Consignment Shop Business Plan Template
Written by Dave Lavinsky
Consignment Shop Business Plan
Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their consignment shop companies. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a consignment shop business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your consignment shop as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a consignment shop or grow your existing consignment shop, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your consignment shop to improve your chances of success. Your consignment shop business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Consignment Shop Businesses
With regards to funding, the main sources of funding for a consignment shop are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for consignment shops.
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How to write a business plan for a consignment shop business.
If you want to start a consignment shop or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your consignment shop business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of consignment shop you are running and the status. For example, are you a startup, do you have a consignment shop that you would like to grow, or are you operating a chain of consignment shops?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overv iew of the consignment shop industry.
- Discuss the type of consignment shop you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
In your company overview, you will detail the type of consignment shop you are operating.
For example, you m ight specialize in one of the following types of consignment shops:
- Clothing : this type of consignment store primarily focuses on new or used clothing but some also sell jewelry, shoes, or accessories. General clothing consignment stores stock clothing for women, men, and children and accept both used and new pieces. Niche or boutique stores focus on a particular type of clothing.
- Books: this type of consignment store buys and sells a variety of books. The inventory is hardback and paperback books from any genre. Some stores also carry specialty books, such as cookbooks or textbooks and also offer audio books, writing journals, and stationery supplies.
- Music and Movies: this type of consignment store focuses on films, used and new copies of DVDs, and cassette tapes. They will also focus on music, selling used and new CDs, and records. Hybrid entertainment consignment stores sell both music and movies.
- Furniture: this type of consignment shop carries a wide array of general furniture pieces, or focuses on a niche within the furniture industry. General furniture consignment stores carry used pieces, factory rejects, or unsold items from other furniture stores.
In addition to explaining the type of consignment shop you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of customers served, the number of sales with positive reviews, reaching X number of pieces sold, etc.
- Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry or market analysis, you need to provide an overview of the consignment shop industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the consignment shop industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your consignment shop business plan:
- How big is the consignment shop industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your consignment shop? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your consignment shop business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals such as young adults, college students, and families.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of consignment shop you operate. Clearly, families would respond to different marketing promotions than young adults, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are othe r consignment shops.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes department stores, big box retailers, and garage/yard sales. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of customers do they serve?
- What type of consignment shop are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide better hours and is your store more visible?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a consignment shop business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type o f consignment shop company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide an online presence, buyback programs, or purchase items not generally sold at your store?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of yo ur plan, yo u are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your consignment shop. Document where your shop is situated and mention how the site will impact your success. For example, is your consignment shop located in a busy retail district, a business district, a standalone location, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your consignment shop marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your consignment shop business, including taking daily inventory, customer interaction, purchasing used items and/or placing newly acquired items for sale, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth session, or when you hope to reach $X in revenue. It could also be when you expect to expand your consignment shop to a new city.
To demonstrate your consignment shop’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing consignment shops. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a consignment shop or successfully running a small retail business.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance s heet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you buy and sell 5 items per day, and/or offer in-store coupons ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your consignment shop, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a consignment shop:
- Cost of shop equipment and supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your shop location lease or a list of products you plan to buy and sell.
Writing a business plan for your consignment shop is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the consignment shop industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful consignment shop.
Consignment Shop Business Plan Template FAQs
What is the easiest way to complete my consignment shop business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your consignment shop business plan.
How Do You Start a Consignment Shop Business?
Starting a consignment shop business is easy with these 14 steps:
- Choose the Name for Your Consignment Shop Business
- Create Your Consignment Shop Business Plan
- Choose the Legal Structure for Your Consignment Shop Business
- Secure Startup Funding for Your Consignment Shop Business (If Needed)
- Secure a Location for Your Business
- Register Your Consignment Shop Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Consignment Shop Business
- Buy or Lease the Right Consignment Shop Business Equipment
- Develop Your Consignment Shop Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Consignment Shop Business
- Open for Business
Learn more about how to start your own consignment shop business .
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Understanding The Consignment Business Model
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There are several business models that E-commerce businesses can use to sell goods. The consignment method is increasing in popularity as an option as it offers a lower-risk approach for more people to participate in the e-commerce business landscape.
In this article, we will explain what consignment is, discuss the pros and cons of consignment selling, and provide you with tips on how to get started.
What is consignment?
Consignment refers to a business model in which the Business Owner , referred to as the consignee, agrees to pay the Supplier , or consignor, a commission proportionate to the proceeds of a product when it is sold to a buyer. Most consignment shops tend to specialise in a particular type of consumer product, and receive products from several suppliers or consignors to sell.
The consignment model is effective for new business owners as you do not need to invest money up front; and you only need to pay when a sale is made. It can also be less time-consuming than sourcing and creating your own product or managing its production. Instead, you will simply act as a middleman between your customer and the supplier. As such, you can focus on other areas such as marketing or customer service.
Pros & Cons of the Consignment Model
Each consignment shop and consignor will ultimately create their own consignment arrangement. Contracts are put in place to benefit both parties and avoid any possible miscommunication in the future that can lead to unexpected losses. The contract will usually highlight the following:
- Shipping policies, costs, and lead time
- A mutually agreed upon sales commission rate of the consignment inventory arrangement.
- A return policy for goods that are not sold within a time period
Tips for doing consignment for e-commerce businesses
1. identify your target market.
Before starting a consignment business, you must have a clear understanding of your target market and what kind of merchandise you will market to them. If you can define your niche, you can build your reputation more easily and earn both suppliers and buyers more easily.
2. Build a business plan
For a start, a business plan must detail your financial undertakings for running the business. This will include costs of running the consignment business as well as the sales and profit targets. This will give you more insight before selecting the merchandise you want to sell, as well as selecting a supplier with fair prices.
3. Select A Suitable E-commerce Storefront
As a seller of the consignment products, this is the most important step as you are responsible for ensuring that the products get delivered to your end customers. The right e-commerce storefront can help you simplify several day-to-day processes such as tracking of orders and inventory, as well as paying out commissions to the consignors. It is also important to think about a platform with various e-commerce logistics solutions such as one that is partnered with local fulfilment partners to cut down on shipping costs and lead time, resulting to customer satisfaction.
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Starting a Business | How To
How to Start a Consignment Shop in 9 Steps
Published January 12, 2022
Published Jan 12, 2022
WRITTEN BY: Meaghan Brophy
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This article is part of a larger series on Starting a Business .
Starting A Business?
- 1 Choose the Right Type of Consignment Shop
- 2 Create Your Budget
- 3 Create a Business Plan
- 4 Select a Storefront
- 5 Acquire Merchandise
- 6 Design & Outfit Your Store
- 7 Advertise
- 8 Hire & Train Employees
- 9 Plan & Launch Your Grand Opening
- 10 How to Start a Consignment Shop FAQs
- 11 Bottom Line
To start a consignment shop, as with any business , you’ll need a prime storefront and a strategy for acquiring customers and merchandise. It involves choosing a niche, establishing a budget and business plan, finding merchandise and laying out your store, advertising, staffing up, and, finally, opening to the public.
Starting a consignment store can cost up to $10,000, according to a commonly reported figure from Entrepreneur, with average salaries for consignment shop owners ranging from $40,000 to $60,000. Here’s how to start a consignment shop―as a brick-and-mortar store―in nine steps.
1. Choose the Right Type of Consignment Shop
If you’re wondering how to start a consignment shop, the first step is to narrow down exactly what kind of store you want to open . The most successful stores cater to a specific audience and have a specialty or focus area that helps them stand out from other online or offline retail competitors. To make the most money with your new business, choose a product area that is in high demand and/or hard to find, to lure shoppers into your store.
Designer & Luxury Goods
The secondhand luxury and designer goods market was worth an estimated 33 billion euros in 2020 (about $37 billion), a figure expected to continue to rise. These are popular items because shoppers can purchase products that may otherwise be outside their budgets. People looking to get rid of gently worn designer products often opt to sell them to a consignment store rather than donating to get a partial return on their investment.
Popular designer goods to sell include watches, jewelry, sneakers and other footwear, handbags, wallets, jewelry, and apparel.
The apparel resale market will hit $77 billion in the next five years , according to ThredUP.
LXR is an online consignment shop for luxury and designer handbags and accessories. The store focuses exclusively on authentic designer label goods. It also purchases used goods to sell on its site.
Apparel & Footwear
Clothing and shoes are popular secondhand items, even if they’re not expensive designer-label. More than three-quarters of people who’ve never done it would consider selling secondhand clothes. They’re relatively easy to source—more than 95% of the 36 billion tossed clothing items each year could be salvaged—and they’re items for which there will always be demand.
In fact, clothing is the most-purchased secondhand good . And as much as 7% of the average person’s wardrobe consisted of used items in 2019, a figure expected to hit 17% in 2029.
The largest target market for this type of consignment shop are Gen Z women, according to ThredUP. So keep those styles and trends in mind if you’re going after that audience.
Omnia is an excellent secondhand apparel and accessories shop to check out for inspiration. It sells a carefully curated selection of used vintage goods.
Secondhand books are another popular consignment category. In addition to regular paperbacks and hardcover books, some used bookstores deal in rare books, such as antiques and signed copies, or specialty books like cookbooks and textbooks.
Popular websites like ThriftBooks and Better World Books are examples of online retailers that have found success swelling used books. Puerto Rico-based El Coquí Bookstore sells used books in-store only—shoppers have to visit the shop and explore the wide array of books in a variety of languages.
Clothing for children and babies is a popular and profitable type of consignment store. Since parents have to purchase clothes for growing children very often, many turn to secondhand stores as an affordable option. Plus, you’ll have a steady supply of parents looking to sell their children’s gently used clothes.
Once Upon A Child is an example of a secondhand shop that sells both children’s clothing and toys. The brand operates several retail shops as well as a full online presence.
Online Consignment Shop
During the past several years, online consignment stores have become very popular, especially for apparel and accessories. Starting an online consignment shop gives you a wider customer base than a local store.
Check out these resources to help you learn how to start selling online:
- How to Start an Online Store
- Best Ecommerce Platforms
- How to Set up Click and Collect
One key thing to remember when starting an online consignment shop is that you’ll need to photograph each item individually. This can be time-consuming, so it’s important to weigh how much time it’ll take you against the opportunity for profit.
Pop-up Consignment Shop
If you’re not ready to commit to a full-time storefront, having a pop-up business is a great way to test products and locations before diving in. If you’re looking to start a consignment business as a part-time venture or side gig, having temporary stores is a good option as well.
Pop-up shops come with less commitment, so they’re a great way to get into retail without all the overhead of running a permanent storefront. This is exactly the approach that Grapevine Events takes with their secondhand goods pop-up shops. As a result, they’re also able to offer higher rates to consignors.
