Money back guarantee to get more orders? How likely is it to work for you?

    Money back guarantees were once standard. Advertising tests proved they could produce more orders. Then things changed. Marketers fudged their guarantees. The fine print took away what the large print offered. Buyers became skeptical and mistrustful. What did the money back guarantee really mean? The promise lost its power.

    Then the internet came along, full of spammers and scammers. Now not only are the buyers fearful of being tricked, the sellers -- with little understanding of the technology behind their platforms -- worry that, unless they are careful, they will fall victim to online grifters. Out goes the money back guarantee.

    Selling perfume online is a tough proposition. You need all the tricks in your bag to get the attention of prospects... and then -- what's really hard -- to get them to give you an order. I'm talking here about largely unknown (small, like mine) companies selling absolutely unknown fragrances. Can a money back guarantee have any value?

    If you've come across my ads for $timeout and Mimosa, you've seen my money back guarantee. I offer a full refund, no questions asked, and no need to return the bottle. This is not as crazy as it may seem.

    First, notice that this is an online offer which can be withdrawn at the click of a mouse. Are you thinking that so many people will respond that I'll be overwhelmed? I have never seen that happen. More likely I'll get fewer takers than I want, so it is extremely -- extremely -- unlikely that I'll get bombarded with orders from people who just want a free bottle of perfume.

    Think about that aspect of the proposition. These people are not anonymous. To accept my offer they must send me their name, street address, and credit card information. They must trust me to deliver the perfume they ordered. I have their payment before they have the perfume. Then they must trust me to honor my guarantee. In spite of all the risks and scams on the internet, for this offer to work there must be mutual trust.

    Right now these offers are a test. I'm curious to see how customers behave and how well they like my fragrances. My suspicion, based on much past experience, is that although I may find myself with a few tricky customers, most -- most -- will respect my offer and NOT take advantage of the easily available refund UNLESS the fragrance really fails to please. If the fragrance really fails to please and I get too many refund requests, this feedback will help guide the development of my next fragrance.

    There's one more reason why I'm experimenting with the combination of free shipping and the money back guarantee. It has to do with trademark rights. A trademark is established by offering "goods in commerce." In other words, putting your fragrance up for sale. To establish trademark rights you have to make a serious effort to sell your product; not to friends and relatives but to the public -- to strangers. Then, if your name is unique -- nobody else is using it or even a similar name -- you acquire legal rights to the name.

    If, in the future, you are approached by someone who wants to buy one of your names, one piece of information they will want from you is the "date of first sale." That helps establish the fact that not only have you offered your fragrance for sale but you have made sales. You really went out there and did it.

    By making my two perfume offers no-brainers for anyone who is halfway interested, I'm seeking to establish a pattern of sales at the earliest date possible. The fact that a sale might result in a refund has no bearing on the trademark rights. Once, in the past, I did sell the name of one of my fragrances. It may never happen again but, I want to be prepared.

Test -- Question everything -- guard your money!

    Even a simple, imperfect test can save you a lot of money and embarrassment -- or clear the way for a major success!

    Marketers test in order to evaluate opportunities without, spending much money. When daily newspapers were the test vehicle for mail order companies, many  offered advertisers a split run. A split run -- or a "perfect A/B split" as it was known -- involved printing two versions of an ad on a rotary press where plates for both pages could be mounted. When the press was run, every other paper off the press would carry the "B" version of the ad. When the newspapers were stacked and bundled for distribution, one paper would carry the "A" version of the ad and the next in the stack, the "B" version. Regardless of how distribution of the newspapers was carried out, regardless of the demographics of any particular neighborhood, half the readers would see the "A" version and the other half would see the "B" version.

    I recall one particular split run in which I was involved. The marketer had an ad that had been a success but was willing to run it against a new ad in a split run test. The new ad produced dramatically improved results and became the first stepping stone in developing a multi-million dollar business.

    General advertisers have also used newspapers for tests. An ad for a new product would be run with a store coupon in a small city newspaper. If enough coupons were redeemed, testing would be expanded until national distribution was achieved.

