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Boost Ancillary Revenue With Physical Goods

Growing your revenue is every business owner’s goal, but as a tour or activity provider, you may be struggling to come up with ways to increase revenues without cutting corners. After all, adding inventory can require hiring more guides or instructors, leasing more vehicles, or stretching yourself even thinner as you struggle to manage too many roles on your own.

That’s where ancillary revenue comes into play.

Airlines have long since cornered the market on the term “ancillary revenue,” but the concept applies just as well to most other industries — including tours and activities. It refers to any source of income beyond your main product. Airlines use it to refer to non-ticket revenues, like baggage fees. Here, it would be non-booking revenues.

If you charge for any booking add-ons, transportation, meals, or other products outside your main offering, you’re off to a great start. But could you be doing more? Take a look at Disney Parks and Resorts. According to research by IdeaWorks, that part of Disney’s business pulls in 49 percent of its revenue from ancillary sources. That’s parking, lodging, dining, VIP experiences — and souvenirs. Merchandise is a huge part of the Disney experience.

We can’t all be Disney, admittedly. In brand recognition alone, it’s sitting on almost a century of hard work and growth. But there’s a world of opportunity for more reasonable gains in ancillary revenue awaiting companies that are willing to take on the risk of expanding their reach. Selling your own merchandise could be an excellent start.

Getting into retail merchandise sales can be intimidating, but it can also be rewarding. Physical goods often have high profit margins. You can also take a fairly low-risk approach, particularly now that so many companies are willing to produce high-quality custom merchandise in small batches for reasonable prices.

As with any expansion, you need to go in prepared. Consider your demographics. Select a merchandise mix that both suits your guests and complements your brand. And take it slow — there’s no need to fill your office with boxes of t-shirts in every possible size and color before you know what will sell.

You may even want to think beyond the t-shirt. Get inspired with our list of creative merchandise ideas.

Rezgo makes it easy to sell your own physical goods with a comprehensive product system integrated into your booking software. You can track inventory, SKUs and price points, manage stock orders and sell your products directly through the Rezgo point of sale. You can also track inventory for products you plan to give away — no need to learn a whole new system.

With that out of the way, you can focus on doing what’s right for your business. There are several questions you should ask yourself before diving into the world of physical goods.

Is merchandise a good fit? Is your company capable of storing and distributing products? Do you have the capital required to order some initial stock?

Is your brand going to sell? If you’re going to start a logo line, have you consulted with a designer? Do you have a design that’s ready to sell, and that people will want to buy? Has anyone asked about buying products with your logo?

How will you market your products? Do you have an online following? Are there influencers you can tap to show off your merchandise on their feeds? Can you handle the logistics of giveaways?

Will it overwhelm your business or your staff? Your primary concern will continue to be your tours or activities, so are you in a position to sell physical goods on the side? Or will your sales team find it difficult to manage both?

In the best of circumstances, your physical products and your regular inventory will enjoy a synergetic relationship. Customers will boost your brand by wearing your gear, and that will, in turn, help you market your tours or activities. But even if it just brings in some additional revenue every quarter, a product line could be a great addition to your business.

Written by

Nissa Campbell is a writer who covers tourism and technology. Since 2014, she has been documenting booking software at Rezgo, and working with tour operators at all levels of the industry to help them find solutions to their technical needs.

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