2. Create Your Consignment Shop’s Budget
Once you know what kind of store you want to open, the next step in how to start a consignment shop is setting a budget for your store . To set your budget, first consider your current income and savings. What can you save and set aside for your new business venture? How much outside funding will you be able to get from personal loans, business loans, business credit cards, and so on? Opening a consignment business requires a lot of upfront cash. Once you’re open, it will take time to build your sales volume.
Next, estimate your expenses for opening your store. Include how much you can spend on a storefront, outfitting the inside of your store, signs, and marketing, and your initial product purchase.
Now, estimate your monthly expenses for once you open. Include set bills like rent, phones, internet, payment processing, and so on. Also factor in advertising budgets, employee salaries, merchandise purchase orders, and other store supplies.
The hardest part of setting a budget for a business that is not yet open is predicting your monthly sales volume. This is especially hard for apparel and retail businesses as sales can fluctuate drastically, depending on the season, holiday, weather, economy, and consumer confidence. According to the Retail Owners Institute , used merchandise retailers had an average inventory turnover rate of 4.1 in 2021. That means they sold through and replaced all of their inventory about four times throughout the year.
Keep that number and your total inventory value in mind when estimating your monthly sales. Err on the side of caution, and plan for lower sales when you open, so that you have enough cash flow to cover expenses. Subtract your estimated monthly expenses from your estimated monthly sales, and that will give you an approximate monthly cash flow for when you open.
Pro tip : Retail is an extremely seasonal business. Most retail businesses bring in a ton of money around Christmas and the winter holidays. There are also spikes in revenue around back to school shopping, and spring holidays such as Mother’s Day and Father’s Day. Your monthly sales can vary, so always have extra cash on hand to cover slower months.
3. Create a Business Plan for Your Consignment Shop
Once you figure out what kind of consignment business you’d like to open, you’ll need a solid business plan to piece together all your ideas and form a strategy for making your store profitable. If you’re seeking outside or startup funding such as a bank loan, your business plan will be evaluated during the approval process.
Here are the nine elements found in a typical business plan :
- Executive summary : An introductory paragraph outlining your consignment shop’s purpose, mission, and why it will be successful.
- Business description : Describe what need or market hole your consignment store is filling in the community, who your customers will be, and the talent on your team.
- Market analysis : Write an overall outlook on the consignment and resale industry including trends, what successful competitors are doing, and what your strengths will be.
- Organization and management : Outline who will be running your business and the experience your team members have in retail, consignment, or your store’s area of specialty.
- Product line : Outline what kinds of products you will sell, how you will sell them, and where your supply will come from. Include research on why you’re selecting those products, such as sales trend data.
- Marketing and sales : Describe your general marketing strategy and your plan for attracting and retaining customers.
- Funding requests : If you need outside funding, outline your needs and specify exactly how you will use the funds.
- Financial projections : Detail how your business will become stable and profitable, including a projected financial timeline of at least five years. If you are borrowing funds, include a plan on how you will be able to repay the loan.
- Appendix : Use this space for any supplemental documents, such as logo or branding designs, sketches of what your consignment shop will look like, credit histories, licenses, permits, etc.
When writing a business plan, use the format and software you’re most comfortable with. Many people use a traditional word processor like Microsoft Word or Google Docs. You can also create your business plan in a presentation format using PowerPoint or Google Slides. There are also business plan software programs that offer templates and guide you through the process.
Choose the Best Legal Structure
Choosing a legal structure for your consignment business is important because it dictates how you will collect and report taxes, your level of personal liability, and how you will get paid from your business. There are many types of legal structures, but the three most commonly found in retail are sole proprietorships, limited liability companies (LLCs), and corporations .
- Sole Proprietorship
- Limited Liability Company
- Corporation or C-corp
If you don’t set up a legal structure for your business, this is the default. Operating under a sole proprietorship essentially means you’re doing business as an individual and, therefore, are not separated from your business in any way. Sole proprietorships are popular options for freelancers, business consultants, and other individuals conducting low-risk and low-visibility work by themselves.
With sole proprietorships, your business revenue is considered personal income. This means you will pay sole proprietorship taxes based on your personal income bracket. While you are subject to self-employment taxes, you do not have to pay any corporate taxes, which is a plus.
However, sole proprietorships also come with greater risk because you and your business are one and the same. Your personal assets, such as your house and car, are at risk if there is any kind of lawsuit against your business or if you declare bankruptcy.
LLCs are legal structures for small businesses that protect your personal assets, such as your house and car, in the case of lawsuits or business bankruptcy. This is the most popular legal structure for small retail businesses and the one we recommend if you are planning on maintaining a single consignment storefront.
If you’re the single owner of the LLC , you’ll likely still pay taxes the same way you would as a sole proprietorship but with the benefit of personal assets protection from liability. However, many states have separate LLC taxes, which may make it more expensive than operating as a sole proprietor. It’s always best to check with your local regulations.
To form an LLC, you need to choose an official name and file paperwork to establish your company, whereas a sole proprietorship doesn’t require any paperwork. Luckily, the paperwork isn’t overly extensive and can be filed easily in a few steps using a tool like LegalZoom .
Corporations are the most structured legal form for your consignment business. They have strict tax guidelines. When you create a corporation, it’s a completely new and separate entity in the eyes of the government and the IRS.
Corporations are an ideal structure for consignment businesses that want to expand into multiple storefronts, become a public company, or want to secure a lot of outside funding. Corporations provide you the most personal liability protection out of the three legal structures. However, you will need to pay federal corporate tax on top of personal income tax. Corporations are also expensive to form and require you to keep detailed business records.
Organize Your Finances
No matter which legal structure you choose, getting your finances in order is a crucial step. This involves opening a business checking account to separate your personal and business finances right from the beginning. Having two separate accounts makes it easier to monitor your business’ cash flow and track expenses accurately and will make the process of filing taxes much easier.
Chase is a great banking solution for retailers because it offers small business checking, business credit cards, and merchant services―payment processing―so business owners can manage all their cash flow in one place. Plus, Chase offers competitive rates and great customer service. Contact Chase to learn more about its small business retail solutions.
Learn more about the best small business checking accounts .
4. Select a Storefront
Choosing a storefront is a critical step that needs to be considered carefully. The location you select can all but make or break your business. The decision can seem overwhelming. So, start by narrowing down a geographic location. You’ll be spending long hours at your consignment shop nearly every day when you first open. Think about how far you are realistically willing to commute and choose areas that are accessible from your home easily.
Spend time in each area to become familiar with specific neighborhood demographics and preferences and scope out other local businesses. There are many factors that go into choosing the right location for your business, but it all comes down to picking the location that will attract the most customers.
Choose a storefront that gets a lot of foot traffic for increased sales and visibility.
Determining foot traffic can help you figure out how many walk-in customers you can expect in each location. In addition to staking out your prospective storefront locations, ask other local business owners questions about the traffic, shopper demographics, and neighborhood.
Additionally, consider details such as parking and signage. A Main Street location is ideal, but only if your customers can park near your store easily. Likewise, you’ll want a location that allows for a big storefront sign. Some locations have strict rules about the sizes and types of signage they allow.
Used clothing store Buffalo Exchange has several locations across the US. Many of the stores have been strategically placed in college towns where they have a steady stream of supply and demand from students. (Source: Buffalo Exchange)
5. Acquire Merchandise
Finding merchandise to sell at your consignment shop is trickier than sourcing products for traditional retailers . You’ll want to have a buying strategy in place before you open to ensure a steady stream of products to sell. You’ll probably use a combination of tactics to keep your store stocked.
Popular secondhand product sourcing strategies include:
- Joining the Association of Resale Professionals (NARTS) : This professional organization connects resale buyers with suppliers through its directory.
- Advertising to potential consigners : Advertise in print and online (on social media too!) regularly that you’re purchasing gently used items. Many of your potential shoppers could also be suppliers.
- Purchasing from flea and thrift shops : You can find some great deals on products to sell in your store by searching through flea markets and other thrift stores.
- Finding an off-price supplier : Off-price products aren’t secondhand, but they’re deeply discounted products that are either overstock or slightly damaged. You can find them through trade shows.
6. Design & Outfit Your Consignment Store
After securing a storefront and finding product sources, it’s time to start strategically planning your store layout . Your store layout has a dramatic impact on in-store sales. A well-designed layout will welcome shoppers, make them feel comfortable, and direct them toward specific products.
The first thing you need to decide is what type of floor plan you want. Most retail stores fit into one of three basic layout categories:
- Loop or racetrack : Best for specialty stores, showrooms, and retailers that want to lead shoppers on a specific path throughout the store.
- Grid or straight : This floor plan is exactly what you would expect: straight, angular aisles that are typically found in grocery and box stores. A consignment bookstore may also follow this model.
- Free flow plan : This is a popular plan for boutiques and allows for lots of creativity in the design process. Most apparel or decor consignment shops will follow this model.
Finally, you will need to position your checkout counter. A well-positioned checkout will open up floor space for displaying products and encourage shoppers to move through more of your store. As a rule of thumb, try to position your checkout on the left-hand side of your store.
Shoppers naturally veer toward the right side of a store, so that’s where you want to display your best products. Some department stores and larger mall retailers place their checkout counters at the back of the store. However, for smaller retailers, placing your checkout toward the front makes it easier for staff to attend the register and keep an eye on the entrance.
Select a POS System
Point-of-sale (POS) systems are cloud-based software programs that replace traditional cash registers and offer additional tools such as inventory management, sales reports, and customer data and marketing. Your POS system is the central hub for your business where you process all transactions. Look for a system that has all the features you need, including payment processing, for an affordable rate.
Lightspeed Retail POS simplifies the process of running a retail store. (Source: Lightspeed Retail)
Some of the criteria we use to evaluate the best POS systems include:
- Price : Most POS software programs charge a monthly fee, and some also charge extra for certain features.
- Ease of use : Test out each POS with a free demo or trial to make sure the interface is easy to navigate, and also read user reviews.
- Customer management tools : Almost all POS systems have a customer directory feature but, otherwise, they vary greatly in what loyalty, marketing, and customer feedback features are included.
- Sales reports : Each type of POS solution will have some kind of reporting tools, but some offer more details and features to create custom reports.
For brick-and-mortar stores, we often recommend Lightspeed. It’s a small business POS with big-business functionality such as custom report builders, detailed inventory tracking, a loyalty program, and built-in payment processing. Plus, it has built-in capabilities to handle consignment products. Visit Lightspeed for a 14-day free trial.
7. Advertise Your Consignment Shop
Before opening your consignment shop, you’ll need to start advertising and marketing your retail shop . Because you’re on a budget, make sure your strategy is effective by choosing a combination of online and offline marketing efforts.
- Social Media
- Search Engine Optimization (SEO)
In order for customers to find your business, you’ll want to have a website. Creating your own website from scratch can be easy with the right tools. There are many easy ways to make a business website for little or no cost. You need a registered domain and a web hosting service.
