Running a consignment shop is hard work, but it’s also a fun, environmentally-friendly, consistently-interesting pursuit. It can also make you good money. In this article we’ll share 5 tips on how to run a consignment shop. This career requires in-depth research, attention to detail, and as much tenacity as you can muster.
Learning how to run a consignment shop: From the beginning
This article isn’t entitled, “how to start a consignment shop,” but the most important steps for future success are taken before the store even opens. We’re talking about:
Picking a location: As in all retail, location is what makes or breaks a consignment shop. Though consignment shops sell all sorts of things, it’s better at the beginning to choose a location with a specific type of product in mind (like clothes), making sure there’s enough foot traffic and people in your target demographic to ensure a steady stream of revenue for that project. Once you have that, you can begin to branch out.
Creating a business plan: First-time entrepreneurs may be tempted to fly by the seat of their pants, but a 5-year plan is essential for staying on course (not to mention essential for securing funding). A good business plan should include consignment rate (the amount you take from every sale), financial plan, management plan, and marketing plan for 5 years. Most consignment stores have a consignment rate of 30-60 percent. The lower your rate, the more likely you are to attract customers.
Stock your store: Consignment stores need initial merchandise to succeed. You can buy goods (perhaps on this very site) or use your own products and what you can scrounge from friends and family.
Obviously, this isn’t everything that must be done to get a consignment store off the ground, but we’re omitting steps like securing a business license and taking out loans, because they are the about the same for any store.
Once you’re through the planning phase, it’s time to run your shop! Here are some tips for making your storefront a bustling success.
Presentation is important: We all know not to dump our products in a heap, but displaying items so that they’ll sell does take finesse. Try to find ways to decorate that showcase each product and lend a unique atmosphere to your store. Artfulness is key.
Invest in bookkeeping software: Consignment is complicated stuff. It doesn’t take a math whiz or a rocket science, just someone who consistently keeps track of their inventory, their agreements, sales, dates, returns, and so on. Running a large consignment store with pen and paper may be too difficult - especially as you start to grow - so look for software instead. Once you have a bookkeeping system established, it will be helpful to look at your monthly and quarterly reports carefully. Sometimes you can get buried in the weeds and forget to look at the big picture. You can be really busy and still be losing money, for example.
Pay attention to trends: A sale isn’t just a sale. It’s a data point, also. It’s a chance to figure out what people are buying and what people are selling. Use your bookkeeping system to keep track of this information, and adjust your marketing and sales accordingly.
Try selling online: You don’t just have to sell items in person. There are a number of sites you can use, including Overstock Pipeline! This is a great way to move products faster. Always let sellers know that you may try to move their products online. They’ll trust you better if they are aware of your specific practices.
Beyond this, it’s a matter of making good decisions about buying and offering friendly customer service. As this article humorously points out, not everything sellers bring to you will be worth taking. Best to pick your battles.
Thanks to the Internet, it’s easier than ever to find goods, and to find buyers for those goods. Like every other form of retail, the consignment store is undergoing an evolution. There’s never been a better time to start selling second hand goods than today.