People are always looking for that new cool item. Often, they can’t find these unique goods in ordinary retail stores that carry everyday things. Instead, shoppers turn to places like consignment shops and thrift stores to browse the plethora of fascinating items.
If you are looking into how to start a consignment shop, keep reading. We’ll break down why these stores are successful and how you can get your business off the ground.
Have you always wanted to run a business? Maybe you enjoy sales but do not want to spend all day looking at the same items? Perhaps you want to work with people instead of large manufacturers and create a store that benefits the community.
In addition to the cases above, opening a consignment shop can help you accomplish your goal and have fun in the process. These stores are anything but ordinary, often featuring new inventories every week. Also, shoppers do not have to pay retail prices in most cases.
Consignment works on a simple model. An individual or small retailer provides your store with an item. Once the item sells, you keep a portion of the return and give the rest to the seller. In this model, both of you benefit from the sale, and you only pay if the item sells.
Many successful consignment shops also allow people to donate goods or sell items upfront. In these scenarios, you keep the entire return after the item sells and still help stimulate your local economy instead of paying large manufacturers for products.
Are you ready to make your business dream a reality? Get your store up and running by following this advice.
Before you make any moves, you need to understand the economic landscape of your area. Failing to do the proper research can result in wasted money and disappointment.
You should do some initial exploration to see if your business will even be sustainable in the market. This process does not have to be an extensive review or deep dive, but you should cover your bases before investing more time into the process.
To start, consider your interests.
Next, look to see what existing stores are in your area.
Lastly, look at the demand and demographics of where you’ll be selling.
After you determine the viability of your store, you need to create a formal business plan to outline how you will achieve your goals.
SmartAsset identifies the following as the ten elements of a solid business plan:
As stated in the business plan, you need to form a legal business entity. For many small consignment shops, this will come in these forms:
Next, you will want to register for taxes and any other licenses needed in your area.
Once your legal status is in order, don’t forget to open a business bank account!
Do you know how much it will cost to get your consignment shop ready for business? Many people underestimate startup costs and end up scrambling for funds shortly after opening.
To avoid any issues, create a detailed estimate of all expenses. Make sure to include even the smallest of costs such as internet connection, cleaning services, and power/water.
Next, determine how much you will need to borrow. For many individual owners, a small business loan may be the best option.
If you cannot qualify for a loan, you may need to bring on a partner or find private financing. Private loans will have different terms than bank financing, so be sure to do your due diligence before signing anything.
We all know location is the most important factor for many businesses. You need to find the ideal place that makes you accessible to the most customers but is affordable enough to stay profitable.
Some factors to consider include:
Depending on your model, you will have a few options for getting inventory.
Sometimes, people have valuable items but no way to sell them. They can sign a consignment agreement with your store to earn money without doing any heavy lifting.
Likewise, stores can sell on your shelves to liquidate inventory or assess market conditions. For example, an out-of-state retailer might see how well their products sell in your city to determine if there is demand.
In any event, it is important to make your shop known and to approach the right partners.
The layout of your consignment shop might seem minor, but it is very important. Not only do you want to maximise space, but you also want to make shopping easier.
If you want to fit the most items possible, use a grid layout. This floorplan will let you create aisles for customers to meander up and down while shopping. One downside, though, is that the grid makes shopping less of an experience and can make the store seem tight for space.
If you want to create an experience, use a free flow layout that has no uniform structure. Shoppers can bounce between display cases and wander through the open floorplan to browse different sections. This structure is better if you have fewer items, especially if they are unrelated to each other.
Click here to learn more about these designs, as well as others.
Since you will continually be bringing in new, unique inventory, you will need the right software and hardware to make management easy. Otherwise, you will need a large ledger to physically track all products.
It’s vital to choose the right point of sale system to keep your business running. Not only do these devices track all sales and process payments, but they also track inventory and can manage your books. With a modern POS system, you can focus on your customers and let the machine do most of the heavy lifting for you.
Likewise, you may need to invest in the following items:
Will you be an owner-operator, or will someone run the store for you? How many people will you need to ensure full coverage?
During the interview process, make sure to assess personality and helpfulness. Since you won’t know that much about each consignment item, you will need staff members who can answer unexpected questions and think of their feet. When a shopper asks about a product, you want someone who can pivot and still offer value to the customer.
Finally, start spreading the word throughout your community. Your marketing strategy should focus on your target demographic, but you also want to increase brand awareness in general.
For most consignment shops, these marketing channels will work best:
Opening a store is a large task, and you need every tool available to gain a competitive edge. Epos Now POS systems come fully-loaded with the tools and capabilities to keep your store running smoothly.
With Epos Now, you get: