What Does SKU Mean? SKU Numbers Explained

ByDanica Jovic
March 02,2022

Introduction: What Does SKU Mean?

The SKU, or stock keeping unit, is an alphanumeric code assigned to retail products. Using an SKU enables retailers to track sales and manage inventories efficiently. The primary use of SKUs is to identify products, but they offer a wealth of other advantages for vendors. Most articles discuss what SKU means in retail, but there are other industries in which SKUs can be helpful. For example, service-oriented businesses (e.g., auto repair shops) use scannable codes for intangible products.

In this guide, we’ll explore how SKUs are used, highlight their benefits for vendors, and offer advice about how to set up an SKU number for each of your products or services.

What Does SKU Mean in Retail?

A retail stock-keeping unit is a scannable retailer code that provides information about products, tracking, and inventory. The SKU is assigned to a product that is part of an inventory. It will be an 8-symbol mixture of letters and numbers in most cases.

The SKU definition outlines the code’s key characteristics:

  • Scannability
  • Uniqueness
  • Letters and numbers
  • Assigned to products to assist with sales tracking and inventory management
  • Created by the retailer
  • Used internally

How to Set Up an SKU Number

There are two main options for creating an SKU number. One is the necessary entering data manually, and the other is using software to create SKUs for you. Using the software is more efficient, and it can also be more accurate. If you choose to enter data manually, it would be paramount to devise a system for creating unique codes that make sense to you as the retailer. For example, if you own a shoe store, you may choose to use specific letters to signify the brand, following a letter or number to denote size, and another letter or pair of letters to describe the color. If you have a standard coding system, you will soon get used to generating new codes for different products, and your employees will be able to create and interpret SKUs quickly.

Once you have either established a system to create SKU numbers manually or installed software, you can print product labels that will contain the SKUs, and use SKU and barcode generators.

Best practice SKU guidelines are as follows:

  • Keep SKUs short
  • Use clear identifier codes
  • Separate information with dashes
  • Use a sequence of letters and numbers
  • Avoid overcomplicating the system
  • Avoid special characters
  • Use abbreviations instead of words

How Are SKUs Used?

Whether you are just starting out, or have an established brand or store, SKUs have a wide range of uses. Here are some of the most common SKU purposes for retailers and businesses:

Inventory Management

One of the most important SKU uses for retailers is inventory management. If you have a supply of stock, or a busy store, you can use stock-keeping units to keep track of products sold, update orders, and issue reminders when stock levels are low, and you need to replenish the shelves or virtual aisles. You can also organize your store using "order by” SKU.

Effective inventory management can save time and effort for retailers, and prevent customer disappointment if they try to order a product that is out of stock and minimize losses. It is essential to understand that administrative errors also play a role: By using an SKU on Etsy, for example, you can track overstock to prevent excess ordering, eliminate human error, and update stock levels in real-time.

Sales Analysis

An SKU is far more than a product identifier. Retailers can also use SKUs to collect and analyze sales data linked to product ranges, categories, or individual items. This enables vendors to spot trends and patterns, gain insight into consumer habits, and gauge product popularity. Retailers can use the data available to make well-informed decisions about stock ordering, promotion timing, and expanding product ranges to cater to new trends or changing customer habits.

Enhancing Customer Experience

Technology plays an increasingly influential role in customer experience. Take the straightforward example of going into a store and asking an assistant if they have a particular shoe in your size. In the days when an SKU was not available, the assistant would have to scour the shelves or go into the storeroom or warehouse and check for the relevant size. Today, they can simply scan the code and bring up information about stock levels and location. The customer gets an answer in a matter of seconds, and employees save a massive amount of time and effort. If the product in question is not available, the assistant can recommend similar products or a different branch where said size is still in stock.

SKU numbers can also be beneficial for store planning and merchandising, as they enable retailers to design efficient, organized stores that make finding products easy and stress-free.

Personalization and Product Recommendations

If you shop online, you may have noticed that recommendations pop up regularly based on items you’ve looked at or bought previously. For example, the SKU on Amazon enables the retailer to show you similar products in the range.

Is an SKU the Same as a UPC?