Olive My Stuff, a consignment shop in Connecticut, has a professional website with information on shopping and consigning.
Create social media accounts on channels like Facebook, Instagram, and TikTok to promote your brand and consignment items. You can even sell your secondhand goods on Facebook as well as sell them on Instagram directly. Run paid social ads targeting people who fit your target market in your local area.
Focusing on your SEO strategy is an excellent way to put your consignment shop in front of people who may not have otherwise heard about you. Local SEO , in particular, can help you increase your visibility for local searches. This is an excellent marketing tactic because users searching for “consignment shop near me” are likely high intent.
- Store Signage
- Window Displays
- Customer Loyalty Program
The storefront signage is the first impression shoppers will get from the in-person experience with your consignment shop. Make sure the sign is easily visible and easy to read, while also being reflective of your brand. You want to stand out enough to make passersby curious about what’s inside, especially if you plan to rely heavily on foot traffic. Check out these business sign ideas for inspiration.
While your signage might make the first impression, your window displays have the potential to make the biggest impact. A well-designed storefront with captivating window displays can lure even the most hesitant shoppers into your consignment store. Here are some resources to help you get started:
- Create a Stunning Store Window Display
- Visual Merchandising Techniques
Once your consignment shop is up and running, loyalty programs are a great way to encourage repeat customers and higher transaction amounts. Simple punch cards can be effective. However, using a loyalty program that’s tied in with your POS system offers deeper insights like who is using the program and how effective it is. Lightspeed offers a sophisticated loyalty program that you can add onto Lightspeed POS for a monthly fee.
8. Hire & Train Employees
Last but certainly not least, before opening your store to the public you need to bring on a stellar group of employees to serve as the front lines of your business. If you haven’t hired an employee before, navigating the process can be intimidating. Follow a new hire checklist that outlines all of the gritty steps you need to take such as obtaining an employer identification number (EIN), registering for state and local taxes, and so on.
As a consignment store owner, it’s likely you won’t have a dedicated human resources (HR) team member. Using an affordable solution like Homebase can save you plenty of time and stress by simplifying hiring, employee scheduling, time tracking, and payroll.
Training Your Employees
You’ll want your consignment store staff ready to provide top-notch customer service from the moment you open your business. Providing great customer service is a skill that requires practice. If you don’t start training your employees before you open, they’ll be practicing their service skills on your customers.
Instead, hold a weeklong training boot camp before you open. In addition to running through customer service scenarios and role-playing, teach employees about store policies and procedures, the items you’re selling, and any other pertinent information.
9. Plan & Launch Your Grand Opening
Hosting a grand opening celebration is a great way to kick off your new business venture while also gaining some press coverage. To have maximum attendance, recruit friends and family, draft a press release for local media and surrounding businesses, make a Facebook event, notify your local Chamber of Commerce, and take an advertisement out in the local paper.
“One mistake a lot of companies make is staying under the radar until launch. If no one knows what you’re doing and when you’re opening, then you have zero chance of making any sales. Start building some excitement at least six weeks before your launch. Get active on social channels. Interact with likely customers and get the conversation started. Build anticipation with enticing photos, and maybe even incentivize purchases in those early days.” ― Deanna Thompson, Blogger, Closet Full of Cash
Plan a grand opening to celebrate the launch of your new business.
How to Start a Consignment Shop Frequently Asked Questions (FAQs)
Opening and running a consignment shop can be a tricky business.
What is a consignment shop?
A consignment shop is a store that sells secondhand items, typically clothing and accessories. Consignment stores purchase gently used goods and resell them at a markup to make a profit.
How does a consignment shop work?
As the owner of the consignment shop, you will purchase secondhand goods from customers, professional suppliers, flea market vendors, and so on, and own those items until they are resold in your store for a higher price.
How much does it cost to open a consignment store?
The exact price can vary a lot depending on your location and local real estate prices. However, opening a consignment store will cost roughly $10,000.
Why do consignment stores fail?
Part of learning how to start a consignment shop is figuring out what not to do. There are many reasons a consignment shop could fail. Common reasons include choosing the wrong storefront location, not having in-demand products, too-small profit margins, and insufficient marketing.
Consignment shops are a great business idea for making money in 2022. More than 20,000 US-based used merchandise stores have a combined annual revenue of $17.6 billion , according to First Research. And these numbers continue to grow, especially as the world becomes more aware of the environmental challenges consumerism brings.
Starting a consignment shop is an excellent way to promote sustainable consumerism while also making a profit. And with the market growing the way it is, there’s plenty of opportunity for consignment shops of all kinds. There’s never been a better time to start a consignment business of your own.
About the Author
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Meaghan Brophy is the Retail Expert at Fit Small Business focusing on small business retail and ecommerce content. Meaghan’s 10+ years of retail experience includes working at local book and dance supply stores, handcrafting gifts at an eco-friendly manufacturer, developing private label brands, and managing a team of more than 40 sales and service professionals at a local spa.
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How to Start a Consignment Store
Opening a consignment store is a great way to start your own business and help your community.
So you want to start a consignment store. You've made a great choice!
In 2018, 60% of Americans dreamed of owning their own business . And consignment stores are some of the simplest to set up---and some of the most ethical:
Up-front costs are minimal.
You don't have to spend time shopping for inventory.
You help keep money in your local community.
You're part of a greener, more sustainable approach to shopping.
And now is one of the best times to start a consignment business. Consignment is a form of resale, and the resale market is growing 11 times faster than traditional retail . In fact, it's estimated that the resale market will be worth $84 billion by 2030 .
In this article, you'll discover what to do before you launch your business. You'll learn how to perform market research, how to classify your business, what software and platforms you should use, and more. And as we write other best-practices articles moving forward, we'll link to them in the relevant sections in this article. So feel free to bookmark this page and use it as a reference for future reading.
What to do before launching your store
We're going to cover a lot of topics here, and each one is going to require some thought and consideration before you take action on it. If you're just starting the process of launching your store, we recommend starting at the beginning, with the section "Market Research." If you're already part of the way through the process, you can simply jump to the topics you still need to tackle. The topics we'll cover are:
Your business model
Business structure and compliance
Choosing what to sell
Telling your business' story
Market research allows you to understand your market and potential customers' needs and desires. With this knowledge, you'll be able to create a business that puts your inventory in front of the people most likely to buy.
We recommend working through the following questions, adapted from the U.S. Small Business Association :
Demand: Is there a desire for a consignment store?
Market size: How many people would be interested in patronizing your store?
Economic indicators: What is the income range and employment rate of your potential customers?
Location: Where do your potential customers live and where can your business reach?
Market saturation: How many other consignment stores are already available to your potential customers?
Pricing: What do your potential customers pay at other stores? Do other consignment stores have higher or lower prices than you?
As an example, let's look at market saturation. If there are a lot of consignment stores in your area, it likely means that there's high demand, so your store may have a good chance of success. But it could also mean that the market is oversaturated. How long do most consignment businesses last in your area? If most go out of business within their first couple years, chances are that a bricks and mortar (B&M) store isn't a great idea. An online store, however, can reach far beyond local market saturation. Today, an online store can reach every potential customer in the country, so online may be a viable option even when B&M is not.
By looking at market saturation and other market research elements, you can inform this and other critical business decisions. So as you work through these questions, take your time and put in the work to research your answers.
Choose your business model
You have two major decisions to make regarding your business model:
Consignment vs. buy-outright
Bricks and mortar vs. online
Buy-outright is exactly what it sounds like. When people bring you their items, you buy the items from them, making you the outright owner. Once each item sells, you keep 100% of the profit. Consignment, on the other hand, is a little different. When someone consigns an item with you, they retain ownership of the item until it sells through your store. Once the item sells, you (the store owner) keep a portion of the money from the sale as a commission. So this question essentially boils down to this: do you want people to consign their items with you, or do you want to buy their items from them up front?
There are pros and cons for each model. The main benefit of buy-outright is you don't have to set up consignor accounts or manage consignor balances. This simplifies your inventory management and keeps overhead low by minimizing your administrative and record-keeping work. But if you find a problem with an item after you buy it, you can't return it to the original owner. Buy-outright also requires a lot more money up front. You won't have inventory until you buy enough items to stock your merchandise floor or website.
With consignment, you don't pay the consignor until after the sale. This means you don't need any money at all to stock your store. Consignment also usually leaves the original owner of each item liable for damaged goods (assuming you've included this as a term in your consignor agreement), which puts less financial risk on you. You'll learn more about this in the "Business Structure & Compliance" section.
Consignment also allows the original owner of the item to earn more money. Many people start consignment stores so they can help out their friends, family, and local community. If you want your business to be service-oriented this way, consignment may be the best option for you.
You can also adopt a hybrid model, combining buy-outright, retail, and consignment inventory, depending on your particular inventory mix. It's also common to invert the consignment model, renting out your space out to vendors who manage their own inventory. We'll cover hybrid models in more depth in a later article.
Once you've decided between consignment and buy-outright, it's time to choose between bricks and mortar and online. Do you want to have a physical storefront, or would you prefer to run an online business?
A B&M store allows you to build a stronger presence in your community. If you have an inviting physical location, people are more likely to develop store loyalty. It's also easier to creatively display your merchandise. But, similar to buy-outright, a B&M location requires more money up front---rent, utilities, and insurance aren't cheap. You're also more restricted in your schedule. If you have a physical store, you have to set business hours, and you (or your employees) have to be there during those hours.
An online store, on the other hand, requires little to no money to start. You can start selling on Facebook Marketplace or eBay at little to no cost. The only costs involved are incurred when it's time to ship items to customers. An online store also gives you more freedom to set your own work schedule and attend to other responsibilities as needed.
In summary, there's no universally right or wrong business model. You can build an online buy-outright store, or start a B&M consignment store (and vice versa). You can even run a B&M store that eventually expands into the online market, or start online and open a B&M location when you have the money. The best model is simply the one that best fits you, your current situation, and your long-term business goals.
If you've decided to run an online store, you'll generally have an easier time starting your business. But there are a couple of things you need to invest in to make sure that you don't have any hiccups when it's time to sell and ship items.
In terms of equipment, you'll need a printer and a scale. The printer will let you print off shipping labels, and the scale will be used for weighing packages, which must be done before you print your shipping label.
You'll also need a place to store your inventory when people bring it to you. At first, you might not need a ton of space since your first consigners will probably be limited to family and close friends. Depending on how much stuff they're trying to get rid of, a garage or spare room should be enough for you to get started. You'll also need an inventory and consignor management system. We'll cover this more in-depth in the "Consignment Software" section of this article.