    Because daily newspapers are read and tossed, their special value was the quick answers they produced. In a few days the marketer could judge whether the product would be a success. When people read an ad in a newspaper, either they respond or they don't. Very few people redeem a coupon that has been saved for more than a week. Response, or lack of it, shows up within three or four days.

    Moving closer to testing opportunities that might be useful to you, upstart marketers such as the young Estee Lauder have gotten their start by making arrangements with an established retailer to allow them to set up a display table within the retailer's store to pitch a product of their own. For Estee, it was her first product, a skin cream. Success within the retailer's store gave the retailer good reason to stock her product. This was done without any large advertising expenditure.

The need to have a product to test

     To make a test it is assumed that you have a product to test. For a new perfume, this can be a problem if you're looking at the need for a run of 10,000 bottles or more to get the few dozen bottles you want for your test. Ten thousand bottles is a major commitment. If you can find a way to test the waters before making this commitment, it makes sense to do it.

"Reserve your bottle now"

    You can test the appeal of your fragrance and your promotion by giving potential customers a chance to "reserve" a bottle so they will be the first ones to receive a bottle when the product becomes available.

    This is a variation on the classic "dry testing" technique -- advertising a product you don't have, producing it if you get enough cash orders, and simply refunding buyers and dropping the product if it doesn't bring in enough orders. The genius and the problem with dry testing are that you're taking money for something that doesn't exist. The genius part is that you get a statistic on how many people are willing to part with their money and not just make a worthless commitment to buy it, if and when. The "problem" is in taking of money for something that doesn't exist. There are laws about this, even if you make instant refunds.

The dummy product

    Testing with a dummy product can teach you whether or not you can sell perfume (or whatever it is you're selling) but it won't tell you whether or not you can sell your perfume. Perhaps the best way I can explain this is to give an example from my own experience.

    We wanted to sell a fragrance to a particular audience, a particular demographic, but we weren’t sure if these people would buy it. A competitor was selling a product similar to what we wanted to sell so we tracked down the competitor's source and bought a small supply. Our purpose was not to make an immediate profit but to see how well this product would sell. If it sold well (which it did) our plan was to knock it off (which we did). By having this other product -- a dummy product (fragrance but not our own fragrance) -- we were able to make our test, spending no more than a few hundred dollars for the inventory and next to nothing for the advertising. This simple, inexpensive test gave us "numbers" that showed we could make good money by developing and selling a fragrance of our own.

Buy for a larger quantity but fill only a handful of bottles

    Sometimes you must plan to produce 10,000 or more bottles of your fragrance in order to get the juice made and to purchase the particular bottle you want. But you don't have to fill all 10,000 bottles. You might fill only 500 or so and do some test marketing with them. By doing this you give yourself two advantages. First, if your promotion flops and you can be pretty sure that the flop isn't due to the scent, you can rename the fragrance, fill another 500 bottles and take another shot at it with the new name and a new promotion.

    Then, if things really go badly for you, you can simply sell the empty bottles, the bottles you didn't fill or label, along with the caps or sprays that went with them. Your boxes will be a total loss unless you can find someone who wants to try and sell your fragrance (or their own) using the name on the box.

How do you use these ideas?

    For a retail store, testing is always difficult. What is important is to track your inventory and sales. When certain items sell better than others, you want to spot this quickly and take advantage of it. You'll need precise numbers, not hunches.

    Beyond this, keep your eyes open. Question. Be alert for new ways to test that relate to your situation. Decisions based on hard data -- facts which may or may not please you -- are what will make your business grow.

"Advanced" merchandise acquisition strategies

    Last week I wrote about what I call the "standard" methods of acquiring merchandise for a perfume store. But I also suggested that while you could get a business started using these methods, you would be unlikely to earn more than a minimal profit. Yes, even a minimal profit means you'll be able to pay your rent but if your thinking is like mine, you'll be looking for ways to make more. Today I want to explore with you some "advanced" merchandise acquisition strategies. Whether or not you find any particular one helpful, they should get you thinking of possibilities and looking around for opportunities.

