How to Start a Successful Consignment Store

You are going to learn a lot of little known tricks of the consignment trade here. Consigning basically means that you sell another persons item and that person receives a percentage of the sale. You get to keep the rest (balance).

Owning a consignment shop or pre-owned, second hand store is a quick, easy, fun way to make good money, consistently, without much outlay of cash in the beginning. With no upfront overhead, you are getting your inventory or merchandise for FREE.

By following a few basic rules you can do very well. I was making money within the first weeks of opening.

OWNER (thats YOU) doesn't put out hardly any money, other than a few start up costs. (first/last rent, display units, ads, signage) You can start by selling your own merchandise. You can set your own hours, days, vacation schedule. You can go on vacation for however long you want. You can open a store anywhere. You can have first dibs on really cool stuff. You'd be amazed at the things people get rid of. You can run it by yourself- no need for unreliable employees. You dont' have to do much advertising, much of your business will be word of mouth. Everyone loves to make easy money. Word WILL spread fast.

SELLER (consignor) makes money, ALOT of money in some cases, and it is free for them to consign. i had consignors making upwards of $300 a month and more (for doing absolutely nothing), and i had a very basic, SMALL scale operation. Who doesn't want to make a little extra cash these days? All they have to do is bring you the inventory and the rest is up to you. All they had to do was bag up a few unwanted things, drive to my shop, drop off their merchandise and leave.

BUYER makes out, as prices are far cheaper than retail. If you keep your prices low and reasonable, you will have happy, repeat customers, time and time again. You will make more sales, and more money in the long run. Don't be greedy. People will appreciate that and will want to support you. They want to see you succeed ! They want inexpensive options. Like anything, you'll get out of it what you put in. A great attitude and a smile for everyone that walks through the door will gain you everything.

CONSIGNMENTS 101 -- Heres the 6 basics you'll need to get started!!

CASH BOX. cash register not necessary. I find them bulky, hard to use, hard to configure. You can always add one later if you need to. A basic metal cash box with a handle is all i ever used. it has a removable tray and sections for coins. The added bonus is you can easily take your money home with you at night.

GLASS DISPLAY CASE. at least one to display anything expensive. Mine was 7 feet long and I added shelving for more display area. Within my display case, I put cameras, telephones, Ipods, electronics, collectibles, and expensive jewelry.

DISPLAY TABLES. as many as you can find. Round, square, card tables, picnic tables, etc. You will find that you'll use your consignors furniture to display items for sale on, as well. You can use ANY table (dumpster diving helped me in this arena) and i lovingly covered the free find in a pretty fabric or tablecloth to hide imperfections.

SALES/RECEIPT BOOKS. Office Depot. Simple. Any kind. CHEAP. buy in bulk, you'll go thru alot!

PRICE TAGS. these can be anything from rectangle hang tags to sticky round neon colored tags.

MERCHANDISE. in my case, to start with, I inherited some of my merchandise from the prior owner, but i also brought things in that i had lying around my house, that i wanted rid of. People are always glad to get rid of things that they are tired of. (especially when they can make cash with no work on their part) Once you're up and running, you will NEVER want for things to sell. You will have more that you can imagine. More than you can handle at times! Peope can and really do want to dump their unwanted goods at a convenient location.

Thats really it! As you get more involved, you will certainly want to add more things. You'll find good uses for things like WICKER BASKETS, CONTAINERS, FLOOR/WALL SHELVING, FILE CABINETS, COMPUTER, etc.

LOCATION LOCATION LOCATION

You can run a pre-owned or consignment business anywhere. If you have a free space, use it. It can be run from a garage, a church basement, a room in your house, an empty retail building or a space in a strip mall. Your chosen space should be well lit and attractive. It should be organized, tidy and clean. Section it off into "areas" ...an area for clothing, area for tools, area for books, etc. HAVE A LARGE MIRROR hanging on the wall and a bathroom or private area for trying on clothes.

PRESENTATION IS EVERYTHING!