The next task is to choose your selling platform. Nine times out of 10, your best bet is to sell on eBay. The main reason for this is that when most people shop online, they look at eBay first. eBay also has a deal with Google so that their items come up in the top search results when you Google that item, so listing your item on eBay will ensure that it's put in front of the largest possible audience. But there are lots of other options, like your own website hosted on Shopify, Poshmark, Facebook Marketplace, and many others. A good way to start might be to list on eBay first and your website second (if you have one), and then expand into another platform.
The last major consideration is that when you ship an item, you have two primary options for covering the cost of shipping. The first option is to absorb the cost. That means that you cover the costs of shipping before you send the consignor their share of the profit. In other words, the consignor's percentage is calculated from what's left over after you've replaced shipping costs with money from the sale. The second option is to partially or entirely charge the consignor for shipping costs through surcharges.
3 strategic best-practices
While the best-practices you're about to discover aren't the only ones you should adopt, we think they're the most important. So starting with these will put your business in a strong position to enjoy early success, which you can then build on over time.
First, a business plan is the most important strategic tool in an entrepreneur's toolkit. It's easy to think of it as something that you only need if you're pitching investors, but even if you're a solo entrepreneur or a partnership, developing a business plan forces you to think through the nitty-gritty details of your business and establish benchmarks for success. No battle plan survives contact with the enemy, but being able to compare your business plan with reality is a key way to look at your business from an objective perspective while you're busy with daily operations.
Additionally, people often fall into the 'sunk cost' fallacy when it comes to their own business. They're so heavily invested, both financially and emotionally, that without objective, outside benchmarks, it can be difficult to tell whether the business is functioning well.
Second, if you're a consignment store (as opposed to buy-outright), you'll need to determine your consignor terms, such as percentage split, length of consignment period, and fees. You can change these terms later, but A) it's much harder to change them later than to get them right the first time, and B) if you don't get them set up right the first time, you may not be in business long enough to adjust them. For an example of consignor terms, you can check out Consignment Chats' resource here .
Third, if you're a B&M store, you need to choose your hours. Small businesses have a reputation for erratic hours. Picking a schedule that works for you and for your customers, then sticking to it, will go a long way toward building a loyal clientele.
Tracking consignors, inventory, and sales takes a lot of work, and if you do it manually, it can consume a substantial amount of time. And the more time you spend in tracking and recording, the less time you have left over for other critical business tasks, like organizing your floor, shipping, and meeting with new consignors.
When you're starting your business, this time matters, so you need to be able to quickly process consignors, inventory, and sales. There's a lot of software on the market that takes the time and effort out of tracking, but picking a platform can be difficult. So here, we'll point out the most important features your software should include.
First, your software should let you easily add new consignor accounts. When someone drops off an item, you don't want to spend 10 minutes adding them to your system. The longer it takes to add a new consignor, the longer it'll take you to process their items and get them on your floor or website.
Second, your software should let you add inventory and connect each item to an individual consignor. You have to make sure that each item is connected to the right consignor so you know who to pay when a certain item sells. If your software lets you easily connect inventory to existing consignor accounts, you can save yourself some future headaches.
Finally, your software should give you insights into the challenges and successes you've had in the past. In the age of Amazon, data helps small shop owners stay competitive and answer questions about their businesses, such as:
How well do electronic products perform compared to other product categories?
When do we sell the highest volume of products each year?
Is there a certain style of clothing that people buy more of in my town?
Should we stop selling furniture?
If you can answer these and similar questions, you'll be able to improve your business over time and focus on the items that return the greatest value to you, your consignors, and your customers.
These features are just the table stakes for running the store. Some software solutions might check all three boxes, but bog you down with bugs and clunky workarounds. ConsignCloud aims to be the simplest, easiest-to-use software out there for running a resale shop and includes these three features and more. For a walkthrough of our platform, check out this video here .
Business structure & compliance
"Business structure" refers to your business' tax classification. LLCs are a remarkable business structure because they're easy to start and simple to maintain. Using one of the myriad online services that help with LLC formation makes it even easier, although keep an eye out for unnecessary upcharges for add-on services.
Most states and municipalities do not require a separate business license for retail stores, but the requirements for liability for handling secondhand merchandise, lost property laws for uncollected money owed to consignors, and privacy regulations vary so wildly by state (and even by city) that they're worth researching before you start. Your local chamber of commerce is a great resource. The U.S. Small Business Administration also has a vast network of Small Business Development Centers, which provide free, one-on-one advising on all phases of small business development. They're great places to meet successful entrepreneurs, get another set of eyes on your business plan, and learn about the requirements and challenges specific to your area.
Choose what to sell
Generally speaking, there are four categories of items you can take and sell:
When thinking about what types of items you want to sell, there are a couple of key considerations. First, you need to think about the state or quality of the item. This applies to all categories. When someone brings in an item to consign, it needs to be clean, in working order, and not thrown crumpled up into a bag (depending on the type of item). Second, you need to think about the age of the item. It's common to take newer items only if they're younger than 3 or 4 years. If it's vintage, the standard is typically older than 25 years.
Next, you can decide on the categories of items you want to sell, which comes down to two more considerations: your available space and your expertise. If you don't have space for furniture, then you can cross that category off your list. If you don't have room for hanging up formal wear in your storage shed, you can go ahead and turn down those items as well. And when it comes to your expertise, you need to decide how comfortable you are taking and selling items you don't know a lot about. For example, if you don't know much about electronics, you may want to steer clear of that category. If you know a lot about a particular fashion trend, you can focus on taking items that fit that style. But keep in mind that the more niche you get, the higher the risk of your inventory going out of style or becoming obsolete. If your clothes suddenly go out of style, you'll be stuck with a bunch of items no one wants.
Tell your business' story
We've touched on this already, but consignment is often less focused on competition between stores and more focused on improving local communities. More shoppers than ever are recognizing the ethical benefits of consignment, and the more people that shop consignment, the better it is for everyone. Here, we'll cover three key benefits of consignment that you can use to create a story around your business' contribution to your community.
Resale reduces waste
Resale is as green as you can get. Just take a look at ThredUp's 2021 Resale Industry Report : in the last decade, 116 billion pounds of CO2 have been displaced by buying used instead of new!
If you run a B&M store, you're even greener than exclusively online stores. As it turns out, shipping packages thousands of miles is typically bad for the environment. There are tactics you can apply to mitigate the impact of your online store, but at the end of the day, receiving inventory and selling it in the same location will leave a smaller environmental footprint than shipping items.
Local business is worth it
Local businesses aren't just good for the environment --- they're good for everyone. Here are some stats that show how beneficial local business is:
Small businesses create more jobs than big businesses. In fact, small businesses have accounted for more than 65% of new jobs since the 1970s .
According to Local First , "when West Michigan consumers choose a locally owned business over a non-local alternative, $73 of every $100 spent stays in the community. By contrast, only $43 of every $100 spent at a non-locally owned business remains in the community."
More money spent on local businesses means more tax revenue for your jurisdiction --- which means more investment in local roads, schools, parks, and more.
28% of shoppers buy local for better service and 19% to help local non-profits.
Your customers aren't the only people who care that you're a local business --- your consignors want to sell local, too! When they do, their split goes right back into their pocket, and the rest goes to you and your shop. Because your supply chain is local, an even higher percentage of your sales stays in your community.
Local consignment has knock-on effects too. A thriving local economy encourages a healthy community by helping people meet their neighbors, get involved, and think more about how their own actions impact those around them.
Consigning for a cause
Mottos like "shop green" or "local first" are often enough to catch the eye of a potential customer and get them in the door. They're simple, to the point, and impossible to argue with. But for folks who are looking to invest more heavily in your shop by becoming a consignor --- essentially a business partner --- you often need to show them that your business goes above and beyond.
Charitable involvement is a hallmark of local business. Non-profits often receive as much as 350% more money from local businesses than from non-locally owned businesses. You can prove that your interests are aligned with your shoppers' and consignors' interests by being more charitably engaged.
Getting started is a two-step process. First, find out what values you share with the people you hope to partner with. Then, put your money (and time) where your mouth is! Do you want to raise support for young mothers? Help save an endangered species? Donate to a medical research project? Find something that you and your community can get behind, either with donations, volunteerism, or by simply raising awareness.
A great way to dip your toes into charitable giving is to simply donate 10 cents from every sale or per item sold. If you let your consignors choose which charity to donate to, you can split the cost of the donation with them, reducing the impact on your bottom line while also getting on the same page as your fellow community members.
Hopefully, you've found some useful info, tips, and tricks in this article. Like we said earlier, we're going to continue to write more in-depth articles on these and related topics, so go ahead and bookmark this page.
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5 Steps To A Successful Consignment Business
December 5, 2017
Updated on 4/12/2021
Want a successful consignment business? Start here
1.) develop a business plan.
A successful consignment business begins with a solid business plan. It outlines your overall vision. The time you invest in creating this document saves you money and keeps you on track for the long haul. According to Entrepreneur.com, a consignment clothing store requires $3,000 – $10,000 to launch. Then, 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
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 fill your shelves with inventory shoppers aren’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. 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
Often times shoppers form lasting impressions of your consignment shop based on the 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. Place must-have seasonal items in the front of the store. Sale items and everyday products are in the back. Display smaller items that cost less than $10 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 .
5.) Seek community support
Reach out to your 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.
Opening a new business? Be sure to read our Getting Started Success Kit . Sign up and start building a better business today.
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What is Consignment? Consignment Definition and Benefits
Are you tired of the typical business models that come with hefty startup costs and inventory risks? If so, have you considered consignment? In this brief guide, we’ll uncover the mystery of consignment and explore its benefits and drawbacks.
Whether you’re an entrepreneur simply curious about the inner workings of consignment shops or seeking a low-risk, high-reward business opportunity , we’ve got you covered. You’ll learn the basics of consignment, the opportunities associated with it, and some potential challenges you may face.
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What is consignment?
Consignment is a business arrangement between two parties: a consignee (usually a retailer), and a consignor, the seller. The consignee agrees to compensate the consignor for the goods sold, usually after the sale.
Traditionally, consignment stores have been physical shops catering to a specific consumer need. However, there has been an increasing trend toward online consignment stores offering various goods.
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Consignment enables businesses to profit from goods that may have been discarded or overlooked. While consignors may not receive the full value of their goods, it provides an opportunity to earn cash from unused items.
So, how does consignment work? Businesses receive items from consignors and pay them when the goods sell. Common products sold on consignment include:
- Athletic gear
- Musical instruments
- Baby accessories and furniture
Pros of consignment
The consignment model is popular for a reason among merchants and business owners. Let’s look at the pros for each party.
Benefits to sellers:
- Do not need to up a retail storefront or create listings on Amazon, Craigslist, or eBay.
- No need to deliver or ship sold items.
- Quickly get the item off hand and not stress over whether it will sell elsewhere.
Benefits to business owners:
- No need to pay for inventory upfront, like most retail stores need to.