SKUs and UPCs are often talked about in the same articles discussing eCommerce and stock inventory management, but they are not the same. An SKU is a unique code, which is generated by the retailer. A UPC (Universal Product Code) is an external code used for tracking. The UPC will be the same for a single product, regardless of its vendor. UPCs only contain numbers, while SKUs are usually made up of numbers and letters.

Further Reading

SKU Number Examples

The following example shows how a garden retailer creates and uses SKUs for products, including different types of lawnmowers. As you can see, the retailer uses codes for the type of mower, color, and size.

Category Code  Item Color Code Item Size Code SKU
T-shirt A1 Blue B3 L 011 A1B3011
T-shirt A1 Green B4 L 011 A1B4011
T-shirt A1 Yellow B5 M 012 A1B5012
T-shirt A1 Black B6 M 012 A1B6012
T-shirt A1 Blue B3 XL 013 A1B3013

Every retailer uses its own system or software to generate codes used internally. This means the team should be familiar with the coding system.

Frequently Asked Questions
What is an SKU on a product?

The SKU acronym stands for stock keeping unit. An SKU is assigned to a product by a retailer. The unique scannable code comprises a series of numbers and letters. SKU numbers are used to identify products, but they also have a range of other benefits and uses, including providing data for sales analysis and enabling retailers to offer personalized customer recommendations.

How does a product get an SKU?

Retailers can create SKU numbers manually or use software to generate SKUs. Once the SKU has been created, it will be added to the product barcode, which is scanned to access information and update inventories.

What is an SKU example?

SKU numbers include codes used by retailers to describe the type of product, brand, color, and size. For example, a store that sells branded footwear may use a coding system that identifies shoes by their brand, size, and color. A pair of blue size 8 Adidas Stan Smith trainers could appear as AD-SS-BL-08.

Do I need an SKU to sell on Amazon?

SKUs on Amazon are not optional. If you wish to sell products on Amazon, you will need to ensure that your items have an Amazon SKU number.

What is SKU on Etsy?

The answer to this question is similar to the answer to: 'What does SKU mean?’ If you are selling on Etsy, you use SKU numbers to manage your inventory, analyze data and provide a superior experience for your customers.

About the author

Danica’s greatest passion is writing. From small businesses, tech, and digital marketing, to academic folklore analysis, movie reviews, and anthropology — she’s done it all. A literature major with a passion for business, software, and fun new gadgets, she has turned her writing craft into a profitable blogging business. When she’s not writing for SmallBizGenius, Danica enjoys hiking, trying to perfect her burger-making skills, and dreaming about vacations in Greece.

