How to Open a Consignment Shop

Business Overview:

If you are looking for a business idea that is easy to start, profitable, and green, you must learn more about how to open a consignment shop. Opening a consignment shop can be exciting and fairly easy. What you need to start, aside from the usual business license, permit, and insurance, is a good storefront location. Once you’ve gotten this far, a catchy name and a supply of the type of inventory you are interested in selling will get you on your way to starting a consignment shop that is fun and profitable. The inventory you’ll need to start a consignment store comes from individuals who want to sell their gently used goods but who want a reputable store to help them sell their items. This can be a real win-win situation in that you get your shop’s inventory for free (on promise) and the client has an opportunity to sell their treasures for a solid profit without any of the work. Plus, you can decide precisely which items you want to stock for sale and which ones you want to pass on. While you might initially think of a consignment shop as a place to sell used clothing, there are so many more options. You might choose to sell home goods or baby gear, or perhaps your store is chockablock with decorative treasures for the home that you adore. You could even focus on more practical household items such as dishes and pictures to help the first time homeowner. In this business model, the world is yours. After you and the client have signed off on a consignment policy outlining all the details of your business transaction, you put the items up for sale in your store. When the item sells, you contact your client (usually on a monthly basis) and they receive the percentage of the profits that they agreed upon in the consignment policy. When you’ve figured out how to start a consignment shop that fits your entrepreneurial desires, you can rest on your laurels knowing that you’re doing your part to reduce, reuse, and recycle while you and your clients profit.

A Day in the Life of a Consignment Shop Business Owner:

Once your shop is ready for business, a typical day will start with a review of your inventory. This is crucial since you will not only be looking to profit on your stock, you will also be beholden to your clients and so you’ll need to ensure that you are super organized when it comes to inventory. Next, you will want to see that your salable stock is in pristine condition and that your store looks as good as a retail store with brand-new items for sale. The goal here is to eradicate any feelings a potential customer might have that things in your store are “used” and therefore sub-par. You will also want to decide how you’ll accept items on consignment. Perhaps you allot certain days for drop-offs or maybe you schedule one-on-one meetings with your clients to review their goods. Regardless, getting your hands on the next wave of inventory will always be on your mind. Finally, reviewing your finances and ensuring that you and your clients are profiting well from your sales will keep your business afloat and a smile on your face.

About Your Customers:

In this business, you will have customers and you will have clients. Your customers will be browsers and shoppers who are looking for gently used treasures for a good deal less than they were originally priced. Your clients will be those savvy individuals who brought items in on consignment for you to sell on their behalf. They will be looking forward to earning money on something they no longer use without having to do any of the work in selling it.

What You Need to Start:

• A storefront location
• Business license, permit, and insurance
• Inventory on consignment
• Detailed consignment contracts and legal paperwork, plus a customer return policy
• Employees, if you desire
• Inventory-tracking software
• Financial-tracking software

The Good:

• You can start this business with a reasonable investment—about $10,000 USD.
• Your inventory is populated for free.
• You will be helping the environment in the sense that your store naturally encourages people to reuse items instead of buying them new.
• You will be helping your clients earn money from their unwanted goods.
• You can include employees to help run your shop, thereby providing a good local small business.

The Bad:

• The startup, though reasonable, is still enough that you should be quite serious about your interest in a business like this before you jump in.
• It takes a bit more work to make your shop enticing since your items are used—you’ll want to make sure everything you sell is sparkling clean.

Resources:

• Association of Resale Professionals
• American Apparel and Footwear Association
• Bureau of Labor Statistics on Clothing, Accessory and General Merchandise Stores
• Wikipedia on Consignment

About The Author

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