- Can pay days or weeks after the product sells to improve cash flow.
- Can return any products that don’t sell to consignors or dispose of them.
- Can build a solid client base that regularly returns to scope out new merchandise.
Cons of consignment
The consignment model has some drawbacks, too. Below are the main ones to consider.
Drawbacks to sellers:
- Earn less than you could earn by selling directly to buyers online.
- Have to wait for payment based on the specific store’s consignment period.
- Difficulty in knowing how much money the business left on the table.
Drawbacks to business owners:
- Incur disposal fees if there is a lot of consignment inventory left over.
- Dependence on sellers to provide a steady stream of merchandise.
- Software package required to simplify tracking of merchandise.
Every consignment shop has its own consignment arrangement, but the split between the individual seller and the business usually ranges from 50/50 to 40/60 or 60/40. The success and reputation of the store often determines who gets the bulk of the proceeds.
Consignment stores are often a staple of the local community, generating profits for both seller and retailer. Naturally, higher quality goods deliver more profits to each party, since they attract more customers than standard quality items.
Consignment trends indicate greater adoption
According to the Association of Resale Professionals , demand for consignment products is on the rise. With the recession starting to show its effects, many consignment shops have opened up as entrepreneurs look to earn more income.
Although not suitable for everyone, the consignment business model can be an excellent option if you’re not looking to rely on creating or producing your own inventory. Many entrepreneurs have already jumped the bandwagon as indicated by the 7% annual growth in the number of new consignment shops. With the right strategy and approach, you can reap the benefits and minimize the limitations associated with consignment.
Consignment model FAQ
What’s the difference between resale and consignment.
The retail business model is where the merchant offers to buy a product upfront. With a consignment business model, the merchant will offer a percentage of the item’s sale.
What percentage of sales do consignment stores take?
The percentage of sales taken by consignment shops depends on multiple factors, including the season, type of item, and sales trends. Typically, stores divide consignment sales from a 50/50 split to 40/60 or 60/40.
How does a consignment store differ from a thrift shop?
The key difference between a consignment store and a thrift shop is that the former is typically a for-profit organization, whereas the latter is generally non-profit or donation-based for a charity.
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How to Write a Business Plan for a Consignment Shop
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- Write a Business Plan
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How to open an old-fashioned general store, how to sell my flower shop.
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- How to Start a Consignment Resale Shop Business
Starting your own business is one of the best ways to grow your wealth and achieve your dreams. Opening a consignment store can be an excellent business move for the right individual, but before you open your doors you need to know how to write a business plan for a consignment shop. The business plan defines the scope of your business, lays out how you are prepared to succeed and details the relevant experience you bring to the new venture.
Business Plan Template
Microsoft Office has some excellent templates available for free downloads. Other popular office suites also include templates that can be customized to create business plans. If you wish to complete your business plan the old-fashioned way, you can obtain business plan templates from your local Chamber of Commerce or from the Small Business Administration office in your area. Financial books at the library and bookstore are also good sources of business plan information and examples.
List Your Business Experience
Make a list of your experience in the retail business. You can make this list mentally, but it is often helpful to get it down on paper. Include all experience you have with buying and selling the type of items you plan to offer at your consignment store, including time spent as a sales clerk or buyer.
In order to be successful, the owner of a consignment clothing store, for example, needs to have a discerning eye and the ability to pick up on new trends in the fashion industry. Likewise, the owner of a consignment furniture or accessories store needs to be able to spot the trends and buy the furniture that is most likely to sell quickly.
Executive Summary and How to Differentiate the Business
This section should state the purpose of the business, including the proposed name of the operation. The section that follows should state how the store will differentiate itself from the competition, that is, what makes your consignment store different from the thrift store down the street. Offering types of products not normally found in the second-hand market can be a big help.
Marketing and Promotion Strategy
How will you advertise your consignment store? What techniques do you plan to use? It is important for lenders and others who review your business plan to see how you intend to market your business and introduce it to the community.
Organization and Management
Provide information about the ownership of the new business, including the names and titles of all business partners and officers. Also provide a brief but thorough overview of the start-up company. The overview should include details about the products the store will sell, where it will get its merchandise and where it will be located.
List your management experience, focusing on experience that is relevant to the consignment business world. List the number of years of management and relevant retail experience you bring to the new enterprise.
Service or Product Line
List the types of products the consignment store will offer. Many consignment retailers limit their product lines to high-end designer clothing and accessories, for example, in an effort to attract a wealthier and more discriminating clientele. Provide a brief overview of the products you already have in stock, as well as your plans for obtaining quality merchandise on consignment.
Market and Competitive Analysis
Include information on any market analysis you have completed, including details about any existing consignment stores. Compare your new business model to the stores that already exist in the community, and explain how your operation will improve on that model.
Financial Projections and Related Information
Provide relevant financial information for your start-up company, including any partnership arrangements you have entered into and any loans you have obtained. Attach statements from your CPA or accountant if applicable.
Things You Will Need
Business plan template
- Bplans.com: Women's Clothing Boutique Sample Business Plan
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- Microsoft Office: Business Plan for Startup Business
Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.
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The Consignment Inventory Management Model and its Best Practices
In the previous article, we discussed the vendor-managed inventory business model (VMI) as one of the most effective ways to reduce operational costs and derive business growth. While VMI is a proven practice that remains successful to boost growth, the lack of inventory ownership might not suit all kinds of businesses. If that’s the case, the Consignment Inventory Management Model (CI) is for you.
In this article, we have detailed the know-hows of a typical Consignment Inventory Model, its benefits for consignors and consignees, and to implement this model to ensure increased profitability.
What is a Consignment Inventory Management Model?
Consignment inventory (CI) is a business model wherein the product ownership is with the vendor until the product is sold by the retailer (consignee). The retailer does not own the inventory at its locations, inventory is owned by the vendor itself. Additionally, unsold products can be returned to the vendor.
For instance, let us say a new bag brand breaks into the market and is totally unknown. Since they are new, no retailer would like to risk their capital by purchasing their stock upfront. Instead, if the brand plans on offering the bags on consignment, the retailers might agree to stock the bags in their store and pay once the stock is sold. This creates a win-win situation for everyone. This model is useful for established brands also since retailers try to minimize their working capital.
The consignment inventory management software works well in the following scenarios :
- New brands breaking into the market
- Existing brands introducing a new product line
- An existing brand trying to expand into newer markets
- Expensive goods that retailers wouldn’t want to invest upfront in
Factors to Consider Before Starting with Consignment Business
It might sound a lot easier to handle the goods on consignment from both sides. However – remember there is no free lunch ever. Let me explain the complications involved and things to remember.
Here are the key points you need to factor in:
- The time span of holding the inventory for sale
- Payment terms for goods sold
- Who will be responsible for product security when stored in the retailer’s location?
- Who should be responsible for shipping charges for returns of unsold products?
- Who should be responsible for product damage?
- Commission structure or margins to be shared with each party
This can sometimes carry major risks for both parties. Let us look at the pros and cons of consignment arrangement:
Pros and Con of Consignment Inventory
Pros for vendors.
– Long Term Investment
A supplier can invest money for the long term on the stock if a retailer is not ready for the same and assign it as consigned inventory.
– Entering the market gets easier
Consignment inventory allows vendors to hold the ownership of inventory and can contact multiple retailers to carry their inventory in the market.
– Reduced inventory carrying cost
Vendors transfer the stock to retailers' shops which will result in reducing their own holding charges.
– Reduced Labor and Shipment Cost
Can save on labor charges and shipments, where the vendors can get the stocks delivered directly to retailers instead of shipping it to their own warehouse.
Cons for Vendors
– Inventory Holding Cost
The vendors here have to invest their money in shipment and carrying charges for the inventory system with which they are not sure of making any profits.
– Bear Damaged and Unsold Inventory Charges
The vendor has to bear the charges for damaged and unsold goods even if the stock is under the retailer’s supervision.
– Fluctuating Cash Flow
The vendors here normally receive their payment after their products are sold. Unsold products are normally returned back to vendors.
Pros for Retailers
– Reduced Carrying Cost
The retailers can sell products without having the stocks in possession. This reduces their holding charge.
– Flexible Cash Flow
The retailers only pay their vendors once the products are sold. They can always hold as many consignment inventories without worrying about the stock-outs or buying more stocks.
– Low Risk
As the retailers do not have to pay for the stocks upfront, this allows them to lower their risk of carrying new supplier brands and use their capital in selling more valuable products.
– Save Time Involved in Inventory Planning
As the vendor keeps a check on the retailer’s store. If the products go sold out, they bring in new stocks. This reduces the workload on the retailer's part to keep track of inventory levels and plan replenishment.
Cons for retailers
– Reduces Floor Usage
If the consigned inventory is not sold for a longer period, it takes up the floor space which could be used to store other fast-selling stocks.
– Inappropriate Management between consigned and other inventory
In case retailers manage their consigned inventory and other inventories separately, they increase the chances of stock mismanagement, in turn resulting in inventory loss.
– Stock Ownership is Held with Suppliers
Since the stock ownership is with the vendor, they can always plan on taking back the inventory management software from their store. Additionally, there is a dependency on the vendor to do the replacements. Hence the retailer has very little control and might face out-of-stock situations for fast-moving goods.
With positives and negatives involved with both the vendor's and retailers' business, we will later discuss how this business can be made profitable for both parties. But, before that, I want you to understand a closely related term with consignment inventory called – SOR (Sale or return).
SOR or Consignment (What do you prefer?)
SOR (sale or return) and consignment model are almost the same. The only difference is the change in ownership of products once they are shipped.
In SOR, the ownership gets transferred to the retailer whereas, in the consignment model, the ownership remains with the supplier (vendor) until the goods are sold.
During an agreement between the two parties in the SOR model, a time period is mentioned to make the sale. If the retailer fails to sell the given products at an agreed-upon time span, the products are then returned to the supplier.
Read this article on The truth about Sale Or Return by Clare which will make you think twice before going for SOR / Consignment business.
How to make Consignment Inventory Management Model profitable
It is always great to learn the tricks that can be used to develop a profitable business. Check the below strategies that a vendor or retailer can follow to get rid of financial issues and develop plans to grow their business.
Prepare a strategic plan with 3-6 months goal:
Normally, few consignment agreements have an effective time duration and some others don’t. After the agreed-upon period is over, the unsold goods can be returned back to the vendor. This period can be extended with mutual understanding between the two.
With businesses taking time to build their trust among customers, both parties can apply their plan and marketing strategy to grow over time.
Once the sales start to happen, the process will get complex and the production will increase. With a growing business, both parties also need to plan their financial strategies, profit sharing, and commission percentage. Being a retailer or vendor you must constantly review plans in order to achieve your goals within time.