    In acquiring merchandise, the maxim is "buy cheap, sell dear." The importance of this cannot be overemphasized. The spread between what you pay for your merchandise and what you can sell it for is what gives your your profit. If that spread is small, unless you can achieve dramatic volume, your profit will be small. To achieve dramatic profits, you are going to need a very healthy spread on one or more popular products.

Closeouts

    There are dealers in a number of fields that buy closeouts and overstocks. Many of my own bottles come from a closeout source (McKernan). Depending on the item and its marketability you might get it for pennies on the dollar. But closeout sources will have minimum order requirements that you might find scary. With bottles, I've bought closeouts because I know that what doesn't get used for one project in time will be used for another. And I've always had room to store those cases of bottles I'm setting aside for future use.

    The problem with closeout sources is that they lack continuity. Once an item is gone, it's gone. No restocking. If you need more of something you got through a closeout you might have to go to the original source and pay full price, or you may not be able to find it at all. It could be discontinued.

    You can explore a number of closeout sources for perfume and scented products. Keep in mind you are not looking for discount sellers who sell by the (discounted) individual piece, but closeout lots, cases of merchandise. Keep in mind that because closeout dealers take advantage of specific purchasing opportunities, their inventory is constantly changing. What they have today might be gone tomorrow -- and they are hoping it will be gone! Again, be prepared to buy in bulk, getting perhaps a good deal more than you want at the moment. But, if the price is right... And you may be able to split an order with another shopkeeper.

Become your own closeout broker, sort of...

    First time perfume marketers often fail. When they fail they fail with unsold perfume. Often their perfumes are quite good, developed and packaged by professionals, but the marketing didn't click. The marketer may not have the money or the will to go at it again. These ventures are too small to attract the attention of established closeout brokers but they can a ripe target for you. You will need some tact and negotiating skills but, if you can locate one or more of these failed ventures, there is a good chance you will be able to purchase some or all of their perfume that didn't sell. To find these situations, follow trade magazines and press releases. Look for perfume launches by new companies. Then, after a number of months, look to see if they are still in business. Many will not be and they might be happy to talk to you.

    On a smaller scale there are creators of perfume who have produced what they cannot sell. They may be eager to sell their unsold inventory and, if a fragrance is good but selling skill is lacking, they might be willing to provide you with a continuous supply of their fragrance at close to cost -- or, if motivated by ego, they might be willing to take a loss on every bottle you take from them, just so they can boast that their fragrance is a success.

Find one hot item and purchase it in bulk

    If you start off with a good variety of merchandise, you may soon find one or two items selling better than the rest -- bringing in a significant share of your profit -- but because you don't yet have a significant markup on these items they aren't yet doing anything dynamic for you. Here's where you have an opportunity.

    Track down the best source for these items and find out what kind of a price you could get if you were buying them in bulk. Be prepared to put a big wad of cash into the selected item, knowing it might take a while to sell all of what you are buying but, as you sell it, you'll be getting your money back with juicier profits.

    A friend with a small store competing against far larger stores adopted this strategy. He could sell the hot item for close to what big stores were charging because he had bought it in bulk. This brought customers to his store. When they came, they bought other items. His business flourished.

Have the hot item made for you

    Sometimes you have the frustration of discovering you have a hot item but you can't find any source that, even in bulk, will give you a price that can make this item really profitable. Here's where -- if you can deal with the complexities and risk the money -- you can go to a manufacturer and have a similar product made exclusively for you. This can give you a very, very low price per unit which means a very, very good markup.

    This strategy has two advantages. First, you already know from your sales reports that this item is going to sell really well. And you know you are getting it for less than what your competitors, who are buying through wholesalers, are paying for their version.

    But there's another huge benefit. This product is now yours exclusively. A competitor could offer a similar product but, once you establish an image for your version, "similar" doesn't command the same price. Think of having a hot item you can sell for ten times what it cost you! Markups like this are what will make your business grow. In time you may be able to develop a number of products with markups like this. Then the profits from all your other products will be icing on the cake.

    In my next article I will write about testing -- a very important issue but difficult for a small retail business. (These articles go out in emails and, if you wish, you can sign up for them here.)
   

