Just because you cater to a well-defined niche doesn’t mean you have to limit your merchandise offering. In fact, many say that one of the best ways to grow your business is to expand into new product categories. But you must choose your expansion path wisely to avoid diluting your merchandise punch.
Start by picking a category that complements your existing line, one that “generates authority and broadens the offering while staying focused on the original merchandise category,” says catalog consultant Andrea Lawson Gray, president of San Francisco-based Aesthetics Marketing. For example, when photo products cataloger Exposures introduced its photo box, a box that holds photos with a photo frame on the top, it entered the storage niche. This was a whole new classification for the company, which also strengthened its authority in photo display items, says Gray.
An even more tangible benefit can be seen on your balance sheet. “Adding products and categories should drive business forward by increasing the average order,” says Gray.
Fredericksburg Herb Farm owner Bill Varney found that to be the case. The Fredericksburg, TX-based company started in 1985 as a purveyor of specialty food items such as herb-infused oils and vinegars. But soon after Varney decided to grow the business by expanding into personal-care products. It was a wise move: Adding herbal lotions, shower gels, and fragrances not only helped increase average orders but it also boosted conversion rates, Varney says.
Be not afraid
While you should enter new categories cautiously, Gray warns against not carrying enough merchandise in the new product category. Adding just one or two items unlike any other products in the catalog can confuse the customer, and the lack of correlating items can dispel your authority in a niche.
When KingsBrook, a Charles City, IA-based food cataloger of specialty meats such as bison, ostrich, and elk, expanded into organic meats this past October, it opted to carry more than one type — adding organic chicken, turkey, beef, and pork — for a more comprehensive offering, says director of sales and marketing Joel King. The new product line increased the catalog’s average order size from $105 to $120.
Sourcing your new merchandise line can be challenging. KingsBrook raised its original line of specialty meats, but it did not have expertise in organic meats. “It took us a few months to set up a supply chain for these new items,” King says.
Similarly, while Fredericksburg Herb Farm had manufactured its own food items, it knew little about making personal-care products — nor about working with product suppliers. So Varney started by selling a well-established brand of herbal lotions and soaps, rather than experimenting with a smaller vendor. Eventually Frederickburg did develop its own line of personal-care products made with herbs from the company farm.
Adding new product categories entails taking on creative challenges as well. Gray suggests introducing the new products on the cover or on the opening spread. You can also use hero shots to call attention to the new items or place the products in “hot spots” such as the upper right hand of a catalog spread.
When KingsBrook introduced its certified-organic products, the cataloger ran a special wrap on its cover promoting the expanded offerings. (The company, formerly known as King’s Nature Ranch, also used the wrap to debut its new name and logo).
Don’t forget the back end
Warehousing and inventory levels are another tricky consideration when introducing new categories. AnneMail, a Hot Springs, AR-based toy trains cataloger, expanded into train-themed accessories such as T-shirts, caps, and backpacks in April 2001. To accommodate the new soft goods, president Anne Marcus overhauled the catalog’s warehouse to improve traffic flow. Heavier merchandise is now stored closer to the front, so that warehouse workers carry the lighter items the longest distances. The accessories line has boosted AnneMail’s average order size from about $82 to $88.
And don’t neglect to educate your order-takers about the new line. Discuss the new merchandise with them in detail, and instruct them on upselling and cross-selling the items.