How to Start a Gift Shop

Table of contents

People often give each other to show affection, and appreciation, restore broken relationships, and as a way of apologizing. Regardless of the reason one chooses to give you a gift, we can all agree on one fact: we love gifts if not gifting others. 

So, whether you want to run a successful gift shop from home, online, or from a commercial building and you are wondering how to go about it then worry not as we got you covered through this article. We will walk you through a step-by-step guide on how to start your own gift shop from different business settings. We will also provide you with a list of the most essential gift shop insurance policies.

How to Start a Gift Shop

Below are actionable steps on how to run a successful gift shop. Follow them and you’re less likely to make errors that will waste time and financial resources. 

Develop a Realistic Gift Shop Business Plan 

Developing a realistic business plan is a crucial step in how to start a gift shop. You ought to develop one if you are to succeed in this lucrative business industry. You can do this by:

Identifying a Niche

Identify an underutilized area and maximize it to your advantage. Come up with solutions that are cost-effective, profitable, and easy to implement.

Identifying Your Target Market

It’s vital that you have a comprehensive understanding of who your customers will be, what their purchasing habits are, and the means and methods you can use to reach them. The following are the critical aspects you should delve into when identifying your target market:

  • Demographic details–Age, gender, marital status, education level, average monthly and annual income, employment status, and the place they live.

  • Factors that influence your potential customers purchasing habits–Do they purchase gifts as a hobby or for resale purposes? Does distance negatively or positively determine their purchasing frequency, and if it negatively does can you do something about it? How often do your customers purchase gifts and in what quantities? You have to find answers to these questions.

Get to Know Your Competitors

Have in-depth insight into your competitors’ related ventures. Know how they price their gifts, where they source them from, who they sell to, and the perimeters they cover. By gathering all this information, you will be able to come up with competitive business strategies that will put you either in an upper or equal competing position.

Secure a Suitable Location

Your business location will not only attract your target market but will also attract and retain suitable and competent employees. Hence, it’s important that you choose a suitable, sustainable, expandable, and accessible business location. Below are some of the factors you should put into consideration when choosing the appropriate business location:

Your Budget

To avoid overspending and putting your entire business plan in jeopardy, it’s important that you consider your budget when choosing your business location. Ensure that the cost of rent in your potential area is within your budget. 

You should also consider if your budget is flexible enough to accommodate some of the indirect costs you are to incur while relocating to your new business areas. Examples of these costs include building renovation and upgrading costs and hidden taxes.

Level of Demand

You ought to choose a business location where the level of demand equals your ability to supply. You don’t want to choose a location where the demand is low and the supply is high. Or where your demand is high and supply is low. Remember, customers love consistency. Nobody wants to come to a gift shop that lacks basic gifts due to overdemand or undersupply. Hence, ensure you balance the two: Demand and supply.


Your business will not thrive if you run it in an unsecured area. Hence, make sure that you choose a secure business location, especially if you operate 24/7 or you deal in high-value inventory.

Here are a few examples of expert-recommended locations you can choose to set up your gift shop:

Near a Public Beach

People tend to impulse buy when they go out for fun. Thus, this location will be strategic especially if your gift shop revolves around selling fancy and custom-made glasses, beach hats, and sandals.

Near an Airport or Inside an Airport

We all love owning something that makes us feel attached to a place we love or has a pleasant memory of it. Thus, setting up your gift shop in or near an airport is a good idea as you are guaranteed never-ending customers. Just make sure you don’t overprice your inventory and that you stock up on inventory that has cultural or social significance to your target market.

Near a Tertiary Learning Institution

Data derived from a gift-giving ability show that gift-giving and buying become more challenging with age. This is true because the more one ages, the less their interest in shopping for gifts is. This is so because most elderly people worry about getting the right gift for their loved ones.

Young adults, (ages 18 to 25) love gift shopping because they associate gifts with trust, pleasure, and social connection. So, if you want to capitalize on this target market, then setting up your gift shop near a learning institution is the best bet for you.

Next to a Hotel That Mostly Houses Non-domestic Tourists

Nobody loves walking or touring around with heavy bags that are full of delicate items. Tourists will prefer to purchase their gifts from a shop that’s close to their hotel. This way, they will just buy what they need and head straight to their hotel to store or pack the gifts. Hence, if you know of a hotel that acts as a non-domestic tourist magnet, then consider starting your gift shop next to or near it.

Outside or Inside a Historic Monument

At least 90% of Americans are likely to visit a historic museum, this is according to a survey conducted by Indiana’s history museum, Conner Prairie. This shows that there is a never-ending supply of potential customers in such business locations. Here is a list showing historic monuments that people are likely to visit:

  • Museums

  • Ruins of ancient buildings

  • Ancient cathedrals and palaces

Please note that some historical monuments have business restrictions. Thus, ensure that you contact the relevant officials and inquire if you can open up your souvenir shop in your historical monument of choice.