Acquiring inventory for your perfume store

 
    Last week I wrote the first in a series of articles about opening your own perfume store. I promised to write about acquiring inventory this week. One way to do it is to create your own fragrance products -- perfumes, colognes, soaps, candles, incense, etc. -- I've written about creating your own perfume here and here and about developing a wholesale fragrance business here. But suppose you just want to sell fragranced products in your store. How do you go about finding products for your store? You need to find products people will buy and you have to obtain them at the "right" price. If your store is small and your business is new it can surprise you to discover that established brands won't sell to you, nor will they allow their distributors sell to you. What do you do now?

    Obtaining inventory for a small perfume store is an art.

    While you may not be able to obtain the famous stuff, you should note that your competitors can't get it either, yet they are obtaining inventory and making sales. Before we look at what your competitors are doing, a word of warning.

    When you are setting up your new store (or folding table) and are in need of inventory, there are easily found sources that are happy to sell you all the off-brand perfume you want at their non-negotiable "list" prices. They will encourage you by telling you how to set your retail price and, from that price, show you what a great markup you will have, a "standard" markup they may call it, but beware. In the first place, their perfume might not sell in your store at the retail price they suggest to you. Then, if you are a novice, you might not realize the markup they promise is really inadequate. And, when you find you can't sell their fragrances for the retail prices they suggest, when you have to slash your prices to make sales, you are also cutting your markups. Now what you get from a sale will be far less that what you anticipated. This issue is discussed in depth in my book, Creating Your Own Perfume With A 1700 Percent Markup! Now it's time to look at your successful competitors and study what they are doing.

    You can learn a lot about what your customers will like and buy by studying your competitors. Whether your competitors are online or in local shops, see what they are offering and promoting with advertising or social media week after week. These will be the items that are selling and these will be the items you will want to acquire for your store. If it sells for them, it will sell for you. The question now is how to obtain the items your competitors are selling successfully and how to get those items at the same or a similar price.

    In most cases the same wholesalers and distributors who are selling to your competitors will also sell to you. In most cases it is unlikely your competitors are buying enough of any one item to get an exclusive on it. So your first step is to track down the vendors that are selling to your competitors.

    How do you track down these vendors? Sometimes it is as simple as asking a competitor where they get their merchandise. It may sound unlikely but it happens more often than you might imagine, particularly when there is a major source that "everybody" (but you!) knows about and they are confident that, if they don't share the information with you, you will soon enough discover it on your own.

    If this strategy fails, a standard strategy is to buy a popular item from a competitor -- provided it is packaged and labeled -- and then look to the packaging for clues as to its source and the source's address. Even a few initials on a box or bottle combined with a Google search can often turn up the original source. A wily competitor will obscure this information on the items they sell but most of your competitors will be too lazy or too unaware to do this.

    The issue now will be price. You want to be sure the vendor is giving you the same price your competitors are getting. Here you may have to do some negotiating, to convince the vendor that in time you are likely to become a very good customer, so the vendor should treat you well now. And it doesn't hurt to ask what you would have to do to get lower prices.

    Aside from supplying your current needs, vendors can be useful because they are aware of trends and what might become a hot item tomorrow. It helps to cultivate a good relationship with vendors. Pay what you agreed to pay and pay on time. Don't try to get tricky with payments to save a few dollars now. This could cost you some needed good will later.

    A starting point for stocking your store is to offer the same or similar merchandise as your competitors are selling. This won't make you rich but it will help you start to generate a cash flow.

Go for variety

    As you don't yet know what your customers want (since you haven't yet opened your store!) get some variety in your offerings -- don't have it all the same. Why? Because by having a variety of scented products, for example, you will get a sense of what will sell profitably and what won't sell. In going for variety keep your ordering for each item minimal. If it sells profitably, you can get more . If it doesn't sell, you haven't lost much. Information is your best friend and, by being able to see what people select out of a range of products -- especially a variety of perfumes and scented products -- you'll become a more effective buyer going forward.

    Copying your competitors is a starting point. Do it carefully and thoughtfully and you should be able to get your business started. Hard work will keep your shop going but, if you want to make more than just a living, you should look into some "advanced" merchandise acquisition strategies. I'll write about them next week.

   

Starting a perfume business with a shop of your own

    Is starting a perfume business in India or the Philippines any different than starting a perfume business in North America or Europe? While regulatory issues and supply chains differ from country to country and sometimes from region to region, the business fundamentals are the same. To have a perfume business you must be able to make profitable sales. To make profitable sales you must have product you can sell at a profit. Today I want to write about getting started.
   
    How does a business that sells goods to consumers get started? Sometimes it gets started when you buy a franchise or when you put up a lot of money to open your own store. But how can you do it if you don't have that kind of money? Would you be surprised to learn that people have been doing it, successfully, for years?

    More than one American fortune was founded by someone who peddled goods from town to town, traveling on foot, working out of a backpack. In New York City I recall seeing African men staking out sidewalk spaces and, seated on the sidewalk, selling out of duffel bags.

    American peddlers who started out on foot invested their profits, first in a horse so they could travel farther, then in a wagon so they could carry more merchandise, and finally in a store. As profits grew, sometimes they opened a second store.

    Today we have shopkeepers whose "shop" is a folding table set up at a flea market, craft fair, or farm market. And some people sell out of the trunk of their car. They have found that even with these low profile "store fronts" they can make money.

    Regardless of whether you start with a peddlers pack, a folding table, or a  store, the dynamics of your business are the same. You have set yourself up as a "shopkeeper" or "retailer" and you confront all the problems and opportunities of others in your trade. Let's look at some of what is involved.

    First of all, your shop must become the center of your life. You must be passionate about it, proud of it, and totally committed to it. You must be constantly focused on making your shop, no matter how small, a more effective money making machine. Making your shop spin money must become everything.

    Whether your store is brick and mortar or a folding table, feeling comfortable with the "traffic" is essential. If you want people to take an interest in your merchandise, your first step is to take an interest in them.

    Always be clean, neat, and nicely dressed. You want people to feel comfortable with you. You don't, by your dress or mannerisms, want to distract them from the merchandise.

    Charm your customers by talking to them, finding out what they might like  and helping them find it and buy it.

    Honest dealings build trust and trust brings additional sales and new customers.

    Be prepared to be present at regular hours. You are the store's image. People will want to talk to you and feel they know you. Schmoozing with customers helps build business. Arrive before opening time and stay a bit past closing time. Show that you are the captain of the ship.

    How you display your merchandise matters, even when you are selling off the top of a folding table. Make your display an example of the pride you take in your business. Feature the items that should be featured. Highlight the winners. Don't give every item the same amount of shelf space or the same treatment.

    Start-up money isn't really an issue because, if you have the right motivation, you can get started with a folding table. If you invest in a store but don't have the right motivation (perhaps because someone gave you the money to open the store and you didn't earn that money yourself), you are likely to fail. To succeed you are really going to have to put your back into it.

    One final warning. Ego and the wrong kind of pride can block you from opportunities. If you have no money but could sell successfully off a folding table BUT are too proud to "lower yourself" to that level, beware! If you have money to rent an inexpensive store but, due to your ego, will only consider a fancier store and location, beware! Starting your own business may be a bad idea for you. (FOOTNOTE: Barneys, the famous clothing store which became a chain, was started by Barney Pressman at 7th Avenue and 17th Street, for clothing a very obscure location. I remember buying some very nice Burberry trousers there before the store became famous and the goods became far more expensive.)

    I haven't mentioned inventory; how to find it and how to buy it. Buying right  is your ticket to success and I'll write about it next week.
   

Two kinds of perfume, two kinds of risk

    There are perfumes that "everybody" likes and there are perfumes that some people love passionately while others can't stand them. Where is the money? Where is the risk?

    What I am about to suggest is not a universal rule but something you might consider. Trying to create a fragrance that everybody likes can be risky. Unlike those of major fragrance marketers, your fragrances will not reach the masses. You don't have enough money. Your fragrances can reach only select markets and a handful of consumers and, in these select markets, you'll find yourself competing with mass market fragrances -- and they will be better than yours, if yours were developed to please everyone.
   
