The next steps to building a consignment business – Step 2

Ask the 3 W’s when building a consignment business

After you’ve developed a solid business plan (Starting a consignment business – Step 1), the next step is to look at the “Who, What and Where” factors. Who are your potential customers and consignors? Where can you realistically afford to open your shop? Is there a market for the type of merchandise you want to sell in that area? Check your competition. If there will be several consignment shops or a large well-known shop in your area, you need to find ways to make your store unique. Step 2 in building a consignment business is knowing what merchandise to sell in which location to your potential customers.

Building a consignment business that’s successful means finding your niche

The Who –

For the most part, consider your potential customers and consignors as those people living and working within a 10 to 15 mile radius of your shop. So many factors determine how far shoppers are willing to travel to make a purchase. Distance can be determined by everything from age of the shopper to the price of gas.

The rise in mobile shopping and e-commerce means consumers are far less likely to make a longer trip. People don’t want to travel long distances unless you offer merchandise they can’t get elsewhere. If you choose to go in that direction, know up front that your advertising costs to make your shop a destination location will take time and money. Also, look closely at the demographics of the surrounding neighborhood. This is another reason to check out your competition carefully.

The What –

You can’t be all things to all people. As a result, you need to decide what merchandise best suits your target. Even if you sell a wide variety of products, you should consider specializing in one or two areas. For example, a teen clothing shop could have the “largest selection of prom dresses in town.” If your neighborhood lacks a shop for the plus-size woman or furniture consignment, then specializing in those areas are a perfect niche even though you offer other products. If you clearly define your target audience and understand your competition, you’ll know what merchandise to offer. Refer to Starting a consignment business – Step 1 for more information on defining your shop’s purpose.

The Where –

You may have a great deal of knowledge about larger antique Eastlake furniture, but the only shop location you can afford is in a neighborhood with small apartments. Deciding the location of your shop is key. It truly is all about…location, location, location. You need to match your expertise with the location of the consumers you want to attract.  If the lease is more expensive, more than likely, you will be located in a high traffic area and have less need for major advertising expenses. If the cost of the lease is much less, you will most likely have to increase your advertising budget to compensate for the lack of traffic that passes your store.

Building a consignment business means staying on track

If you’ve been in the resale or consignment business for awhile now, you already know the importance of discovering the “Who, What and Where” factors. Even though you have an established location, it’s always important to continually review your surroundings. Communities change over time and shopper’s needs evolve as their life situations change. You have to listen to what customers want vs. what consignors offer. There are some wonderful resources in the resale community that can help. I suggest joining The National Association of Resale Professionals (NARTS). It is a wonderful organization to glean information and find mentors. There is a fee to become a member, but you’ll build relationships and gain support. In addition, many communities have local resale associations. If there isn’t one in your area, consider contacting other shops and creating one to mutually benefit each other through shared marketing and promotions.

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