Acquire All the Local and State Licenses and Permits

For you to operate your gift shop legally in the USA you must purchase the necessary local and state licenses and permits. Below is a summarized list showing the must-have gift shop licenses/permits:

Certificate of Occupancy

Most often your local government will issue you with this critical business license. You must obtain a certificate of occupancy before you occupy and operate your gift shop activity in a commercial building.

General Business License

This license shows that you have your state’s approval to run your gift shop in your chosen business location.

Vendor’s License

It’s also known as a sales tax permit, seller’s permit, retail license, and sales tax license. This is an official document that legitimizes your business to make taxable retail sales and collect sales tax from your customers.

Resale Certificate

This is an official document that shows you are a legitimate retailer who wants to sell goods/products after purchasing them. This document exempts you from paying sales tax on inventory purchases (goods/products to be resold to clients).

Federal Employer Identification Number

If you are to hire employees in your gift shop you must register with the internal revenue service (IRS) for a federal employer identification number.

Payroll Tax Registration

If you are planning to hire employees, you must meet this licensing requirement. You are liable to severe state penalties if you fail to do so. Please note that this licensing requirement differs in different states. Thus, it’s crucial that you consult with your state’s certified agency before purchasing this critical licensing requirement.

Purchase the Appropriate Insurance Coverage

As you continue to learn how to start a souvenir shop it’s important that you determine which insurance policies to purchase. Below is a rundown on some of the almost obligatory insurance policies:

  • General liability insurance

  • Professional liability insurance

  • Commercial property insurance

  • Commercial auto insurance 

  • Workers compensation insurance

  • Business owner’s policy

Interview and Hire Employee(s) According to Your Business Needs

Never forget that employees form the backbone of any successful business. Hence it’s important to acquaint yourself with the employee interviewing and hiring process since a slight overlook can prove to be catastrophic.

Let it be known to the public that you will be hiring by advertising for job vacancies. Please ensure that you clearly outline the requirements each candidate should have. Don’t forget to give the deadline for applying for the job vacancies. Here are some considerations:

Short-List Your Potential Employees Online

After receiving job applications from your interested candidates, please shortlist them. Here is a simple criterion you can use to discreetly and fairly short-list your potential employees:

  • Education level–someone who holds a degree in commerce is more likely to make more sales than one who is yet to complete high school. Hence, it’s important that you shortlist your future employees by using their education level.

  • Work experience–You want to choose employees who have at least a year or two of working experience. Please note, that sometimes employees with extensive working experience may require you to pay them more. And sometimes employees with zero experience may turn out to be better than those with experience. So be sure to put these aspects into consideration.

  • Demographic details–Your future employees’ age should be put into consideration during short-listing. For instance, if you need an employee who will be delivering gifts to customers by use of a bicycle you cannot hire an 80-year-old.

Set an Appropriate Date and Time

Please consider interviewing your potential employees in the middle of the week, that is from Tuesday to Thursday. We need not mention that most people dislike Mondays and rarely focus on Fridays. Also, consider scheduling the interview from around 10:00 AM to 11:30 PM. This time frame gives your potential employees time to prepare and reach interview venues on time.

Choose a Conducive Interviewing Venue

It’s important that you choose a conducive interviewing venue that’s spacious enough, has good lighting, and has excellent air ventilation. Also, choose an interviewing venue that has minimal to zero distractions. By this, we mean, zero to minimal décor, human traffic, and noise. Avoid holding your interviews in open spaces.

Contact the Shortlisted Candidate to Notify Them of the Date and Venue of the Interview

After choosing the appropriate date and time and selecting the best place to conduct your interview, please proceed to notify your candidates. Make sure you notify them at least 2 weeks earlier. 

Conduct a Thorough Background Check

According to federal laws, you can only perform a background check if the person in question consents. When performing an employee background check, please be sure to look into their:

  • Criminal records–Vandalism, disorderly conduct, violence, sexual crimes such as rape, fraud, and public intoxication are some of the criminal lawsuits that are categorized as criminal records. 

  • Civil court records–Give you an insight into what type of a person your employee is in society.

  • Credit records–Help you determine whether your potential employee is trustworthy when it comes to financial matters or responsibilities. 

  • Driving records–Gives you an insight into what kind of a driver you are about to hire.

  • Education verification checks–Helps validate that your future employee holds legit education credentials and certifications.

  • Employment verification checks–Validate whether or not your potential employee has the working experience they claim to have.