    But think of the people you expect to promote to. What can you offer them that they can't get from the popular, well promoted, mass market fragrances so easily available to them? You're unlikely to impress them with the fine quality of your perfume. You, or whoever is making your perfume, will simply not be as good as the top professionals. But you can offer them originality. You can offer beautiful scents that are out of the ordinary and, because they are a bit "different" -- not following current fashion trends -- they will be "off limits" to the perfumers who are paid to create for the mass markets.

    The risk is that because these scents are out of the ordinary, not everybody will like them. Some people may hate them. But even those who hate them can help you sell, by talking about them, by generating buzz that will get more people to look at your fragrances. Some who look will buy.

    Yes, you must create a fragrance that has merit. You must create a fragrance in which some will see the beauty. You must create a fragrance that some will be passionate about, regardless of what others say.

    But look now what has happened to the risk. Rather than being a marketing issue where you're bumping heads with major fragrance marketers, now your risk is that you may not be able to create that beautiful but controversial fragrance! But this is a risk that can be overcome by common sense, hard work, and testing. And the costs of launching and promoting a new perfume that is painfully "ordinary" carries a far greater risk.

How can I reduce my cost per bottle without risking a big financial hit?

    In my last message I wrote about SCALE and explained that the profit is greatest when production and sales closely match. Unsold inventory is a drain on profit. But it's also a fact that large orders can give each of your components a lower per-item cost. Moreover, with a larger order you have access to a greater range of bottles, pumps, boxes, and even fragrances. The question is, are there purchasing strategies that will give you the best of both worlds?

    The answer depends (this may sound corny!) on your business plan, your long range goals. Is your first venture into perfume being planned as a one-shot venture -- if you make money perhaps you'll go deeper; if you don't make money, that's the end of it -- or does your plan reach out beyond your first promotion?

    If your planning calls for a moon shot -- one "make it or break it" promotion -- then the smart plan is to follow the strategy outlined in my last message which is to match, as far as possible, your production with your likely sales so that, when you've finished, there will be "no paid for but unsold" inventory dragging down your profit.

On the other hand...

 

    If you are planning "perfume" long range, your first venture is simply a test, and you do want to keep it small, working for orders from just the very best prospects. But now there are some ways you can reduce your cost per bottle.

    Say for your test you are hoping for 1,000 orders. Does that seem too small? OK, we'll bump it up to 3,000 orders, increasing our risk just a bit. So, while we will need to produce 3,000 bottles of perfume, we aren’t limited to ordering 3,000 units of each component.

    But before ordering any components in larger quantities we have to estimate how far our program might go. Ultimately will we sell 20,000 bottles, 40,000, or more? What do we have available in funds?

    Look at an example. For our first promotion our expectation is that we will sell 3,000 bottles. But within a short time, when our first results come in, we expect we'll be able to sell at least another 7,000 bottles, and we have the money available to produce 10,000 bottles without straining our budget. So what do we do?

    We buy 10,000 pieces of each component we need but we assemble only 3,000 bottles. Our only exception could be the perfume itself of which we may be able to  buy in a minimal amount, just in case our market really hates the scent.

    By assembling only 3,000 bottles and keeping the rest of our inventory in reserve we gain flexibility. Should our first promotion bomb because of the name, we can change the name because we haven't yet printed those 7,000 other labels. Should we need more perfume immediately, we will be ready with the necessary bottles, pumps and boxes.

    By ordering components in quantities of 10,00 each instead of 3,000 each there is a chance that we will significantly reduce our cost per bottle. And, because the bottles we do not fill are not "leftovers" but, rather, inventory for the next stage of our project, they do not become a drag on profits.

Settle your strategy before you get started

 

    Are you going for a one-shot promotion or do you have business building plans? If you are planning a one-shot, limit your buying to what you expect to need now. The cost per bottle will be more than if you bought in a larger quantity but unsold bottles won't be sucking the profit out of your sales.

    On the other hand, if this is to be the beginning of , and you can consider your first promotion to be a test, it makes sense to buy your components in larger quantities. Only don't get too carried away and buy so much inventory that you won't be able to use in this lifetime!