One of the most important selling tools is creating an "ambience or atmosphere" that shows your merchandise to its fullest potential. Create soft lighting in some areas. My shop was more like a parisian "boutique". I made it that way by adding ambient lighting, fluffy overstuffed furniture and soft colors. i never had an overhead light on. i used alot of lamps. (With energy saving bulbs of course) Make your customers feel like they are shopping in an expensive department store!! By making your store look great, your merchandise will look nicer, resulting in better sales.

Arrange your merchandise in well defined, clearly organized spaces. Hang as much up in the wall as possible, utilize that space too! i hung up jewelry, hangbags, clothes, pictures, lot of things. Tools and electronics were on the opposite side of the store from the clothing/shoes/purses/accessories. i had a clearly marked "MENS" section and a clearly defined "WOMENS" area. (for clothing) . Make it understandable for customers. You are not running a yard sale.

Your customers will get very bored by seeing the same old stuff every time. You must keep stock rotating all the time. This keeps customers always curious to see what new items you have and will keep them coming back time and time again. Change your display up from time to time too. Moving merchandise around every once in a while will make it seem as if you have all new inventory. Your customers will LOVE that.

WHAT ARE THE HOT, TOP SELLING ITEMS?

In todays economy people want value and the best bang for their buck. They want functionality. They want things that will make their life easier. Here are the items that sold the best in my shop:

Electronics
Kitchen Gadgets and Appliances (blenders, toasters, microwaves, etc)
Bedding, Curtains, Linens, Tablecloths, Rugs, Window Coverings
Toys
Tools
Furniture

Furniture is probably your easist sell and will earn you the most cash. I always got rid of every furniture item within 1 or 2 days. Remember you have the right to refuse any item you think will not sell. For electronics, make sure each item you take in is in working order AND have the consignor show you it works. I CANNOT EMPHASIZE this enough. The last thing you want to deal with is returns. Have a store credit only policy on returns please. Returns are a bookkeeping nightmare. And only accept returns for credit on non-working electronics. Besides electronics, ALL SALES FINAL. On some electronics, there is no way for you to know if it works or not, for example, a computer router or a satelite dish.

You must cater to your buyers. For instance, If you live in an area with mostly older people, do NOT carry antiques or little knick knacks. They do not want that kind of stuff. Clothes are a great seller too, but for me, too much work to keep track of. Again, only carry clothing styles that suit your demographics.

INTAKE 101 - here is the way it will work when a consignor drops off merchandise:

1. They will bring in the merchandise. Its always best to arrange an appointment, other wise you will have people waiting in line to drop things off or you will have buyers waiting impatiently to pay)
2. You and the consignor go thru each item to see if its sellable. Reject whatever is not.
3. Write each item down in a book with the consignors name and their consignor number.
4. Agree on a price & have consignor label their own item. Make sure they write legibly on the price tag so you can read the price tag later. Some people have horrible penmanship. This saves you time and hassle. Use a hang tag for clothes or linens because the sticky tags fall off. Sticky tags also do not stick well to fabric items such as pillows. The worst thing to have happen is not knowing who the item belongs to or its price, when a buyer comes to pay!
5. The price tag will show the consignors THREE initials, price and date on it.
6. Set it out for display. Youre done!

OUTAKE 101 - heres how the merchadise will stay and leave your store:

Consignors MUST agree to either come pick up their items after a certain time period. If they do not, make sure they understand it will be donated to a good cause. You will set a time limit, i usually kept items for about 2 months before i returned or donated it. The consignor is responsible for picking up their non-selling items. if they do not, off it goes to Goodwill. (or you keep it if its something you like!)

You can also mark the item down 25 or 50% after 8 weeks or 90 days, if it has not sold. Keep reducing until it sells. At some point you can make a FREE box. This would consist of merchandise that has not sold and you know the consignor does not care to have it back. This is a great incentive for bringing in repeat customers. Free is everyones favorite word these days.

If the free box is not helpful in getting rid of merchandise, take it to donation or give it back. You should not have had that item in your store in the first place, but it is a learning process in the beginning. There is a definite learning curve in this business.