Identify factors affecting profitability
While working together, vendors and retailers get to know each other and develop an honest relationship. Their supply chain relationship also gets stronger with time as the processes get more streamlined and systems get aligned. The vendor here gets a trusted retailer, selling the consignment inventory system efficiently and the retailer gets a supplier who can maintain the inventory on time with a proper quality process in place.
Vendors and retailers need to have an integrated system in place for the consignment business to be successful. That provides visibility of the sales run rate of various products and also visibility into damaged/lost inventory reports.
Identifying non-moving inventory
These types of products often eat up money, time, and space. There needs to be a plan and data sharing between the parties to find such items and they must be dealt with with urgency. Nothing hurts more in retail than storing dead inventory at stores. Removing stuck inventory and replacing it with faster-moving goods will enable faster turnover and hence more money for both parties.
Special consideration has to be given for items with a limited shelf life. Deadstock for SKUs having an expiry date coming up needs to be cleared on priority. Hence special promotions or price discounts must be offered in consultation with the vendor in order to clear such items.
Consignment Model Friendly Application
The supply chain management relationship between the vendors and retailers in the consignment inventory management system is not possible to manage with excel sheets/manual entries with a pen and book.
One has to opt for software having consignment inventory as a feature wherein:
- Consigner is able to track the consignee’s inventory system
- Consigner must have near real-time sales visibility in order to plan replenishments to avoid stockouts
- Any surge in sales activity for certain SKUs must generate an auto alert for both parties
- Consigner should be timely updated on what goods need to be shipped
- Consigner should be able to track the shipped stock to the consignee
- These processes can be made simpler and quicker with an integrated platform.
How to Simplify Consignment Inventory Management Workflow?
Using a robust inventory management software like EasyEcom to manage your consignment inventory model will help you maintain a profitable business in the long run. It will help both retailers and vendors to have transparency in business.
Here’s how EasyEcom helps streamline consignment inventory operations.
1. Manage multiple customers from a unified dashboard:
Being a vendor, you will have to deal with multiple customers from different locations, selling multiple goods. With EasyEcom you can manage all your customer accounts from a single dashboard.
2. Create a returnable gate pass to keep track of consignment inventory sent to various parties
If your goods remain unsold for long, you can always provide an option to your customers to return or transfer and easily record the in-house adjustments.
3. Create passes as per return request
Once you create an adjustment there will be a gate pass created against every selection. This pass can be used as an entry or exit for the selected products.
4. Upload sales and create invoice against a gate-pass:
Once the gate pass is created, the consignee can upload the sales made against that particular gate pass. The consigner can then create and send the invoice against the same gate pass number. This process can be carried on monthly, weekly, or on any customized interval basis.
Now that you are aware of the nitty-gritty of the consignment inventory system , you can plan your retail business in a comprehensive manner so as to gain maximum profit. An integrated platform will surely enable the proper planning and hence profitability in the long run. Staying systematic and having proper trackers in place will enable transparency which is a must in a consignment business model.
Are you looking for an omnichannel inventory management solution with integrated B2B order management for your eCommerce business? Drop us a line at [email protected] or directly sign up for a demo here .
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Home » General » Explanation of the Consignment Business Model
Explanation of the Consignment Business Model
Have you ever walked into a consignment store to shop? The consignment business model is a simple and straightforward process toward profitability for everyone involved. The shop provides a place for someone to sell their goods or services. In return for the sales space, the shop owner takes a percentage of the sales price. The remaining amount is then paid to the consignor at some point in time, usually at the end of the month.
The consignment business model has been used successfully by thrift stores for decades, but it is being used successfully online as well. A number of major websites use a variation of this business model right now as seen in major commerce sites such as eBay and Etsy, all structured on the consignment business model.
It’s About the Listings
For these successful ecommerce sites, the consignment model exists with only one slight variation, a fee is charged in advanced. These websites charge consignors for the privilege of listing their item on the website. In return, the listing can be indexed through search engines or directly accessed.
Although there are advance fees, when managed appropriately, it becomes easy to find profits. Because payment processing is handled by the site, consignors simply pay a percentage of the sale to cover these costs.
Instead of providing the item to the site, however, the consignor is responsible for shipping out the items that have been ordered. To keep consignors honest, a system of feedback is put into place so that customers can research a seller to determine if the rewards of ordering a specific item outweigh any risks that are associated with the online purchase.
For Others It’s About Representation
On many freelance and service style sites, professionals are connected with freelancers, requiring a slightly different approach. Instead of creating an advanced fee to provide services, they charge a commission on any services ordered instead. That commission is paid out of existing revenues that are generated, much like royalties are paid to artists.
Advantages for Consignors: With this type of business model, consignors do not have to manage the financial part of their business. The base site handles the cash to ensure the money clears and processes successfully. After a specific amount of time, such as 14 days, that money becomes available with a credit ard through an integrated payment system such as Paypal where it can be withdrawn by the freelancer.
What Is the Advantage of the Consignment Business Model?
The primary advantage of utilizing this particular business model is that the services being provided are salesmanship and space. Instead of securing inventory, consignors will provide it. Customers come because they have a need for the products that have been consigned. For selling the item in your space, you get to take a cut off the top. It doesn’t get much easier than that to make money.
A secondary advantage is that it becomes very easy to start a business using this particular model. As long as enough capital exists to create the structure for the business, then there will be a way to start earning some cash.
What Is the Disadvantage of the Consignment Business Model?
The disadvantage of this business model, however, is that a consignment business is at the mercy of the quality of merchandise or work being offered. If the quality is poor, customers don’t come back. For some sites they may promote their best sellers because this helps them obtain consistent revenues. The same is true with the ratings systems of other sites.
For the consignors, there is one immediate disadvantage with the payment for services not becoming immediately available. A freelancer would be required to work consistently for over two weeks before they can become eligible to take cash out. That is two weeks of not having cash to pay rent or other necessary living essentials. Once the payment system is established, payment schedules flow frequently.
The consignment business model is one of the easiest to implement, which is why it is seen so often today online and offline. It has some advantages and disadvantages, but when appropriately managed, can be a simple and easy way to bring in consistent revenues.
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What is Consignment: Business Model Explained
Consignment selling is a business model that allows individuals or businesses to lend out their items to a shop that contracts to sell them at an agreed price and split the proceeds in accordance with an agreed formula.
Jeanel has 15 years of retail, marketing and brand management…
Consignment selling is a business model that allows individuals or businesses to lend out their items to a shop that contracts to sell them at an agreed price and split the proceeds in accordance with an agreed formula. In this blog post, we will explore the ins and outs of consignment selling, including how to price consignment items, examples of goods sold on consignment, and tips and tricks to help you succeed in the consignment business.
What is the Consignment Business Model?
The consignment business model is a type of retail business in which a shop contracts with individuals or businesses to sell their items for them. In this model, the owner or maker of the items essentially lends them out to a consignment shop, which contracts to sell them at an agreed price, then splits the proceeds in accordance with an agreed formula. As we have seen, a typical consignment percentage is split 60:40 in favour of the seller.
Benefits and Risks of Consignment Selling
Consignment selling has many benefits, such as allowing craft artists, fabricators, and private citizens looking to dispose of lightly used or estate items a chance to make money without the hassle and expense of storing and advertising the articles themselves. This can be lucrative, too, if the consignment percentage split for these goods is fair.
However, there are also risks associated with consignment selling, such as potential damage or loss of merchandise, shopper damage, and shoplifting. These risks can be mitigated by proper planning and evaluation of fairness and competitiveness of prices.
Pricing in Consignment Business
One of the more stressful tasks in consignment selling is pricing items. You don’t want to price items so low that you lose money or upset your consignors, but you also don’t want to price items so high they don’t sell. So, how do you determine the price for consignment items?
The One-Third Rule of Consignment Pricing
At my consignment shop, we sell clothing, shoes, and accessories. To establish a base price, we start with 1/3 of the item’s original retail price, then add or subtract 10% for details that affect the item’s desirability (wear, color, styling, etc.). You may need to adjust your base price ratio depending on the type of goods you sell.
Adjusting Base Price Ratio
Every consignment item is unique, so you should only take in items that you know you can sell. For example, if you know what clothing styles are popular in your area but aren’t sure about collectibles, then focus on the clothing. If you’re versed in certain styles of clothing or certain styles of furniture but not with others, stick to the items from styles you know well. You should also consider how niche an item’s style is.
Calculating Profit from Sales
To calculate profit on a consignment item, subtract the contracted payment that you must give to the owner of each consignment item from the sales price for that item. Place the difference onto the line next to the listed piece of inventory. This difference is the profit from the sale of the item, and that item’s specific inventory value to you.
Example of Consignment Pricing Formula
Imagine a consignor brings in a designer dress to a consignment shop. The original price of the dress was $100.
To determine the consignment price, the shop owner must consider several factors such as brand, age, condition, and market demand.
Step 1: Determine the initial selling price
As a general rule of thumb, consignment items are priced at 25% – 40% of the original price.
In this case, let’s assume the designer dress in excellent condition and still in demand. The shop owner decides to price it at 35% of the original price ($1,000), which would be $350.
Step 2: Calculate the consignment split Consignment shops typically take a commission based on a predetermined split.
Common splits include 60/40, 40/60, or 50/50. For this example, let’s assume the shop operates on a 60/40 split, meaning the consignor will receive 60% of the sale price, and the shop will retain 40%.
Step 3: Calculate the consignor’s earnings and the shop’s commission
Once the dress sells for $350, the consignor will earn 60% of the sale price, which amounts to $210.
The consignment shop will retain the remaining 40%, which is $140.
Getting Started with Consignment Selling
If you’re thinking of starting a consignment store, there are some things you should consider. For example, what types of goods do you want to sell? What is your target market? How will you price your items?
Examples of Goods Sold on Consignment
Consignment shops can sell a wide variety of items, such as clothing, accessories, furniture, collectibles, and more. The key is to focus on items that you know you can sell and that will attract your target market.
Consignment Selling for Small Businesses
Consignment selling can be a great option for small businesses that want to extend their inventory without the cost of purchasing the product beforehand. However, it’s important to evaluate the risks and benefits involved and to plan accordingly.
Special Considerations and Factors
When it comes to consignment selling, there are several special considerations and factors to take into account. For example, the consignment percentage split is different from a wholesalepercentage and a retail percentage. Consignment selling is one of a range of business models that include retail and wholesale. A typical consignment percentage split is 60:40 in favour of the seller, while a wholesale scenario usually involves a 50:50 split, and retail selling allows the seller to keep 100% of the profits.
Managing Consignment Inventory
One of the challenges of consignment selling is managing inventory. Since the inventory is still owned by the supplier, it does not count toward your actual inventory valuations when counting assets for financial reports or tax purposes. However, proper management of consignment inventory is crucial for internal business decisions and ensuring a smooth sales process.
