5 steps to a successful consignment business
May 9, 2014
Want a successful consignment business? Start here
1.) Develop a business plan
A successful consignment business begins with a solid business plan. Your business plan outlines your overall vision. The time you invest in creating this document will save you money and keep you on track for the long haul. According to Entrepreneur.com, a consignment clothing store requires $3,000 – $10,000 to launch. Plus, it takes at least two years to work out all the kinks. Carefully consider your business structure, consignment policies and your goals for the future. To learn more about financing, read Build a Strong Consignment Business – Step 1.
2.) Research the neighborhood
Remember, it truly is all about location. Become very familiar with the neighborhood you’re considering. Visit the local city hall and get as much information as you can regarding income, age, marital status, etc. Make sure there’s a market for your type of store in the area. If you aren’t comfortable talking to a direct competitor, at least browse their store and marketing materials. Then, contact similar businesses in other cities or states. When the market is over-saturated or a large, well-known shop will be in direct competition, brainstorm ways to make your store unique. Find your shop’s niche, by reading Build a Strong Consignment Business – Step 2.
3.) Acquire an outstanding inventory
To become a successful consignment business, you need to attract consignors with quality merchandise. Don’t open the doors before the shelves are full. Shoppers will hesitate to come back. However, if you overload your shelves with inventory your market isn’t interested in, they won’t return either. By knowing your neighborhood and its demographics, you’ll know what merchandise to offer. Advertise for consignors in your local newspaper. You can also do website searches. Plus, scour yard sales, auctions, estate sales, business liquidations and thrift shops for good deals. Learn to bargain and negotiate. These skills will be needed when interacting with consignors. Read Tweaking Your Consignment Acceptance Policy and Inventory Management: Because You’re Running a Business, Not a Museum to learn more about your inventory.
4.) Design an attractive store
Shoppers form first and lasting impressions of your consignment shop based on the atmosphere and layout of your store. No matter how well-stocked the store is, if it isn’t clean, bright, organized and attractive, customers will find another place to shop.Visit your favorite retailers and see how their merchandise is laid out. Must-have seasonal items are placed in the front of the store. Sale items and everyday products are in the back. Smaller items that cost less than $10 are displayed next to the register. These impulse purchases can add up to significant sales each month. It’s also important to vary how you display your items. Changing up the same merchandise makes it feel new and different. For more merchandising tips, read 6 Tips to Improve Store Design.
It’s crucial to reach out to the community for support. Team up with other businesses in your neighborhood to offer cross-promotional services and discounts. Dry cleaners or tailors offer excellent cross-promotional opportunities for a clothing store. An aspiring jeweler could sell original accessories that complement a formal wear shop. Or, you could cross promote with a hair and nail salon. A children’s consignment store should partner with a local photographer for a customer appreciation sale. A furniture shop always benefits by having a solid relationship with a moving company. To learn more about partnering with other shops in your community, read Pros and Cons of Teaming Up with Other Resale Shops.
Think outside the resale box
To become a truly successful consignment business, look for every available opportunity to build your vision. Join organizations such as the National Association of Resale Professionals (NARTS). Get involved with your local Chamber of Commerce. Find ways such as Shop Small Saturday to encourage your community to shop local. Do your homework and you will be successful.
I have been a writer for various forms of marketing for over 40 years. I've written my share of radio and TV scripts, magazine and newspaper ads as well as direct mail brochures and newsletters. Currently, as the Marketing Director for Traxia, home of SimpleConsign software, I've moved into blog posts, eBooks and website text. It's been an ever changing and ever challenging journey but I've loved it all along the way.
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