  • International background checks–Best if you are employing a non-US citizen. This will provide you with any criminal records and will help you verify your future employee education credentials and past employment.

Know Where You Will Be Sourcing Your Inventory From

You must find a cost-effective, reliable, and dependable gift vendor or supplier. It’s important that you find at least two or more, to avoid shipment delays and also gift monotony. You can do this by checking online (Etsy serves as one of the best online platforms to quickly find gift vendors) and asking other gift shop owners for referees. Trade fairs are also excellent places to source your gift vendor. 

Invest in First Moving Inventory and Learn How to Manage It

Before you stock up on your inventory, please make sure that you have in-depth detail on your target market’s wants and needs when it comes to gift giving and purchasing. For instance, if your target market is elderly people, then you may consider stocking up on art and antiques. 

If your target market is young people, then a gift shop filled with handmade bracelets, custom-made glasses, trendy bags, and hats will definitely do the trick. Please avoid stocking up on the same types of gifts, even if they are fast-moving. Please note that customers love having a selection to choose from. And by choosing to stock up on one type of gift, your gift shop will definitely be boring and not customer-attracting. Adopt inclusivity and not an exclusivity approach when stocking up your gift shop.

It’s important that you learn how to manage your gift shop inventory. Practicing good inventory techniques ensures that you purchase the right quality and quantity of merchandise at the right time. Here are some techniques for inventory management:

  • Implement the first in first out (FIFO) strategy–Make sure that you only sell new products after you clear the old products. 

  • Keep track of low-turn stock–Identify gifts that are not first moving and stop stocking them. Low-turn stock is goods/merchandise that doesn’t get sold within 6 to 12 months.

  • Regularly audit your gift-shop stock–Consider auditing your stock at least once every month. Physically count every single gift in your shop, record it, and see if it matches with what you have sold, what’s remaining on the shelves, and what you had ordered.

Strategize on How to Increase Your Sales

You ought to come up with strategies that steadily boost your gift shop sales. Below are some of the bulletproof strategies you can employ to increase your sales and promote purchase return rates.

  • Arrange first moving gifts at eye-height levels- preferably on the middle shelves

  • Arrange slow-moving gifts on the bottom shelf

  • Place less expensive gifts that are eye-catching where your customers line up while paying for their gifts

  • Have your shop have a separate entry and exit point.  This way you will influence or indirectly compel your customers to follow a certain trajectory where you have placed first moving gifts

  • Offer discounts on bundled goods. For instance, you can combine three different gifts and sell them at a much cheaper price than when sold individually.

  • Offer after-sales services. For instance, you can offer free gift-wrapping services or you could offer professional advice on how to clean and store the specific gifts.

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How to Start a Gift Shop from Home

You can start a gift shop from home to test things out.  Here is a rundown on how to start a gift shop from home: 

Identify or Create a Niche in the Gift Shop Industry

The good thing about running a gift shop is that there are numerous avenues where you can identify or create a niche and monopolize it. When identifying a market niche, you must first put into consideration what you would love to have as a gift, and yet you cannot find it. In this step, your creativity greatly counts. If you cannot identify a niche in the market, then you should consider creating one. For instance, if you live in an area where learning institutions are plentiful, you can come up with gift ideas that are tailored specifically to suit teachers. For instance, you can design pens that come in the shapes of books or degree hats. 

Determine Which Type of Gifts You Will Be Selling

Start by determining which type of gifts you will be selling. Whether perishable or non-perishable gifts. Consider your target market consumption logistics when determining the gifts you will sell. Note down what sells fast or what doesn’t, and specialize in it.  

Determine Your Business’s Geographical Perimeter

You must determine how far you are willing to go regarding mileage. Will your business be confined within your geographical boundaries, or will you serve customers from the neighboring states? Factors that you can use to determine your home-operated gift-shop business perimeter include:

  • The availability of a commercial vehicle

  • The total number of employees you have

  • The size of your market and the number of orders you receive in a day, week, or month

  • Already existing competitors

  • Your profit margins

Acquire the Necessary Business Permits and Licenses

Do not assume that running your gift shop from your house exempts you from acquiring the local and state licenses and permits because it doesn’t. For you to operate your home-based gift shop you must acquire a;

  • General business license–You cannot operate your business if your state or local government hasn’t issued you this license

  • Health and safety permit–A must have if your gift shop inventory is highly flammable.

  • Sign permit–If you plan to put signage/sign outside your home that advertises your business then you must obtain this permit

A photo of a man holding a gift box.

