There are profits to gain from running a consignment shop. People purchase at this type of stores in order to get discounted items of designer brands, furniture, toys and other used merchandise. The operator can enter earn in many ways due to the number of consignors recruited for the shop.
Guide on How to Start a Consignment Shop
- Do a full research on the market to find more helpful tips to start a consignment business.
- It is important to understand the resale value of the products to know what type of specialty to pursue like antiques, furniture or designer bags.
- Find a suitable location for the shop. Consider rental costs and visibility of the store toward the target market. Start with an inexpensive business space so as the store gains a solid customer base, move to a better location.
- Aside from sourcing the products to sell in the shop, the owner must take into account all the other items needed including display racks, signages, computer, cash register, mannequins and hangers for clothes.
- In following the steps to start your own consignment store, approach owners of thrift shops and find out if they are interested in consigning some of their items for a good deal. Likewise, advertise to friends and neighbors first as a test market.
- Arrange an agreement with consignors on the terms and condition of sale, percentage of shared profit and mode of payment, which are all emphasized on the contract signed between the consignee and consignor.
- Obtain the required business permits and licenses before operating the business. Make sure the paperwork for the taxes, property and insurance are completed.
Tips on Developing the Consignment Business
- If the guidelines on how to start a consignment business has been followed down to the last detail, create winning sales strategies to improve the store.
- Check the consigned items properly to ensure that they are in mint condition.
- Offer a discount within 30% to 40% less than the original retail price to earn profits. Increase the markdown only when the item has been sitting idle for months.