How Not to Open a Cloth Diaper Store: One Man’s Story
I've got a friend by the name of James who started his own cloth diaper business last summer. He first got introduced to cloth diapering by his wife Carole after they had their first child. After a couple of months using cloth diapers with their own children, they identified an opportunity to start a small business selling top brands of diapers like bumGenius and gDiapers at the Foxwoods Mall located in Appleton, Wisconsin.
Market Opportunity
The location in Appleton was a strategic choice by my friend. For one, the town of Appleton has roughly 100,000 residents with no competitors in the cloth diaper market. The closest places to source these diapers in a store would be to drive all the way to Chicago, Illinois or Minneapolis, Minnesota. Realistically this was too big of a distance for people to drive to compare prices. As a result, my friend figured he could corner the market in his area.
To cut overhead on his business, James decided to open up a Kiosk in his local mall instead of a full store. This allowed him to keep inventory levels lower and also the monthly rent was a lot less.
Crafting a Marketing Plan
Like any successful business, James understood that he would need to develop a marketing plan to attract customers to his website. Being a young man, he understood the power that social media websites like Facebook and Twitter could have for his business and he quickly began to establish a presence on local parenting forums to get the word out. In addition, he also began creating videos that explained how to use cloth diapers.
After his online presence was in place, James decided to take out an ad in the local paper and produce flyers to promote the business. The ad in the paper and flyers produced little in terms of new customers for the business; however, James figured it was worth a try.
Learning from His Mistakes
After about two months James realized that his business was in trouble. He had invested over $10,000 into his kiosk and had nothing to show for it. Few people came to his kiosk via foot traffic from the mall. Although, he had managed to attract a few dozen couples online via Facebook he was not able to get into the black financially.
€The newspaper ads did nothing for my business,€ explained James. €My wife and I were getting desperate and I was considering going back to my full-time job. But that's when we got another idea.€
James and his wife had found some small level of success online. They were determined to continue following what worked and decided to open a digital store front in the form of an e-commerce website. So they built up an online presence, wrote product descriptions for each of their diapers, and hung up their digital shingle.
Similar to my friends experience with social media the e-commerce website attracted some attention, but was not able to pay the families expenses. In the end, my friend decided to close down his shop only 6 months after opening.
The website went down and the kiosk was closed. Fortunately, James had a high-paying job to return to so his family was secure financially.
In conclusion, 9 out of every 10 new businesses will fail so if you're a first time business owner be careful and complete your due diligence before investing your life savings on a dream you're not confident about.
Market Opportunity
The location in Appleton was a strategic choice by my friend. For one, the town of Appleton has roughly 100,000 residents with no competitors in the cloth diaper market. The closest places to source these diapers in a store would be to drive all the way to Chicago, Illinois or Minneapolis, Minnesota. Realistically this was too big of a distance for people to drive to compare prices. As a result, my friend figured he could corner the market in his area.
To cut overhead on his business, James decided to open up a Kiosk in his local mall instead of a full store. This allowed him to keep inventory levels lower and also the monthly rent was a lot less.
Crafting a Marketing Plan
Like any successful business, James understood that he would need to develop a marketing plan to attract customers to his website. Being a young man, he understood the power that social media websites like Facebook and Twitter could have for his business and he quickly began to establish a presence on local parenting forums to get the word out. In addition, he also began creating videos that explained how to use cloth diapers.
After his online presence was in place, James decided to take out an ad in the local paper and produce flyers to promote the business. The ad in the paper and flyers produced little in terms of new customers for the business; however, James figured it was worth a try.
Learning from His Mistakes
After about two months James realized that his business was in trouble. He had invested over $10,000 into his kiosk and had nothing to show for it. Few people came to his kiosk via foot traffic from the mall. Although, he had managed to attract a few dozen couples online via Facebook he was not able to get into the black financially.
€The newspaper ads did nothing for my business,€ explained James. €My wife and I were getting desperate and I was considering going back to my full-time job. But that's when we got another idea.€
James and his wife had found some small level of success online. They were determined to continue following what worked and decided to open a digital store front in the form of an e-commerce website. So they built up an online presence, wrote product descriptions for each of their diapers, and hung up their digital shingle.
Similar to my friends experience with social media the e-commerce website attracted some attention, but was not able to pay the families expenses. In the end, my friend decided to close down his shop only 6 months after opening.
The website went down and the kiosk was closed. Fortunately, James had a high-paying job to return to so his family was secure financially.
In conclusion, 9 out of every 10 new businesses will fail so if you're a first time business owner be careful and complete your due diligence before investing your life savings on a dream you're not confident about.
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