How to Start a Consignment Stores Business in 2024
Last Updated: 12/17/2023
Starting a Consignment Store Business
Opening a consignment store can be such a fun way to start your own business! As a new small business owner myself, I want to share some tips I’ve learned for how to get a consignment store up and running.
Choosing a Business Structure
The first big step is deciding what legal structure you want for your business. Most consignment stores operate as sole proprietorships, partnerships or limited liability companies (LLCs). I went with an LLC for my store — it provides some legal protections without all the complexities of a corporation. Definitely talk to an attorney or accountant to pick the best option for you.
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Creating Your Business Plan
I know business plans can sound tedious, but having one is so important! It really forces you to think through all the key details — your goals, startup costs, location, displays, staffing, systems etc. Take your time on this step so you have a solid roadmap before diving in. Outline what % commission you’ll offer consignors, what categories of merchandise you’ll carry, your store layout, inventory system, and more.
Funding Your Dream
Most consignment stores can be started pretty affordably, but you still need some startup capital. Make a list of all your expected startup costs so you know how much funding you need. Your own savings, loans from family or friends, small business grants and loans are good options. Get creative with fundraising if needed!
Finding the Perfect Store Location
Choosing the right spot for your store is so critical. Look for areas with lots of foot traffic, visibility, access to parking, and space for great displays. Being near other consignment shops or boutiques can actually help, since it makes the whole area a destination for treasure hunters.
Designing Your Store Layout
Think through how to arrange your store in a logical flow. Have sections for clothing, accessories, shoes, jewelry, furniture, baby items, books and more. Make sure there’s space for intake, processing, and storage too. Allow room for checkout counters up front. Use lighting, displays and decor to create an inviting atmosphere.
Setting Up Your Inventory System
An organized inventory system is a must for keeping track of all the consigned items coming and going. Use tags and agreements to catalog each piece. Maintain detailed records in your point of sale or consignment software. Regularly audit your inventory to find missing or outdated items.
Spreading the Word
Start telling everyone you know about your fabulous new store! Create a website, run local ads, partner with other businesses for promotions. Host a big launch party or grand opening event to create a splash. Offer special discounts for first-time consignors. Word of mouth and great customer service are so important for growing your reputation.
Providing Excellent Service
The key is making the consignment experience fun and easy for both consignors and shoppers. Greet everyone warmly. Answer questions. Assist with trying on items. Process sales and new consignments quickly. Keep displays fresh and floors neat. Follow up with consignors about returns. Stellar service brings customers back again and again.
Adjusting and Growing Over Time
Check in regularly on what’s working well and what could improve. Tweak your product mix based on sales trends. Use slower seasons to take inventory and run promotions. Consider expanding to a second location once your first store is thriving. It takes dedication, but starting a consignment business is so rewarding. I wish you the best of luck pursuing your dream! Let me know if you have any other questions.
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Consignment Stores Financial Forecasts
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Revenue Forecast
Frequently Asked Questions
What are the most popular items sold at consignment shops?
Clothing, shoes, accessories, furniture, home decor, and children’s items are generally top-selling categories at consignment shops. Shoppers love finding quality secondhand fashions and home goods at bargain prices.
What percentage does the consignment shop take from sales?
The typical consignment shop commission ranges from 40–60% of the item’s selling price. Some stores use a sliding commission scale based on the item’s price. others offer better rates for frequent consignors. The percentage should be clearly outlined in your consignment agreements.
How long do items usually stay on the sales floor?
Sixty to ninety days is standard for keeping consigned merchandise on display. If items haven’t sold in that timeframe, most stores return them to the consignors. You want to keep your inventory fresh and rotating.
What happens to unsold items?
Any pieces left unsold after the consignment term ends get returned to the original owner. Some stores donate unsold items if the consignor authorizes this. It’s a good idea to have a donation partner in place.
How do I attract quality consignors and merchandise?
Offer great customer service, fair commission rates and quick payment when items sell. Be selective about the items you accept to maintain high quality. Promote to local parents, boutique owners, and collectors who are downsizing or refreshing their wardrobes and homes.
How do I price the consigned items?
Check comparable resale sites and stores to price items competitively while leaving room for profit on your end. Consider the brand, condition, desirability, original price and how long until the season ends. Price items higher than yard sale prices but lower than boutique retail.
What are the keys to merchandising?
Display items nicely on racks, shelves and furniture settings. Group by categories, sizes and colors. Use mannequins for statement fashions. Refresh displays often. Keep the sales floor looking clean and inviting. Stage vignettes around themes to spur impulse purchases.
How much does it cost to start a consignment business?
Startup costs typically range from $10,000 to $100,000. Key expenses are first and last month’s rent, leasehold improvements, POS system, starting inventory, legal fees, permits, marketing and initial hiring. Have several months of operating capital on hand as cash reserves.
What are the profits like for consignment stores?
Successful consignment shops can generate over $300,000 in annual sales. After covering expenses, profit margins are around 25–35% on average. Location, business relationships and effective merchandising greatly impact your net earnings.