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You’ll sometimes see the terms SKU and UPC used seemingly interchangeably, but there are important differences, particularly if you run a store or a business that sells products to consumers or other companies. In this guide, we’ll delve deeper into UPC vs. SKU, highlighting the main differences and outlining the use of different types of codes for sales, tracking, and inventory management.  What Are SKU and UPC Codes? SKU and UPC codes are used widely in product sales. The acronyms stand for “stock keeping unit” and “universal product code.”  What Is an SKU? An SKU is a scannable, alphanumeric code assigned to a product by a retailer. SKUs usually contain a combination of letters and numbers and are designed solely for internal use. Retailers and companies can come up with their own SKU number system or utilize software to generate SKUs. An SKU number used by different retailers will be different when selling the same product. The UPC will be the same.  What Is a UPC? A UPC is a numeric, 12-digit code assigned to products across all retailers and vendors. The UPC is for external use among all retailers. The UPC doesn’t contain letters, it’s always 12 digits long, and it’s printed as a barcode. If two retailers sell the same product, the SKU will be different, and the UPC will be the same.  The authority responsible for maintaining UPCs is GS1, the international organization that develops and maintains standards for unambiguously identifying entities such as products, documents, logistics units, physical locations, and more.  UPC vs. SKU Comparison The key differences between SKUs and UPCs include: Length The UPC is always 12 digits long. The SKU can be any number of digits. Usually, an SKU is six to 12 digits long.  Composition The UPC is numeric. The SKU consists of both letters and numbers.  Use The UPC is used across all retailers. The SKU is designed for internal use only. Consistency The UPC is consistent across every retailer or business. The SKU is unique to the specific retailer or vendor. UPCs are generated randomly via a universal system. Cost SKUs are free. There is a charge for obtaining UPCs.  Printing The UPC is printed as a barcode. The SKU can be printed as a singular code or with a barcode.  SKU vs. UPC: When To Use Which Code When To Use SKUs The most common use for SKUs is to manage stock inventories efficiently. Retailers can use SKUs for inventory management and to track sales and collect and analyze data. SKUs are designed for internal use, and they’re used widely by eCommerce companies and store owners. Uses of SKUs include: Managing and organizing inventories: With SKU numbers, you can manage and organize your inventory in real time and with ease. Every product has an SKU, which can be scanned to bring up relevant information. Retailers can develop a system to create codes based on product categories, sizes, colors, or brands or use software or SKU generators to speed up the process. If you use SKUs, you should find it easier to track products, update your inventory, monitor stock levels, and locate products.  Providing customer assistance: One of the most significant benefits of SKUs for companies that sell products to buyers in-store is enhanced customer assistance. Assistants can now scan codes to locate products, find various sizes or colors, and make recommendations if the product the client wants is out of stock.  Collecting and analyzing sales data: SKUs provide access to useful information about sales, consumer trends, and buying habits. Retailers can utilize SKUs to gauge the demand for various types of products, monitor sales at different times of the year, and spot emerging trends to boost sales.  When To Use UPCs UPCs are required for businesses and vendors looking to sell products on external platforms. If you want to sell on Amazon, for example, or you’re interested in pitching to retailers like Walmart, you’ll need to ensure that your items have universal barcodes. UPC stock can still have an SKU - one doesn’t exclude the other. It’s beneficial for retailers to maintain SKU number systems for internal inventory management.  SKU vs. UPC vs. Serial Number The serial number is a unique code specific to the individual product. It’s common to use serial numbers to identify issues with electrical appliances and computers. If you report a problem or you need advice, for example, you may be asked to provide the serial number so that the manufacturer can track the item and access information about the owner, the date of purchase, and the warranty status.  RN Code and EAN Code Registered identification numbers (RNs) are issued by the Federal Trade Commission to businesses and vendors in the US that manufacture, distribute, or import products governed by the Textile, Wool, and Fur Acts.  As for European article numbers (EAN) and international article numbers (IAN), they’re used by companies outside of the US.  UPC and SKU Tracking UPC and SKU tracking can be done manually, but more and more companies are choosing to take advantage of innovative software, for example, point-of-sale systems. Examples include Shopify, Lightspeed, Square for Retail, and Clover.  Further Reading Finding the Best POS System for Your Small Business What Is a Sales Pipeline and How Do You Manage One? What Is an EIN Number?
By Danica Jovic · March 01,2022
