For many years I had always wanted to go into retail here in Seychelles but there were always obstacles that didn’t make it possible. Late 2021 I practically begged my sister – who had just quit her job at the time – to get into business with me and give retail a real chance and she agreed. So after endless nights of strategizing, we imported a handful of items with the very little amount of money that we could risk losing. We also sorted out all the documents required and we were ready to launch. We wasted no time, and it took me a few minutes to come up with a simple logo – the same one that we are using until today. I quit my job very shortly after we launched, and the rest is history.
Yesterday I came across an advert of someone holding a clearance sale on all their items, the pictures shared shows a lot of clothing hung up on racks – it was clearly at a commercial location. I very quickly realized that this was actually a store promoting their location just a few months ago. So the store was open for just a few months and now they’re trying to clear all their inventory. This is not something that is typical for a store that has plans to fill up their store with new items. Au contraire, it is typical of a store that has decided to close down. Last year, something similar happened to a store that went all out into renting a massive commercial space for an extremely niche product. They closed down only 4 months after launch and they were still trying to offload their inventory months later.
Paying close attention to what people are buying and selling, and the new stores opening is part of our interest as small business owners. For small businesses that do well, we want to learn what they’re doing right. For small businesses that close down soon after launching, we want to learn where they went wrong. We’re not perfect and we are very aware that retail stores are extremely sensitive to the volatility of the economy, but I’d like to share 5 tips that might help if you’ve decided to launch a new retail store in this small country – especially if you’re not born with a silver spoon in your mouth:
- Start by selling online. I know it might seem tacky and unprofessional, but if you are working with a very limited budget, one way to test the market and the response of potential customers is by understanding how they react to whatever it is you are offering. You absolutely should not try to “fake it until you make it” with this one. With commercial properties being quite expensive and you not fully understanding your total monthly expense, it will be too risky to go brick and mortar immediately.
- Forget all the “bells and whistles”. Again, if you are starting with a very limited budget, believe me when I tell you that you do not want to spend inventory money on all the fluff. You don’t need to pay for a logo, you don’t need to pay for business cards, you don’t need to pay for a website and “unlimited storage”, you don’t need to pay for stickers with your logo on it and you don’t need to print thousands of paper bags with your logo on it. Again, I know it might seem tacky and unprofessional, but you. cannot. afford. the. fluff. People know you’ve just started out and you will have time to gain their trust while you build your brand. Include whatever you like with your items when you’re already hitting the profit phase.
- Marketing is key. Allocate a good percentage of your budget to marketing. I know people who felt that simply sharing their products on their Whatsapp status and Instagram photos/stories was enough. When you first start out, your friends and family will be the ones to help you out. They will support you by buying your products, and they might even convince their friends to buy your products. This is really good because it helps boost your business when it’s still in its infancy. But remember, this will not last. When people you know have already purchased from you, it will take a very long time for people you don’t know to finally find out that you exist. You are also competing with other businesses selling similar products – businesses that have been in business for far longer than you have. So you will need to get out there and you will need to pay extra to be heard properly. I’ve seen a business promote their closing down sale far greater than they ever promoted their business prior to having to close down. It’s very unfortunate. As a small business, act like you need your items sold immediately. When we first opened, we received a message online from another online seller/competitor who said “are you so desperate?” we ignored her, but when we were discussing this person, we literally said “yes” out loud to each other. There was absolutely no way we wanted to go back into employment, so yes, we were desperate to sell our items.
- Accurately calculate your expenses. My mother owned a retail store when I was younger. My dad would pay for her flights to countries where she would purchase the goods. He would also cover her accommodation, and he would sometimes send money for us. If my mother purchased an item for e.g. $10 and decide to sell it for $25, simply because it was something that would easily sell for $25, she would come to the conclusion that her profit was $15. She failed to factor in her total expenses because a chunk of it weren’t technically hers.
After they were properly separated and she was on her own, she struggled to make ends meet because she then had to carry all the burden of expenses. This meant that her business was not self-sustainable from the beginning. If she had calculated the expenses of running the business properly, whether my dad pulled out or not her business would still have been able to run without his support.
Last year I was paying close attention to a seller who initially sold things online and then she opened a brick and mortar. She sold items that I have seen in my trips to Dubai. I expect that she would fly there, purchase the items and then sell these items at her store. Many of her items had a retail price of SCR 50 (US$3.50). Many small-scale sellers fly to nearby countries to buy their stock. I expect that many do this to skip custom/importation charges or they believe it’s just a cheaper way to import things. When it comes to importation, to each his own. But there seems to be a lot of miscalculation of expenses. If I decide to fly to Dubai to replenish stock, here are the costs that I will have to factor in while pricing the items I plan on selling: - Embrace competition. I’ve asked some of my friends why they decided to close their retail business and several of them actually said “a competitor started selling the same items”. When you pull yourself out of the competition, your competitor wins and this mentality is absolutely ridiculous. Many small businesses are so threatened by newcomers into the game that they don’t even entertain suspected competitors. You send them a message about their items online and if they suspect that you might be a competitor, they will either respond rudely to your question, or they will not respond to you at all. After we opened our brick and mortar store, we had a young girl who looked 10 years old walk up straight to my sister without even looking at our items. She then started asking questions that a 10 year old child wouldn’t even ask at a store: which countries do you import your items from? What items sells the most? What materials are your products made of? It’s like her parent told her to enter our store and ask us these structured questions. We were very vague with our responses because we suspected her to be a little “mole”. But competition is good, it stimulates innovation and it motivates you to improve so that you can be the one that the customer chooses. The longer you stay in the game, it builds trust with customers and they just find it easier to keep going back to you even if someone else sells the same item(s) for cheaper.
- Ticket price + transaction fees if I pay online. Transportation fees if I went to Victoria to buy the ticket. Time away from my retail store if I had to close it in order to buy my ticket in Victoria. Phone calls (if any).
- Transportation costs of getting to the airport. Food I needed to purchase at the airport.
- Transaction fees (if any) for changing foreign currency.
- Transportation costs in Dubai (including from and to the airport).
- Food and accommodation costs while in Dubai.
- Cost of goods to be sold and all transaction fees lost if using a debit card.
- Cost to my business, e.g. is my store closed while I am in Dubai? Why would a new retail store hire an employee?
- You will have to pay 1.5% presumptive tax on each item sold.
Remember that if you get a product right, you could easily sell 100% of your inventory. But if you don’t get it right, you will only sell a percentage of it. So if you purchase a set of 30 lip balms for AED 120 (SCR 480 or US$35) and you are selling each lip balm for only SCR 50, you are only earning SCR 1020 for all that trouble, assuming you are able to completely clear the stock. Realistically though, you will probably only be able to sell 5-10 easily, so that’s you spending SCR480 to only get SCR 20 back if luck is on your side.” It’s feasible for Indian shops to lip balm for SCR 50 especially because they obtain their stock from wholesalers who bring things in by the container. But if you are flying to Dubai to buy trinkets, realistically, selling anything for SCR 50 would be a loss.
I’ve learned so much about the local market and I still have a lot of learning to do, but I stand strongly by the few tips I’ve mentioned above. It’s completely okay to disagree with me, as this is my personal experience and yours might be different.