How to Start a Gift Shop Online

You can start an online gift shop. An online gift shop will allow you to avoid the cost of renting a physical space. Moreover, you don’t need to get a building registered. To make things quicker, you can avoid a lot of operational costs but earn the same as a brick-and-mortar gift shop.  Below is a summary of how to start a gift store online

Design Your Business Website

A website will immediately cross your mind when thinking of how to start a gift store online. You must develop a unique and visually appealing website. You must come up with a straightforward website that’s user-friendly and showcases the products/merchandise you deal in. Despite the need of making your website visually appealing, please don’t overdo it. 

Consider making it as simple as possible. Give it a name that is easy to spell and remember. Make it a one or two-click website. Make it exclusively for use in your business activities. Use symbols to make it more straightforward. For instance, use a shopping cart to show your customers where they need to click. 

Come Up With Marketing and Advertising Strategies That Legitimize Your Online Gift Shop

It’s a fact that technology has led to the mushrooming of both legit and phony online businesses. Therefore, you must adopt cost-effective advertising and marketing methods that legitimize your online gift shop. Here are some points to consider:

  • Have an influencer who is relevant to your target market advertise your business

  • Form a partnership with an already-established brand

  • Use Google ads and YouTube ads

Choose Which Social Media Handles You Will Capitalize On

It’s a fact that most online stores benefit from different social media handles. Hence, identify which social media will best suit your business needs and capitalize on it. The following are some of the best social media handles that are sure to boost your gift shop sales:

  • Instagram–Best if your target market is between 19 to 35 years

  • Facebook–Best for a business that targets people of all ages

  • TikTok–Best if you want to sell your merchandise live

Clearly Outline Your Terms of Service

You ought to clearly outline your terms and conditions of service on your website before you start your gift shop operations. Let your customers know that you have the authority to act in a legal way that suits your online store if they violate your TOS. Outline things they may do to cause the deletion of their accounts or rejection of their orders.

Customers are less likely to serve you with lawsuits if you clearly outline the terms of service on your website. Please note that it’s not mandatory that you have terms of service for your online gift shop. But remember, mistakes do happen, and it won’t cost you a thing if you play safe by having them.

Come Up With a Cost-Effective Shipping Strategy

You need to come up with inexpensive shipping methods if you are to make substantial profits in your online gift shop business. Here are a few ways through which you can minimize your shipping expenses:

  • Consider working with a reputable courier company

  • Suggest pick-up points that are cost-effective for you

  • Ship items/merchandise in bulk

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Insurance Requirements for Boosting Income

Below are some of the insurance requirements that you ought to purchase before you start running your souvenir shop:

Business Owner’s Policy

This is a comprehensive insurance policy that merges three insurance policies into one. Commercial property insurance, general liability insurance, and business interruption insurance are the policies that make up the BOP for gift shops. BOP is mostly designed to provide coverage to small-scale enterprises. NEXT is a well-known insurance provider that offers business owner’s policies (BOPs) for gift shops. NEXT business owner’s policy packages are unmatchable.

General Liability Insurance for Gift Shop

This insurance policy covers you against financial liabilities and lawsuits if the product you sell, manufacture, or distribute causes unintentional third-party bodily injuries or property damages. It also protects your business from personal harm, advertisement injury, and copyright infringement lawsuits. Thimble is one of the best short-term general liability insurance providers in the USA.

Professional Liability Insurance for Gift Shop

This is a commercial policy that covers claims of negligence done by you or your employees during your professional service delivery. Some of the claims and lawsuits your insurer covers you against through this policy include:

  • Gross general misconduct

  • Performing an error, oversight, or mistake during service delivery

  • Inability to provide your services at the set time or date

  • Provision of inaccurate or misleading professional advice

Hiscox is prized for its reputable, dependable, and cost-effective professional liability insurance policy.

Commercial Property Insurance

Through this policy, your insurer compensates you for the cost of replacing and rebuilding your commercial building and the physical assets in them after fire theft, vandalism, lightning, hailstorms, and windstorms happen. CoverWallet provides some of the best commercial property insurance policies across the 50 states.

Commercial Auto Insurance

This policy provides you with financial assistance if the vehicle you use to conduct your business activities causes third-party bodily injuries, death, or property damages. Also, your insurer caters to the cost of repairing your vehicle after collision and non-collision events damage it. Fire, theft, vandalism, landslides, lightning, and windstorms are the non-collision events your insurer covers you against. Tivly stands out as one of the USA’s best commercial auto insurance providers.

Workers Compensation Insurance

You can use this policy to cater to the medical expenses of employees who get work-related injuries or sicknesses. Lost wages, disability, and dismemberment benefits are also paid to your employees through this policy. Deceased employees’ survivors get paid for death benefits through this employer-funded insurance policy. The Hartford offers the best workers comp insurance deals.

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