MAKING A SALE: what to do when a customer buys an item:

in a little receipt book, when you are selling an item, you will write down the following:
DATE, ITEM THAT SOLD, PRICE, CONSIGNORS INITIALS. (date you will write at the top of the page)
Carefully describe the item, for IE write "blue and white bath towel"
So heres how the line on the receipt book will look... "blue/white bath towel" then "3.99", and last "LSB"
ALWAYS use the 3 initials of the consignors name. I had 4 Lindas consigning things in my shop!! and two had last names that began with "B" !!
The date will appear at the top of the page. Important to keep the pages dated so you know when the item sold.

Sometimes a price tag will go missing. this happens when it falls off due to customer handling. This is why it is imperative you write each item down and be VERY very specific when you write the item down in the book under the consignors name. You might get 20 white t-shirts in. how do you specify which belongs to who? This is how i wrote it down in the book: "red white and blue Abercrombie long sleeve t-shirt", sometimes with the size. This way if the item comes up to the register, with no price tag, you can always go back and see who it belonged to!
This is also why (in this case) it is imperative you write a detailed description of the item in the receipt book as the customer pays. Do not ever falter in this process, because your consignor is counting on you to deliver.

if the item has no price tag, you must instantly make up the price, at customer checkout. Try to remember what you and the consignor agreed upon.

Sometimes customers will want to haggle prices. Do not make this a habit because before you know it, everyone, all the time, will be asking to lower prices. You can't have that. The price is the price. Your consignor is counting on you to deliver at the agreed upon price.

PAYOUTS - a general overview of how to pay your consignors:

Once a month, at the end of the month, typically the last business day of the month; you will give your consignor their share of their sales. Usually this is a percentage. Mine happened to be 70%. That is pretty low. i beleive most shops do a 40 or 50% commision. I KEPT 30% ON EACH SALE. I wanted to have happy consignors who would keep bringing me more merchandise. Volume is key. if you keep too much profit for yourself, you might not get the same amount of inventory.

The night before payout day, i sat down and tallied everyone sales and set their 70% aside in an envelope with their name on it. On the envelope, i would write down each sold item and the sale price. Then a final total at the bottom. This way your consignor knows what they sold and there is never a question. Keeping immaculate records of each sale, by writing the sale down in a receipt book, is so crucial for this reason.

On payout day, as you hand out the money, have each consignor sign for their earnings. This way there is no question. Alot of times you will hear, "did you pay me for January?" Sometimes consignors will not pick up their earnings for a long time. In this case you set a time limit for picking up pay. You cannot be responsible for others peoples money, what if there is a break-in? Set a 2 week time limit and stick to it. If they don't come in to pick up their pay, make sure they know they will forfeit their pay and it will also be donated to a good cause.

LIABILITIES - Make it a point to tell your consignors (and include this on their contract) that you are not responsible for any in-store or off hours theft. You simply cannot be responsible for so many personal pieces of property. You also cannot be responsible for breakage. I once had a customer break a glass bowl. He did not offer to pay for it. Make this part of the customer contract.

YOU MIGHT THINK ABOUT MAKING A RULES CHART TO HANG PROMINENTLY ON THE WALL. ALSO HAVE YOUR CONSIGNORS SIGN A CONTRACT OUTLINING ALL THE RULES WHEN THEY BRING IN THEIR FIRST ITEMS.

CHECK OUT THESE CONSIGNMENT SHOPS BELOW !!

weeonesreruns.net
www,britchesandlace.com
craveconsignmentshop.com

heres a great place to find FREE consignment shop software:
www.bestconsignmentshopsoftware.com

A Complete Candid Guide on How to Open a Consignment Store:
consignment-shop-store.com

I believe i have covered the basics of starting and running a successful pre-owned, resale or consigment shop business. There is of course more to it than what I have written here. Most of it though you will learn as you go! Trial and error is the best teacher. Remember, a great attitude and a smile for everyone will gain you everything. Best of luck!