Planning and Setup
Start a consignment shop by making a plan that outlines your goals, strategy, and projections. Research the market to understand your customers, competition, and trends, and tailor your approach accordingly. Choose your shop type based on your interests and product demand. Then find an optimal site, prioritizing foot traffic and access, as location impacts success.
Price consigned items at 25-40% of the original cost, while considering factors such as brand, condition, and margin. Ensure prices are comfortable for customers. Additionally, open a thrift store by planning your concept, forming a legal entity, obtaining the necessary licenses and permits, securing financing, leasing retail space, hiring staff, and marketing your business.
Profitability and Pricing
How Profitable Are Consignment Stores?
A consignment store’s revenue varies greatly and profit depends on sales revenue minus expenses. Consignors may concede 25-60% of the selling price in fees to the store.
- Price items at 25-40% of original cost, factoring in brand and condition.
- Sell near-new items at 50% of retail, slightly used at 30%, and well-worn at 10%.
- Take up to 60% of the selling price for consigned items as per the agreement.
What Percentage Do Most Consignment Shops Take?
Consigning typically involves a 50-50 split on proceeds between the consignor and the shop. Benefits include earning extra cash and managing inventory effortlessly. In 2018, the resale and consignment industry generated $17 billion in the U.S.
Operational Tips
- Choose shop locations based on demand for your goods and ensure that the items are displayed neatly, as quality display conveys value.
- Consider demographics and traffic patterns before choosing an area for your brick-and-mortar store.
- Online consignment shops can encourage impulse buys by adjusting price and promotions. The setup cost for an online shop is about $2,500, while a brick-and-mortar establishment costs roughly $13,000.
Summary
Starting and managing a successful consignment shop requires retail knowledge, funding, and dedication. The key aspects to focus on are converting traffic into sales, achieving high inventory turnover, obtaining quality consignments, and controlling expenses. With the right approach, the income from a consignment store can rival that of other business models.