If you love beer and wine, the thought of opening a liquor store is one you’ve probably considered on more than one occasion. While many industries have suffered in recent times, the liquor industry is still going very strong. The global market revenue in 2022 is estimated at $1,810,873 million, while research into recent trends shows that people have shifted towards drinking at home gatherings rather than social occasions due to the COVID-19 pandemic. There has arguably never been a more exciting time to enter this business. So what do you need to open a liquor store in 2022? Read on for all the answers you need. Why Owning a Liquor Store Appeals to People Before starting any business, you must first be sure that it is the right venture for you. Otherwise, you will inevitably struggle to maintain the motivation needed to establish the brand and achieve sustained success. Aside from the general appeal of becoming your own boss, the following perks are what makes working in the alcohol industry great: Flexibility - you can open a wine store, a convenience liquor shop, or even sell alcohol as a section of a larger grocery store. Ongoing demand - while there is a spike during the festive season, alcohol sales remain high all year long. Product/brand recognition - you can stock brands that consumers are already familiar with. This can subsequently make marketing a lot simpler. Recession-proof - like running a food truck business, this venture won’t suffer as much as other businesses due to broader economic issues. Online selling - in addition to your brick-and-mortar venue, a liquor store business can switch to online sales easily. In truth, there are many other reasons to start a business of this kind. The products appeal to millions of adults, boast a long shelf life, and don’t require huge storage space. Meanwhile, you probably already have a good understanding of the products and will enjoy learning more about them. The knowledge that you’ve helped enhance social lives is also hugely rewarding. The Cost of Opening a Liquor Store Before even looking at the finer details of a business plan, you must first check the financial viability of opening a liquor store. The harsh reality is that it’s not cheap. Moreover, it’s the initial outlay that is most likely to pose a major stumbling block.  The expenses that you will face during the pre-launch and early phases of running the business will include: Acquiring a liquor license, which will cost several thousand dollars. Finding a store to let, which can again cost thousands of dollars. Renovations to the store, including racking and shelving as well as decor and new POS terminals. Inventory, which is likely to cost anywhere from $20,000 to $50,000. Marketing costs that may cover branding materials, website building, and covering the local marketing channels. Overall, it is not uncommon for business owners to spend $100,000 on launching the liquor business. Following this, you can expect to keep spending thousands of dollars each month on staffing, marketing, and running the premises. Of course, any stock you sell will need to be replaced, too, so you have to factor in resupply costs as well. You can reduce some of the costs of opening the business by finding an existing liquor store for sale or an opportunity to open a franchise instead of your own brand. Steps to Opening a Liquor Store If you're wondering how to start an alcohol business venture, perhaps the most important tip is to ensure that no stone is left unturned. With the right action plan and strategy in place, you can tap into the multi-billion-dollar industry easily. Here is a list of the top tips that can help you in the process of opening your alcohol store. Complete the Necessary Market Research Before you can open a liquor shop business, you must understand the marketplace you are about to enter. Checking state and national industry statistics will be crucial while you should also take some time to analyze what is already available in your location.  As well as knowing what’s available, you need to think about the gap in the market you’ll exploit. With this in mind, you need to consider the target market too. Some of the key questions to ask include; Who are the people buying the alcohol? How do they buy alcohol - online, offline, convenience store? How often and what quantities do they buy liquor in? Understanding the industry will help you set realistic expectations and learn how the profitable business sector can build you a brighter future.  Write a Business Plan A business plan is a legal document that will subsequently help you with funding and gaining liquor store permits. Crucially, it is an item you can return to time and time again throughout the planning phases for guidance. You can find business plan templates online, including solutions specifically for alcohol distributors. It should cover these key aspects: Your mission statement and purpose for the business. Relationship between the target demographic and the product. Details of your operations and management plan. Design plans for products, services, and branding efforts. Financial projections for at least the short and mid-term goals. A solid business plan will become one of your most valuable assets because it can help establish trust from investors while also giving employees a clear action plan and brand identity. Find the Right Location The right location is one of the most important things to consider when opening a liquor store, not least because it will have a huge influence on foot traffic and overall liquor store income levels. Even if you plan to sell online too, a prestigious location and strong reputation in offline circles will aid the cause.  There are several factors to consider at this time. Ask yourself the following questions for guidance; Is it close to residential areas? Because over 45% of all searches are now local and consumers looking for liquor stores near them will provide a lot of your visitors. Does the venue offer good public transport access and ample parking? Is it in close proximity to other venues that people may visit before or after wanting alcohol? If so, this can have a significant impact on your visitor levels. The right location may additionally open up drive-thru liquor store options, or at least the potential to provide a curbside pick-up service. Similarly, it may enable you to provide local deliveries directly to your customers without losing too much time or money, While you won’t confirm the venue just yet, creating a shortlist of ideal locations and anticipated costs will serve you well going forward. Focus on Funding The harsh reality is that your business idea won’t go any further if you do not have the funds to get it off the ground. As already stated, you may be looking at a bill of over $100,000 to launch the company before tapping into any potential liquor store profit.  