Business Overview

A consignment store sells goods for consignors – people who pay a fee to a store owner to sell their goods. Consignment stores may have niche items or may contain everything from kitchenware to clothing. Though starting a consignment store may sound easy, it takes a great deal of knowledge and money to start such a business. Creating a business plan before diving into starting a consignment shop will help ensure that you stick to guidelines and budgets in order to minimize the riskiness of your new business venture. It is important to know where you will be getting your inventory from. Unlike a regular retail store, you will not be able to get your inventory from popular retail suppliers. Your inventory will be coming from individuals who are trying to sell your products. Before agreeing to stock a certain item, you must be sure that you are likely to be able to sell the item for a large enough profit. Being able to negotiate favorable terms with consignors is an essential skill to have.

Who is this business right for?

A consignment store owner needs to know his or her limitations and must also do well with dealing with people. It is essential that you are able to negotiate business terms, as you will be working with consignors in addition to your customers. If you are not able to negotiate terms with consignors that will allow you to make a large profit off of selling their items, then you will not be able to cover your operating costs or make a profit.

What happens during a typical day at a consignment store?

The owner of a consignment store has several duties to do, some every day and some a few times a week, including:

  • Cleaning the store
  • Straightening out inventory
  • Marketing the store via mail, e-mail, social media and other outlets
  • Locating new consignors
  • Customer service
  • Paying bills
  • Ordering office supplies, bags and other inventory needed to conduct business
  • Closing out sales
  • Notifying current consignors of sales and the need for new product
  • Paying consignors

What is the target market?

A consignment store has two types of clients: consignors and buyers. Consignors are usually those who want to sell items they no longer need. Buyers are those looking for a deal on an item that might be out of their reach if they were to buy it new.

How does a consignment store make money?

A consignment store makes money by selling consignor's goods. The store may charge an upfront fee to show items, take a fixed percentage of each sale, or it may do both.

What is the growth potential for a consignment store?

In the ideal location, a consignment store could show extensive growth as long as the city has many people who want to put their items on consignment and you have buyers that are willing to purchase those items. In certain areas, clothing may sell better than furniture, while in other areas, you may do well with non-clothing items, such as furniture and other home and garden items.