Dealing with Damaged or Lost Merchandise
In the event of damaged or lost merchandise, it’s important to have a clear agreement with the consignor regarding responsibility and compensation. This can help prevent disputes and ensure a fair resolution for both parties.
Planning for Shopper Damage and Shoplifting
To mitigate the risks of shopper damage and shoplifting, it’s essential to implement security measures, such as surveillance cameras, security tags on items, and employee training on loss prevention strategies. Additionally, having a well-organized and clean store can help deter shoplifters and minimize accidental damage.
Evaluating Fairness and Competitiveness of Prices
Setting fair and competitive prices is key to the success of a consignment store. To evaluate the appropriateness of your prices, consider factors such as the original retail price, the condition of the item, and the prices of similar items at other stores. It’s also important to regularly review and adjust your pricing strategy based on market trends and customer feedback.
Tips and Tricks
As you begin your journey in the consignment business, keep the following tips and tricks in mind:
Practice Makes Perfect
Initially, consignment pricing will feel like a ton of work, but with practice, you’ll become more efficient at determining appropriate prices for items. Eventually, you’ll be able to glance at a standard item and know, without Googling and without 10%-ing, what the consignment price should be.
Go Directly to the Product Website
To get a better idea of an item’s original price, try going directly to the product website and searching for similar items. This can help you establish a realistic starting point for your consignment pricing.
Setting Prices to Sell
Remember that the goal is to sell items quickly and efficiently. Set your prices to be competitive and fair, while also considering factors such as item condition, desirability, and current market trends. Don’t be afraid to adjust your prices as needed based on customer feedback and market changes.
Importance of Consignment Selling for Retailers
Consignment selling can be a lucrative and rewarding business model if done correctly. By understanding the ins and outs of consignment pricing, focusing on items you know well, managing consignment inventory, and implementing effective security measures, you can set yourself up for success in the consignment business. Remember, practice makes perfect, and with time and experience, you’ll become more efficient at pricing items and making the most of the opportunities presented by consignment selling.
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Jeanel has 15 years of retail, marketing and brand management experience. She has started an ecommerce business in 2019, after working in corporate retail and real estate as a senior managing director and former consultant. She's traveled all over the world, speaks at world renowned trade shows and events, holds a Bachelor’s of Commerce (B.Comm) and a Certificate in Commercial Real Estate. You can connect with her on Linkedin.
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Consignment Shops Diversify to Boost Sales as Consumers Pull Back
As the impact of inflation reverberates through consumer spending, luxury consignment shops feel the pinch, experiencing a surge in haute couture stress.
In a recent development reported by PYMNTS, The RealReal has embarked on an overhaul, aiming to reap the benefits in the first half of 2024. This initiative includes changes in the commission structure, a reassessment of its supply dynamics, and the implementation of third-party advertising.
Read more: The RealReal Gets Real Revenue From Advertising
Meanwhile, Fashionphile, a luxury resale platform based in San Diego specializing in preowned ultra-luxury accessories, is taking a different path.
The company is venturing into B2B wholesale after its acquisition of the Canadian preowned luxury omnichannel retailer LXRandCo. (LXR) .
Founded in 2010, LXR specializes in the curation, sourcing and authentication of premium preowned products from luxury brands like Hermès, Louis Vuitton, Gucci, Prada and Chanel. The company directly sells these items to customers through its website and indirectly through partnerships. Additionally, LXR engages in wholesale, collaborating with retail partners throughout North America.
Fashionphile announced the acquisition of various assets, including inventory, intellectual property, domains and other intangible assets from LXR Luxury Products International, Groupe Global LXR, and LXR Canada. These entities represent the operating subsidiaries of LXRandCO, a Montreal-based omnichannel retailer specializing in authenticated, preowned luxury accessories. LXRandCO filed for bankruptcy in Canada earlier this month.
“With this acquisition, we are excited to forge a new path in wholesale and provide trusted, authenticated, branded accessories to even more sectors of the growing second-hand market,” Ben Hemminger , co-founder and CEO of Fashionphile, said in a statement.
Through this acquisition, Fashionphile aims to move beyond the direct-to-consumer (D2C) model. This encompasses elevated circular retail experiences, clienteling, and a strategic foray into B2B wholesale, as well as the implementation of new omnichannel operations.
Additionally, Fashionphile will leverage the expertise and experience of LXRandCo, specifically in omnichannel retail and the integration of physical stores with online platforms.
LXRandCo’s established presence in the Canadian market will provide Fashionphile with a strategic entry point into a new geographical region.
Other Players Diversifying
In a different avenue, Season 2 Consign is amping up its presence in the resale sector — through franchise.
In an interview with PYMNTS this month, CEO and Co-Founder Erika Schrieber of Season 2 Consign , told PYMNTS CEO Karen Webster, “We found that there was a void in the industry for something that combined really the best of both worlds, and we used technology to really fuel the growth of Season 2.”
According to Schrieber, Season 2’s business model centers on the online luxury resale sector. The company operates an online marketplace exclusively for authentic fashion items, and the platform is powered by franchise owners.
Moreover, at Season 2, the policy is “all sales final.” This not only backs their franchise owners but is also made possible by their authenticity guarantee, offering protection against counterfeit items for both customers and the platform. Their dedication to combating counterfeiting is evident on social media.
The reason for this is because Season 2 is confident in their ability to guarantee authentic goods as Schrieber emphasized that every franchise owner bears the responsibility of authenticating the merchandise they manage. This process is facilitated through a partnership with software provider Entrupy, which uses artificial intelligence (AI) technology and specialized hardware to meticulously scan both the exterior and interior of each item.
“If you follow us on a social media platform, you’ll see us sometimes destroying fakes and making a really big deal about that,” Schrieber said.
Read more: Main Street Meets Luxury Consignment Shops With a High-Tech Update
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How To Write a Business Plan for Web Consignment Store in 9 Steps: Checklist
By henry sheykin, resources on web consignment store.
- Financial Model
- Business Plan
- Value Proposition
- One-Page Business Plan
Greetings, aspiring entrepreneurs! Are you ready to embark on the exciting journey of starting your very own web consignment store? Look no further, as we have prepared a comprehensive guide to help you navigate the process with ease. In this blog post, we will walk you through each step of writing a business plan for your web consignment store, ensuring that you have a solid foundation for success. So, let's dive in!
Before we delve into the nitty-gritty of writing a business plan, let's take a moment to appreciate the immense growth and potential of the web consignment industry. According to recent statistics, the online consignment market is experiencing a staggering growth rate of XX% annually. This booming industry presents a lucrative opportunity for entrepreneurs like you to enter the market and carve out your own niche. Now, let's get down to business!
- Step 1: Research the market. Before launching your web consignment store, it is crucial to conduct thorough market research. This will help you understand industry trends, customer preferences, and potential challenges you may encounter.
- Step 2: Identify the target audience. Define your target audience based on demographics, interests, and buying behavior. Tailoring your offerings to their needs will greatly enhance your chances of success.
- Step 3: Conduct competitor analysis. Analyze your competitors to gain insights into their strategies, strengths, and weaknesses. This will enable you to differentiate your web consignment store and offer a unique value proposition.
- Step 4: Define the unique selling proposition (USP). Determine what sets your web consignment store apart from the competition. Whether it's a broader range of items, exceptional customer service, or innovative technology, highlight your USP to attract and retain customers.
- Step 5: Determine the business model. Choose a commission-based model, where consignees receive a percentage of each item sold. Be sure to define terms such as shipping, packaging, and inventory management to ensure a smooth selling process.
- Step 6: Create a detailed financial plan. Outline your projected revenue, expenses, and profit margins. This will help you gauge the sustainability of your web consignment store and secure funding if needed.
- Step 7: Establish a pricing strategy. Consider factors such as item type, condition, and market demand when setting prices. Striking a balance between profitability and competitiveness is key to attracting both consignees and buyers.
- Step 8: Develop a marketing and advertising plan. Craft a comprehensive strategy to reach your target audience and build brand awareness. Utilize social media, email marketing, and partnerships with influencers to maximize your online presence and generate sales.
- Step 9: Outline the operational requirements. Determine the technology, website design, and logistics needed to successfully run your web consignment store. Efficient operations are essential for delivering a seamless selling experience.
By following these 9 steps, you will have a well-rounded business plan for your web consignment store. Remember, proper planning and thorough research are the keys to success in the dynamic and competitive world of online consignment. Good luck on your entrepreneurial journey!
Research The Market
Before starting a web consignment store, it is crucial to thoroughly research the market to gain a deep understanding of the industry landscape and potential opportunities. Here are several key steps to undertake during the market research phase:
- Identify the target market: Determine who your potential customers are by analyzing demographics, psychographics, and buying behaviors. This will help you tailor your products and marketing strategies to meet their needs and preferences.
- Analyze industry trends: Stay up-to-date with the latest trends and developments in the web consignment industry. This includes understanding consumer preferences, popular items, emerging technologies, and market dynamics. Stay connected with industry publications, online forums, and attend relevant trade shows or conferences.
- Assess competition: Conduct a thorough analysis of competing web consignment stores to understand their strengths, weaknesses, and unique selling propositions (USPs). This will help you identify gaps in the market and differentiate your business.
- Identify potential challenges: Research and anticipate potential challenges or barriers to entry in the web consignment market. Consider factors such as logistics, pricing, technological requirements, and legal considerations.
- Understand customer needs: Gain insights into what customers expect when using a web consignment store. Identify pain points and areas of improvement for existing platforms to find ways to differentiate your business and provide a superior customer experience.
- Use online survey tools or conduct interviews with potential customers to gather valuable feedback and validate your business idea.
- Stay connected with industry experts and join relevant online communities to gain insights and stay informed about the latest market trends.
- Regularly update your market research to adapt to changing consumer preferences and industry dynamics.
By thoroughly researching the market, you will be equipped with valuable insights to build a successful web consignment store. This research will guide your decision-making process and help you develop strategies that resonate with your target audience.
Identify The Target Audience
In order to build a successful web consignment store, it is essential to clearly identify and understand your target audience. This will help you tailor your offerings to meet their needs and preferences, ultimately increasing the chances of attracting and retaining customers.
When identifying your target audience, consider the following factors:
- Demographics: Begin by examining the demographics of your potential customers, including age, gender, location, and income level. This information will guide your marketing and advertising efforts, ensuring that you reach the right audience with your messaging.
- Interests and preferences: Dive deeper into the interests and preferences of your target audience. Are they interested in specific types of products or brands? Do they prioritize sustainable and ethical shopping? Understanding their preferences will help you curate a selection of items that align with their tastes and values.
- Shopping behaviors: Analyze the shopping behaviors of your potential customers, both online and offline. Are they frequent online shoppers? Do they prefer to buy items at a discounted price? This information will help you design your website and pricing strategy to appeal to their specific needs and habits.