There are several ways for creative entrepreneurs to raise funds. Some of the most popular include: SBA loans or business loans for bad credit. Private investments from local or national investors. Crowdfunding from friends, family, and other interested parties. Personal loans or selling assets. Federal or state business grants.  The most important thing is to analyze all of the options. After all, a lack of capital is often the reason why one in two ventures fail within five years, so make sure you are well prepared, and not just for the opening few months. Form a Legal Entity Forming a legal entity is one of the most important requirements to open a liquor store. It is not possible to start trading until you have completed this step. The main types of entities that you are likely to consider are: A sole proprietorship, where the business is solely owned by you.  A partnership between two or more liquor store owners. A Limited Liability Company (LLC), which works as something of a hybrid between a partnership and a corporation. A corporation, which is a legal entity established to conduct particular types of business. Entrepreneurs looking to open liquor store businesses will often choose a sole proprietorship or an LLC depending on individual circumstances. Speaking to a dedicated legal advisor or lawyer is the best way to make the right selection for your business needs. When forming your legal entity, you’ll also want to consider the name of your company. Remember that the name of your liquor store can be the same as the brand name, but it doesn’t have to be. Get Your Bank Account and Licenses How much does a liquor store make? It doesn’t matter if your business doesn't have a bank account to conduct transactions or a license to sell alcohol. Securing a bank account with a business credit card will require a visit to the bank with your ID and Employer Identification Number (EIN). As s liquor store, you’ll need a physical address, which shouldn’t be a problem since you’ll need a property anyway, unless you plan on selling online only. As for licenses, you will need to check state and national regulations. To complete this phase, your state’s Alcohol Beverage Control Board will determine; Who can be served and who can serve alcohol. The times during which your business can operate. The limits on prices on the volume of alcohol sales per customer. In addition to the liquor store permits, you may need to consider special licenses for online sales. Organize Your Finances A liquor store has high start-up costs, and you will encounter a lot of transactions (income and outgoing costs) once your doors open. As such, keeping your finances organized will be vital. To get this right, you’ll want to complete a range of steps. These include: Finding a suitable accountant with experience in supporting liquor store businesses. Putting insurance in place - including Liability and Liquor Liability Insurance, data protection coverage, and Workers’ Compensation Insurance. Managing your invoices, expenses, operational costs, and projected financials. Just because you have funding doesn’t mean you don’t need to spend your capital wisely. Besides, good organizational skills enable your liquor store business to have a great headstart and enter the market, creating a profit in record time. Establish Your Marketing Strategy Branding and marketing are essential features of every business model. An alcohol store isn’t any different. After cementing your brand name and choosing the right color scheme and logo, you must establish the best marketing strategies to help your business thrive in the industry.  When dealing with Pay-Per-Click (PPC), the cost per click in the alcohol industry is higher than in other industries. Insight like this should help you decide where and how to promote your company. Some of the options you’ll need to consider are: Shop signage to attract foot traffic. A strong website and SEO plan to attract local online traffic. Social media campaigns to raise awareness and show the brand image. Shop layouts and staging of products. Local media placements and ads. Referral marketing and recommendations. The great news is that many of the products you stock will already be supported by extensive marketing campaigns from their manufacturers. Perfect your branding skills, and you’ll be rolling in cash, too. Set your Prices Setting the prices is an essential step for your business. You need to find the sweet spot between healthy profit margins and keeping consumers happy. In most cases, markups will be around the 25-40% mark. However, a convenience store's prices will likely differ from those in a wine store, so bear in mind the type of shop you’re planning to open. Crucially, you’ll need to divide all beverages sold into four categories: House beverages.  