Branching out from what you typically sell can help you tap into surprising new revenue streams. If you offer a service, experimenting with retail can be a natural fit, depending on the type of business model you have. As consumer behavior changes, adding retail can also be a chance to give customers even more of what they crave.
And customers are here for it. Research from Square and Wakefield found that 59% of consumers are likely to buy an item from a restaurant or retail store that isn’t a part of its main offering.
The question is, how do you start selling products when that wasn’t your original plan? We talked to Square sellers who offer both services and goods to get their advice when trying out a completely new way of doing business.
For many service businesses, retail is a creative way to increase revenue if you have to rethink in-person services.
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Jenna Sharma, the owner of spray-tan studio BlushTan Worcester, had to close down one of her locations during 2020. But retail was a lifeline, even though sales typically happened at the front desk when clients were done with their spray tans. “Without doing those services, we had to come up with new and fresh ways to market those products,” Sharma says.
Similar to Sharma, Marissa Cydya saw retail as a way to increase revenue when she also had to close her beauty business, Minx Studio Salon, for a period of time. “I’m trying to make passive income, and retail is one of those avenues,” Cydya says.
Retail takes on an additional complexity for some service businesses that don’t want it to deter people from coming in for in-person services. “We thought long and hard about offering retail to help with the services we usually offer,” says Keith Miller, the co-owner of Bubbly Paws, a multi-location dog grooming business in Minneapolis. Retail helped him continue to bring in revenue while his services wound down during closures. At that time, customers weren’t getting their dogs bathed, says Miller. “But now we want you to.”
That fine line was echoed by Sharma, since her product lineup is designed to make clients’ spray tans last longer after their appointments. “We really try to push it as products to use after their spray tan to maintain their results. So we had to get creative without jeopardizing the service part of our business.”
Dominick Lewis, the owner of Photodom, went the opposite route. Lewis first started Photodom as a retail store serving photography fans. In 2020, many film processing labs were closed, so customers reached out to see if he could develop their film. “So I started offering it as a service,” he says.
Now, film processing is a major part of his business. “On the very first day, we had 200 people drop off film,” says Lewis. “And I was like, ‘Okay, this is something that definitely needs to be catered to.’”
Interested in adding a new component to your business? Here are a few of the lessons Lewis, Sharma, Cydya, and Miller learned when experimenting with another type of business model.
“Lean into what people need,” recommends Lewis. Despite him having a fairly niche audience, “There are quite a lot of people out there who love photography and process film,” he says.
Lewis also paid attention to what his local customers needed when it came to what he could provide at his physical store. While there are other businesses that process film in Brooklyn, where Photodom is located, there aren’t any in his immediate neighborhood. Lewis has seen success with the service part of his business because he now runs one of the rare places to get film processed on his side of town.
“A lot of people didn’t even know where to go to process film before me. We have a couple regulars who come in and they say, ‘We’re so glad you opened up because you’re so close to where I live.’”
According to Miller at Bubbly Paws, one myth about being a retailer is that you need to have a large amount of inventory to get started. But that’s not the case.
“When we first opened the store, we thought people would literally be buying things off the shelves,” he says. But it happened gradually as he focused on the types of products dog owners in his area needed and couldn’t find anywhere else. Testing out a few products at a time allowed him to make smarter purchase decisions.
He also recommends looking into wholesale companies that can help, and some offer free samples so you can get a feel for the product before making an order. “Start with small numbers and see what sticks,” he says.
For some businesses, an affiliate model may be more effective for getting customers to buy your products. Cydya is an affiliate for a company that offers salon products, and she gets a portion of every product she sells.
“Rather than buying wholesale and carrying it in my salon, the commission I receive balances the time it takes to do it on my own,” explains Cydya. This has also been a helpful route for clients that aren’t local or who live further away from her salon. “Now that people are expecting things delivered, that’s quite an expense. But that company packages it and delivers it for me.”
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To get started, Cydya suggests seeing if the brands you use have affiliate programs and, if so, see if they provide help with marketing to make it easier to list products. “That helps me showcase everything I have,” she says.
Miller emphasizes the importance of carrying unique products that can’t be found elsewhere. At Bubbly Paws, they offer collars, leashes, doggie sweaters, jackets, and more, but only from locally made independent sellers in the Minnesota region.
“If you can find it in a Petco or Petsmart, you won’t find it here,” he says. “It has to be a unique product.” As a local business owner, this can differentiate you from larger players.
Since Miller has multiple locations, he also makes sure his retail offerings reflect the character of each store.“The retail concept is different for each of our stores,” says Miller. That approach encourages customers to try different locations, and it also gives each store their own unique identity.
“I spent a lot of time putting together our online store,” says Sharma, “just trying to make it super user-friendly, sending email blasts, like, ‘Hey we have a website now, check out our new website. And just trying to drive that online stuff.”
READ MORE: How to Start a Free Online Store from Your Square Account
Sharma also connects with BlushTan clients on Instagram, sharing new products and giving video demonstrations. “We say, ‘Hey we just came out with this new mousse, we’d love for you to try it,’” Sharma explains. She also offered free shipping and free gifts with purchases to help drive more traffic to her new online store when she first launched.
“I don’t think many people knew I even sold online. I kind of always sold online, but I didn’t really invest in it, it was just there if you were looking for it,” Sharma says. “So I’ve really had to get creative I guess.”
At Minx Studio Salon, Cydya promotes her products by posting them on her salon website, sending out links in her email marketing, and she also adds a link to her online store on customer receipts.
When dabbling in retail, one approach is to sell in a more subtle way, according to Miller from Bubbly Paws. “When you give honest opinions, that’s what works,” he says.
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For Miller, that approach is ingrained in how he trains his staff. “In our employee handbook, we have a list of the products we sell and the backstory of why we have them,” explains Miller. “Our staff is not on commission, they’re not forced to push anything. You’re getting their true opinion.”
For all of these sellers, the trick is in making the retail and service parts of their business connected so it adds value for customers. The service fuels the value of the product and the product fuels the value of the service.
Lewis from Photodom explains how the flywheel works at his store. “When you’re processing film, you’ll drop off film, you’ll buy more film. [Customers] need all of those things, and here we are.”
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