Consignment stores sell goods for consignors who pay a fee to the shop owner. In 2014, Goodwill Industries generated $5.37 billion from its 2,000 stores. Consignment stores may sell specific items or everything from furniture to clothing.
To successfully start and manage a consignment shop, you need retail knowledge and adequate funding. Revenue varies greatly and depends on many factors.
You bring items to consignment shops to sell them, doing a 50-50 split on proceeds. Consigning is selling through a third party that takes a commission. Benefits include extra cash, easy decluttering, and effortless inventory management. You get paid only when your item sells.
In 2018, the U.S. resale and consignment industry generated $17 billion. Profit depends on sales revenue minus expenses. Sellers may concede 25-60% of the price in fees. If no sale is made in the period, goods return to the owner.
Consider rent, overhead, demographics, work habits and traffic patterns before choosing an area for a shop. Well-run online shops in high-traffic areas can be quite profitable. According to Bankrate.com, they usually sell items for a third of retail price, keeping 60% profit and giving 40% to the original owner.
Starting costs for an online shop are about $2,500, whereas a brick-and-mortar shop costs about $13,000. The average owner salary is $42,000 but varies by location and management. In online shops, you can encourage impulse buys by altering price, placement, packaging, and promotion. There is unlimited income potential and no cap.
It takes time to sell at consignment shops, providing profits in the long run, not enabling quick money. Policies should be considered before selling on platforms like ThredUp and The RealReal.
To price resale items, sell near-new at 50% of retail, slightly used at 30%, and well-worn at 10%. Popular items tend to sell fast. Display goods neatly and enable easy online viewing to turn high traffic into sales.
With passion and retail experience, consignment stores are an appealing small business opportunity. The keys are converting traffic, achieving quick inventory turnover, obtaining quality consignments, and controlling expenses. With sufficient revenue and margins, income can rival other resale models.