Standard branded liquors. Premium liquor brands. Super-premium brands. Your liquor shop business will probably run special promotions on a regular basis, but knowing your general pricing before opening the doors will be key to having a strong start. Build Your Team When opening your alcohol store business, a lot of the success will depend on having the right around you. In fact, you’ll have already embraced the support of experts like accountants, lawyers, market researchers, bank managers, license vendors, and web designers by this stage. However, you’ll still need the most crucial aspect for the success of ongoing daily operations - the employees. Workers may include floor workers, cashiers, customer care experts, in-house marketers, drivers, and more. You will want to keep the numbers as low as possible due to their salaries and bonus costs like healthcare and 401K contributions. When hiring employees, be sure to test their; Knowledge of the alcoholic beverages industry as a whole. Knowledge of their specific job role and the tasks within it. Personality traits and alignment with your business philosophy and goals. A winning team won’t only represent your alcohol store in an effective way but will help your business grow and prosper. Stock Your Inventory As mentioned above, stocking your inventory could account for up to $50,000 right at the start of your business journey. Therefore, managing it well is one of the most important steps to opening a liquor store, and for that, you’ll need a good Point of Sale system. It should be able to: Track all stock in real-time, Compile reports of all sales and automate purchases. Give clear info for managing order fulfillment.  In addition to the right stock management system, you should ensure that the liquor store is protected by insurance. This will help prevent losses caused by bottles dropping off the shelves or shoplifting. Naturally, a sound security system should be installed for further peace of mind. Prepare for the Opening By now, you will have: Satisfied all legal requirements. Built a winning brand and designed your store logo, layout, etc. Financed the liquor shop business. Found a winning team of employees. Stocked your business with the right products. All that’s left is to arrange your big opening. Use this as an opportunity to build excitement for your new company, and local drinkers will quickly check out what your business has to offer. We’ll raise a glass to that! Further Reading Best POS System for Your Business What Is an EIN Number? Final Words Opening a liquor store business does require hard work and a significant investment. When done well, though, it is one of the most stable industries to be involved in. Crucially, a combination of online and offline sales will enable you to achieve significant profits for immediate and long-term success.  If you are passionate about alcohol and running a business, there has never been a better time to start.
By Danica Djokic · March 01,2022
The popularity of candles is arguably greater than ever, and most consumers are now open to supporting independent brands in this field. So, if you’ve been thinking about how to start a candle business over the past few years, this may be the perfect time to finally do it. A quick look at the industry supports this idea; it was worth $3.54 billion in 2019 and is forecast to hit $6.64 billion by 2027. Moreover, it’s a surprisingly accessible sector to join, as long as you have passion, talent, and a winning strategy.  That’s exactly what this guide to starting a candle business in 2022 aims to do. The road to turning your burning passion into a reality starts here.  Why Choose a Candle Making Business? Like any other business idea, starting a candle company requires a significant investment of time, money, and passion, so you need to be sure that it’s the right venture for you. This means analyzing the prospect of selling candles rather than just the benefits of being your own boss. There are many reasons why you may wish to work in this business sector, starting with the growth that it’s currently experiencing. Other factors include; Earning potential - as far as the business model is concerned, a candle supply business is quite impressive. The products are cheap to make (and send), while the markups are also healthy. Mass appeal - candles are used in 7 out of 10 US households. This makes them one of the most commonly used home products of all, not least because most people use multiple candles each year. Stability - candles are inexpensive yet make a difference to our lives. As such, their sales don’t typically get affected by economic downturns, which is very important in the current situation. Year-long appeal - while there is a spike in sales during the festive period (unsurprisingly given that both men and women like them as gifts), two-thirds of candle sales are non-seasonal. Easy start - once you know how to make DIY candles, the process is quite simple and doesn’t require large volumes of equipment. In fact, many startups in this field begin as home-based ventures. Furthermore, the candlemaker community is quite supportive. There are more than enough customers to go around and small business owners can often connect with each other in mutually beneficial business relationships. If you already love candles as a consumer, you already know the type of products that you’ll love - it’s likely that others will too. When combined with the right business methods, you can’t go too far wrong. What Does it Cost to Start a Candle Making Business at Home? The opportunity to start the company at home is one of the most attractive options for many reasons, such as the opportunity to establish a healthier work-life balance or even launch the venture as a side hustle before eventually leaving your day job to go full-time. Crucially, it also removes one of the largest costs. Since 64% of businesses start with only $10,000 in capital, it’s obvious that you don’t need an obscene amount of money to get going. Low costs are an attractive feature of running a small candle business, yet you’ll still need to consider the following overheads: The costs of registering your business for tax purposes. Candle supplies like wax, wicks, and molds. Double boilers and other candle production equipment. Increased energy bills at home. Branding and marketing costs, which should ideally scale up with your success. Overall, most home candle businesses will look at somewhere between $1K and $5K to get started. However, those who want to work from a commercial setting will need to factor in rent, insurance, and potential staffing fees. The most common estimate of the cost of starting such a business is $44,000. How to Start a Candle Business in 10 Steps If you’ve been searching for “how to start my own candle company in America,” the great news is that it’s probably a lot simpler than you think, although it will require a lot of effort, as is the case with any venture. Whether you have experience making candles for friends or are completely new to the field, the following tips will serve you well.  #1. Fund Your Candle Making Before even launching the business, you’ll need to buy yourself the essential candle making equipment. This includes products like wicks, as well as the necessary tools. Most people can fund this through personal investments or by selling a few unwanted items first. If you plan on making candles to sell, you may eventually face some additional costs. Even if the venture becomes profitable at an early stage, you’ll need to maintain your cash flow. Some of the options include: Bank loans, including business loans for bad credit. Private investors. Crowdfunding from friends, family, and online supporters. SBA loans and business grants. While you may not need to access funding until some of the subsequent steps have been completed, it’s important to understand the situation in advance. #2. Become a Better Candle Maker For a candle business to thrive, it will rely heavily on repeat customers. Spoiler alert; they’ll only continue to buy your products if you provide quality. Before selling, it’s essential that you learn to create the best possible products. If you wouldn’t be happy buying the product yourself, it’s not ready for the market.  Research has shown that more than 10,000 scents are available in the US, while the vast majority of consumers state that fragrance is a very important factor in their selection. Some of the other key aspects to consider include: How long it burns for and whether that matches the stated duration. The price and the perceived value for money. How far the scent spreads across the room. The consistency of the candle and whether it stays in one piece. Practice makes perfect, which is why you should have fun with different scents. There’s nothing quite like unlocking a new winner, and even the losers will help you perfect the craft of actively making candles. You may also consider candle making classes before transforming the hobby into a commercial venture. #3. Research the Market Over one billion pounds of wax are used to create candles in the US each year. However, that doesn't mean all companies or consumers are the same. Even if you think you’re pretty good at making candles, you also need to understand the mechanics of the industry. Otherwise, you’ll be left with little more than an expensive hobby. When considering how to sell candles, you must first define your target market. Generally speaking, your products will fall into one of three categories: Mass-market products, which can range from tealights to budget-friendly candles like those often seen in big retail stores. Traditional scents feature heavily. Mid-market, which may include combinations of scents while also featuring a higher quality of packaging. In some cases, they’ll promote eco-friendly or vegan aspects. High-end, which are premium products that are likely to be found in boutiques or prestigious homewares stores. The brand and the scents are luxurious. The costs of making (and packaging) the candles will increase through the three markets. However, the selling prices will follow suit. You’ll need to weigh up the pros and cons of each, taking the local marketplace and any current gaps in the market into account. #4. Create Your Candle Business Plan Building a robust business plan is one of the most significant steps you’ll have to complete. This is true for every business ranging from food truck companies to candle companies. A business plan is a document that can help you when seeking funding. It also makes life a lot easier when it comes to hiring people.  Most importantly, it turns your initial ideas into a vision and strategy. The business plan should: Outline your objectives and goals. Determine the strategy needed to reach those targets and overcome challenges. Review the ideas to see whether they are viable to make a profit. List the resources and equipment required. Business plan templates are readily available. With a little research, you’ll find one that helps you consider the stages of how to start a candle business. If nothing else, the detailed plan gives a clear outline that you can follow with confidence. #5. Register Your Candle Business  When looking at how to sell candles, the great news is that you don’t require a license. This means that technically you could start making and selling your products immediately. If you’re only selling a handful over the course of a year, it’s more of a hobby. However, if you’re selling products with the aim of turning a profit, you’ll need to register the company. Most people starting a business entity will choose to be a sole proprietor at this stage. However, there are some factors to take into account at this stage. Your state may have local insurance demands for all SMBs. Securing your Employer Identification Number if you plan to hire workers. Using the National Candle Association cautionary fire safety label. Setting up a business bank account. Overall the legal requirements for selling homemade candles are fairly limited, especially when using non-hazardous wicks and waxes. In this case, you won’t even be required to list ingredients on the product packaging. #6. Build Your Brand  Building a brand that stands out from the crowd will be one of the most significant steps in getting your business started. Choosing candle company names is a great starting point; it’s something you probably would’ve considered during the business plan and registration elements.  