brand new bag

The idea came to Michelle Romero shortly after she spilled a drink on her favorite handbag: "Wouldn't it be great if handbags had removable covers so you could replace the cover instead of throwing away the whole bag?" That simple thought led to the 2005 launch of Miche Bag, a Salt Lake City-based manufacturer of handbags with interchangeable covers.

Women who own Miche Bags don't have to wait for an errant spill to change the look of their bag—they can switch covers, or "shells," just to match a new outfit, mood or season. A new shell creates what amounts to a brand new bag in a snap, thanks to magnets that hold the shells in place. The Miche Bag line is undeniably unique, and it's catching on with women across the country, from tweens to seniors.

Miche Bag launched its first test cart last July through December in Fashion Place, a single-level, enclosed center in Salt Lake City. "Our test went really well," says co-president Matthew Seegmiller. "Shoppers love the product. It's one of those things that as soon as the customer understands what it is and how it works, the light bulb goes off and we hear, 'That's the coolest thing!' or 'What a great idea!' We've had a lot of success, a really good response that continues everywhere we open. The cart in Fashion Place is still open today, but now it's run by one of our dozen or so distributors."

The first week the Fashion Place location opened "we had four or five people request franchise information," Seegmiller says. "We never envisioned having all company-owned and -operated carts. We knew we wanted to create a start-up package for independent entrepreneurs, to give us speed of distribution." And they did.

So far 12 distributors have opened their own mall carts in Utah, Colorado, Texas, Florida, Mississippi and California malls. By June, the company expects to have a dozen more. Miche Bag's $12,000 start-up package includes $6,800 in inventory (wholesale), attractive signage, marketing materials and pre-printed discount coupons, plus allowances for the first month's rent and insurance costs. The company also creates a separate web presence for each distributor, so all customers of that cart are sent to the same web address, where the system credits the retailer with any sales.

Because Miche Bag manufactures its own products, the company can deliver product within 48 hours of order. Another plus for retailers: Because the shells are interchangeable, distributors don't have to carry a huge amount of inventory. The company's merchandising strategy and quick turnaround translate into sales, with the average Miche Bag location pulling in more than $20,000 a month, and the product hasn't even registered on the mainstream shopper's radar—yet.

"The opportunity to change your bag with your outfit is so appealing to so many women," says Account Executive Kara Church. There are almost three-dozen shell styles to choose from and "the styles we offer are so different, they bring in all ages of women." A new Miche Kids line is coming soon. "The ability to create whatever type of bag you like, depending on where you are going or what you are wearing, is a really exciting idea to a lot of women."

Reporters seem to love the concept, too, Seegmiller adds, pointing out that local media are usually happy to profile the latest Miche Bag cart opening, because the idea of changeable handbag shells is so unusual. (The company's start-up package also includes a press kit to help retailers generate publicity.) "The excitement level when people see this product is amazing. It's very novel.

"Miche Bag is such a great concept for cart operators on so many levels," Seegmiller says. "From the shoppers who love the product's uniqueness and versatility to the leasing managers who love having a tenant with a fresh, new, exciting product line to the local press that loves writing about us, we're getting fantastic responses from all corners. Miche Bag offers its cart retailers a great way to start out by hitting the ground running with a hot new product that's definitely on its way up."

The lure of handcrafted goods

Another company getting attention by presenting shoppers with unique products is Indo Imports, based in Bali, Indonesia and Encinitas, CA.

It's not often that a mall cart carries hand-carved palm tree bracelets, hand-painted sarongs and hand-embroidered handbags made by master crafters in Bali, Indonesia. In fact, that's just what Indo Imports is banking on: that shoppers are hungry for products with an interesting cultural background, particularly handmade items from exotic locales.

Bali is "home to some of the best handicrafts and handmade accessories on the planet," says Sales Manager Ryan Smith, who's based there. "The Balinese are amazing at what they do with shells and wood. And no two pieces are alike. We've found our products to be a huge success with [US] local mall and fair venues. We have over 20 retailers scattered in the US, a mix of inline stores and cart or kiosk operators."

The company's $10,000 start-up package for carts includes $2,500 in inventory (wholesale) plus custom displays for all products, built to spec in the company's Bali factory. "Once we know which start-up package is ordered, we have the retailer send their cart or kiosk specifications to our factory. After that, we build everything custom: neck displays, spinners, custom wood-carved signage. We even include hangtags. The total delivery time is three months for a complete cart setup delivered to your [US] location. When you receive a starter package from us, not only will you have great jewelry and handicrafts, but your jewelry displays will be made of stunning teak and bamboo," Smith says.

There are several different start-up packages available through Indo Imports, "but as a general guideline the profit margin on most products is over 500 percent." Smith adds that "since we're the manufacturers, we can provide the retailer with maximum profit."

Indo Imports also can create and test new products to take advantage of emerging trends or changing consumer tastes. "We are quick to adapt and change," he says. "This year we found that adding a lot of wood products really helped our retailers boost sales in the cooler months. This month we added over 100 new styles and designs. We like to keep it fresh."

Though the products are made in Indonesia, in-stock reorders can be delivered to US operators within five business days, Smith says. "We know what it means to need merchandise quickly."

"One reason we've been so popular is that we offer a complete solution for retailers while maintaining a consistent 'look and feel' of our products," he says. "Since our products are primarily 'earthy,' we carry that feeling through all the merchandise units as well. We have found this formula is a great way to catch the customer's eye, even from afar, to create that warm shopping experience that makes people want to buy."

How to wow the mall crowd

Wow Smile Express, an Aventura, FL-based company with a teeth-whitening kiosk concept, opened its kiosk division in October of last year. By early 2008, the company had about two-dozen locations in malls across the country, mostly kiosks but some inline stores. With a new start-up package for specialty retailers now launched that includes a newly redesigned kiosk that gives customers more privacy, Wow expects to have almost 150 kiosks open by the end of this year.

Director of Real Estate Mark Klockner says quick teeth-whitening services appeal to mall shoppers, with the average Wow kiosk attracting about 20 customers a day. "All a kiosk operator needs is about five customers a day to break even on their investment," Klockner says. "If they can get 20 a day, which is our average, then that is a nice and steady income for them... a good revenue stream. We have a proven product."

The company's start-up kit for kiosk retailers costs about $25,000 and includes: 120 teeth-whitening application kits (retail value: $12,000), plus four specialized lights required for the actual whitening, a four-seat kiosk with privacy features, a tutorial video and four static panels that can be branded with whatever message the individual operators desire.

Wow Smile Express also provides operators with a point-of-sale system to help manage both sales and back-office operations. And they help independent operators secure favorable lease/license agreement terms for their mall location. If the operators aren't able to finalize a lease, Wow Smile Express returns their investment.

The company's kiosks offer customers teeth-whitening services for $100, a bargain compared to competitors charging $300 to $500, says Klockner. Considering the teeth-whitening kits cost operators only $20 each, the product gives retailers a significant markup.

Mall kiosks are ideal locations for a teeth-whitening service, Klockner says. They attract the attention of shoppers and, with the right kiosk design, offer buyers the privacy they need to use the product on-site.

"The sales potential is really strong with a kiosk location," he says. "You have guaranteed walk-by traffic. And when people see the service, and the price, they do get interested."

"We've created a complete kiosk program with this business," Klockner says. "Our retailers get a head start on their business because we provide them with solutions that we already know work. That's one of the real benefits with going with a turnkey solution such as ours. We are a total solution concept."