Your brand will also need to encapsulate why and how you’re making candles, as well as who they are for. Some of the issues you’ll have to consider are: Which fragrances you’ll produce and whether they could be broken into categories like “natural scents” or “fruit scents.” The brand’s standing on social responsibility, because two-thirds of customers want to stand with companies that share their views. A brand story that people can relate to - your backstory is vital as a small startup that’s focused on DIY candles. Visual elements such as the logo, packaging color schemes, web store layout, and related elements that make your candles instantly recognizable. The biggest candle company is Yankee Candle. While you cannot copy or emulate this famous brand, you can certainly gain some ideas about how to tell a brand story and how to sell candles in a way that users know will improve their lives. #7. Work on Making Candles to Sell Even at the start of your journey, you would have naturally thought about how to make candles that sell. The scents and the general branding elements are crucial. However, there are over 400 well-known candle manufacturers in the US. To secure your place in the market, it will be necessary to ensure quality in every aspect of the venture. Some of the additional options you may wish to consider are: Making soy candles for profit. These are totally renewable and organic, and they also burn longer, which can appeal to eco-friendly users. A CAGR rate of 8.5% should not be overlooked either. Decorative candles. These can be created in a plethora of unique designs. While some users may burn them as usual, many will leave them as ornaments for the home. A wide range of shapes and colors can be created with care. Vegan candles. These are made without beeswax and use animal-free materials instead. The plant-based waxes are usually coupled with natural scents to fit in with the brand. It should be noted that you could look at tea lights or other alternatives. When you’ve selected the type and material you want to work with, you’ll find tutorials with ease. #8. Assemble a Winning Team or Network As the owner of a homemade candles business, you’d be forgiven for thinking that you need to go it alone, at least until you’ve built a larger following. In reality, you may still need to work with others, even if you don’t hire them directly. Candle making businesses aren’t just about crafting the candles and packaging them up nicely. You’ll also need to consider these people: Suppliers who provide the materials for creating candles, as well as the packaging materials. Branding experts and freelance marketers who can bring the business to life. Couriers or delivery services. Accountants or legal experts, particularly during the pre-launch phases. Furthermore, your network of other small businesses and other candle companies can be very useful. Whether you’re working together, trading skills, or sharing resources isn’t important; what matters is that you don’t have to face the world of business alone. #9. Market Your Candle Making Business When you first open your doors, it’s unlikely that you’ll need an advanced online store. In fact, you can run your candle business on Etsy, where the number of active buyers nearly doubled between 2019 and 2020 and continues to grow at a rapid rate. While they won’t all be in the market for candles, it is a great way to open yourself up to a huge online audience. Meanwhile, you’ll find that local sales can generate a lot of your business as a new candle seller. To make the most of this, you can; Use social media to the max by placing local ads and interacting with customers. Ask friends and family to spread the word - the power of recommendation is incredible. Attend local community and trade events. Ask to stock items in other local stores for a small fee. Introduce subscription boxes. If you’ve already worked on your brand and done some market research, you’ll have a good idea of how to get your products in front of the right people. Assuming that the pricing model and product quality are up to standard, you should see stunning results. #10. Grow The above candle business tips should help you prepare to open your doors with either one or a few scented candles. However, you can’t afford to rest on the laurels of your initial success. Growing the company is the only way to make it a permanent business venture. No two candle businesses will follow the same path. However, you could look at the following options: Creating new scents to increase your catalog. Trying different materials and wax types. Opening a brick-and-mortar store or a dedicated online store. Creating accessories and other items linked to candles.  It may also be possible to turn the company into a franchise. This will help the brand grow, and you’ll also take extra profits through commissions or franchising fees. It’s a long-term ambition but one that you should at least consider when starting your homemade candles business.  Further Reading Startup Failure Rate and and 80+ Startling Statistics About Startups The 45 Most Important Advertising Statistics Small Business Banking: Top Banks The Final Word By now you should feel quite confident about how to start a candle business in 2022. If you know your audience and can create products that smell and look the part, your hopes of success should be quite strong. Not least because a product that costs you $5 to make could easily sell for three or four times that value. Build a solid audience and there’s nothing to stop you from earning thousands of dollars in year one, followed by significant growth in the years to follow.
By Julija A. · February 28,2022

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