- Competitor analysis: Look at the existing web consignment stores in the market and analyze their target audience. Are there any gaps or untapped segments that you can focus on? Identifying niches within the market can help you differentiate your store and attract a specific audience.
- Conduct surveys or interviews with potential customers to gather valuable insights into their preferences and needs.
- Monitor social media platforms and online forums related to second-hand fashion and consignment to observe conversations and trends among your target audience.
By identifying your target audience, you can refine your business strategy and tailor your offerings to meet their specific needs. This will not only attract the right customers but also increase the chances of their satisfaction and loyalty to your web consignment store.
Conduct Competitor Analysis
Conducting a competitor analysis is a crucial step in developing a successful business plan for your web consignment store. This analysis allows you to gain a deep understanding of your competitors' strengths, weaknesses, and overall strategies. By evaluating your competition, you can identify opportunities for differentiation and develop effective marketing and business strategies.
To conduct a comprehensive competitor analysis, start by identifying your main competitors in the web consignment store industry. Look for both direct competitors who offer similar services and indirect competitors who may have a slightly different business model but still cater to your target audience.
Once you have identified your competitors, analyze their websites, product offerings, pricing strategies, and marketing techniques. Pay attention to their unique selling propositions, brand positioning, and customer reviews to gain insights into what they are doing well and where they may be falling short.
Important: It is essential to assess your competitors' online presence, including their website design, user experience, and social media engagement. This will help you understand their overall online visibility and how they are attracting and engaging with their customers.
Tips for conducting a competitor analysis:
- Make a list of key competitors and regularly track their activities and changes in their business strategies.
- Study their pricing structures to determine their competitive advantages or disadvantages.
- Look for gaps in your competitors' offerings that you can capitalize on to differentiate your web consignment store.
- Consider reaching out to industry experts or conducting customer surveys to gather insights on your competitors' reputation and customer satisfaction.
- Keep an eye on your competitors' marketing efforts, such as the channels they use and the messaging they employ to attract customers.
By conducting a thorough competitor analysis, you can gain a better understanding of the current landscape, identify opportunities for improvement, and position your web consignment store uniquely in the market.
Define The Unique Selling Proposition
When developing a business plan for a web consignment store, it is crucial to define your unique selling proposition (USP) . Your USP is what sets your consignment store apart from your competitors and provides value to your target audience.
Start by identifying the key features and benefits of your web consignment store. What makes your store different from others in the market? Is it your wide selection of unique items, exceptional customer service, or user-friendly website interface?
Consider conducting market research to better understand your target audience's needs and preferences. This will help you identify gaps or opportunities that your web consignment store can address. Use this information to tailor your USP to resonate with your target audience and successfully differentiate your business.
- Focus on highlighting the key features and benefits of your web consignment store that resonate with your target audience.
- Consider incorporating elements such as personalized recommendations, curated collections, or exclusive partnerships to enhance your USP.
- Communicate your USP clearly and consistently through your marketing materials, website content, and brand messaging.
By defining your unique selling proposition, you establish a clear value proposition that attracts customers to your web consignment store. This differentiation will position your business as a leader in the market and drive customer loyalty and trust.
Determine The Business Model
When it comes to starting a web consignment store, choosing the right business model is crucial to your success. This is the foundation upon which your entire operation will be built, so it's important to carefully consider your options.
One common and effective business model for web consignment stores is the commission-based model. In this model, you, as the consignment store owner, will earn a percentage of the selling price for each item sold on your website. This percentage may vary depending on factors such as the type of item and its selling price.
Not only does a commission-based model allow you to generate revenue, but it also provides benefits for both you and your consignees. Your consignees will appreciate the convenience of not having to deal with packaging, shipping, and other related tasks. They can focus on managing their inventory and pricing, while you handle the logistics.
Tips for determining the business model:
- Research existing web consignment stores to see what business models are commonly used and successful in the industry.
- Consider the advantages and disadvantages of different models, such as commission-based, subscription-based, or hybrid models.
- Take into account the expectations and preferences of your target audience and consignees.
- Reach out to potential consignees and gather feedback on what type of business model they would find most appealing and beneficial.
- Ensure that the chosen business model aligns with your financial goals and resources.
By carefully determining the business model for your web consignment store, you will be able to create a framework that allows for both profitability and a seamless selling experience for your consignees.
Create A Detailed Financial Plan
Creating a detailed financial plan is crucial for the success of your web consignment store. It allows you to understand the financial aspects of your business and make informed decisions. Here are the key steps to follow:
- Evaluate Start-Up Costs: Determine the initial investment required to set up your web consignment store. This includes expenses such as website development, inventory acquisition, marketing, and legal fees. Consider any ongoing costs, such as software subscriptions, shipping supplies, and customer service.
- Forecast Revenue: Estimate your projected revenue by analyzing the market demand and competition. Consider factors such as the average selling price, the number of items sold per month, and the commission rate. Take into account any seasonal fluctuations and adjust your forecast accordingly.
- Outline Operating Expenses: Identify and categorize your ongoing expenses, such as web hosting, marketing campaigns, customer support, and possibly rent if you decide to have a physical space. Be diligent in recording even small expenses, as they can add up over time.
- Calculate Profit Margins: Determine the profitability of your web consignment store by subtracting the total expenses from your projected revenue. This will provide insight into how much profit you can potentially generate. Keep in mind that it may take time for the business to become profitable, so be prepared for initial losses.
- Consider Funding Options: Identify potential funding sources, such as personal savings, loans, or investors. Determine how much capital you need to launch and sustain your business until it becomes self-sufficient. Clearly outline your funding needs in your financial plan.
- Monitor Cash Flow: Establish a cash flow management system to ensure you have enough funds to cover your expenses, especially during the initial stages of your business. Regularly review your financial statements to track your revenue, expenses, and cash flow patterns.
- Use budgeting software or spreadsheets to create a comprehensive financial plan that includes all relevant details.
- Estimate your revenue conservatively and be realistic about expenses to avoid overestimating profitability.
- Consider consulting with a financial advisor or accountant who specializes in e-commerce businesses to ensure the accuracy and validity of your financial projections.
Establish A Pricing Strategy
One of the key elements of running a successful web consignment store is setting a competitive and profitable pricing strategy. Here are some important considerations when establishing your pricing strategy:
1. Research market prices: Begin by researching the prices of similar products in the market. This will give you a benchmark to ensure your prices are competitive.
2. Set the commission rate: Determine the percentage of the selling price that you will retain as commission. Consider factors such as the type of item and the selling price when setting your commission rate.
3. Consider the consignee's expectations: Keep in mind that consignees will expect to receive a fair share of the selling price. Balance your commission rate with the commission that the consignee will receive to ensure a mutually beneficial arrangement.
4. Factor in shipping and packaging costs: Take into account any costs associated with providing free shipping, packaging, and related materials. Adjust your pricing strategy accordingly to cover these expenses.
Use tiered pricing:
- Consider implementing a tiered pricing system based on the selling price of the item. This can incentivize consignees to sell higher-value items, as they will receive a higher commission percentage.
Offer discounts and promotions:
- From time to time, consider offering discounts or promotions to attract customers and increase sales. This can help you stay competitive in the market and drive traffic to your web consignment store.
5. Monitor and adjust prices: Continuously evaluate the performance of your pricing strategy and adjust as needed. Keep track of sales and customer feedback to ensure your prices are effective and appealing to your target audience.
By establishing a well-thought-out pricing strategy, you can attract consignees and customers while ensuring your web consignment store remains profitable and competitive in the market.
Develop A Marketing And Advertising Plan
Developing a comprehensive marketing and advertising plan is crucial for the success of your web consignment store. It will help you promote your brand, attract customers, and increase sales. Here are some important steps to consider when developing your marketing and advertising plan:
- Identify your target audience: Before implementing any marketing strategies, it is essential to identify your target audience. Understand their demographics, preferences, and buying behavior to tailor your marketing efforts effectively.
- Create a strong brand identity: Develop a unique and memorable brand identity that resonates with your target audience. This includes designing a visually appealing logo, establishing brand messaging, and maintaining consistent branding across all marketing channels.
- Utilize digital marketing channels: With the increasing popularity of online shopping, digital marketing channels are an effective way to reach your target audience. Consider leveraging social media platforms, search engine optimization (SEO), email marketing, and content marketing to promote your web consignment store.
- Collaborate with influencers: Influencer marketing can significantly impact your brand's visibility and credibility. Collaborate with influencers in the fashion and consignment industry who have a strong online presence and a loyal following. Their endorsements and recommendations can attract new customers to your web consignment store.
- Implement paid advertising: Consider allocating a portion of your marketing budget to paid advertising channels, such as Google Ads or social media advertising. These platforms offer targeting options that allow you to reach your specific audience and increase brand visibility.
- Partner with complementary businesses: Identify complementary businesses or platforms that align with your target audience and collaborate on cross-promotions. For example, partnering with a fashion blogger or a local boutique can expose your web consignment store to a relevant audience.
Tips for Developing a Marketing and Advertising Plan:
- Regularly monitor and analyze your marketing efforts to assess their effectiveness and make necessary adjustments.
- Consider offering promotional discounts or incentives to attract new customers and encourage repeat purchases.
- Utilize social media platforms strategically by engaging with your audience, sharing user-generated content, and running targeted ad campaigns.
- Invest in search engine optimization (SEO) to improve your web consignment store's visibility in organic search results.
- Establish partnerships with fashion influencers or bloggers to leverage their audience and increase brand awareness.
Outline The Operational Requirements
When running a web consignment store, it is crucial to have a clear outline of the operational requirements to ensure smooth and efficient operations. Here are some key areas to consider:
- Website Development: Invest in a professional and user-friendly website platform that allows consignees to easily create profiles, upload item details and images, and manage their inventory. Ensure that the website is secure and offers seamless navigation for both consignees and customers.
- Inventory Management: Implement an effective inventory management system that allows consignees to easily track their items, update pricing, and monitor sales. This will help streamline the process and ensure accurate and up-to-date inventory records.
- Shipping and Packaging: Establish partnerships with reliable shipping and packaging providers to ensure prompt and efficient delivery of items. Negotiate competitive rates and ensure that the packaging is professional and protective to maintain the quality of consignee items.
- Customer Support: Provide excellent customer support by promptly addressing inquiries, handling returns, and resolving any issues that may arise. This will help build trust and loyalty among both consignees and customers.
- Legal and Regulatory Compliance: Familiarize yourself with the legal and regulatory requirements for operating a web consignment store. This includes obtaining necessary licenses and permits, adhering to consumer protection laws, and ensuring compliance with data protection regulations.
- Payment Processing: Set up a secure and efficient payment processing system to facilitate smooth transactions. Consider integrating multiple payment options to accommodate diverse customer preferences.
- Regularly review and update your operational processes to identify areas for improvement and enhance efficiency.
- Implement robust security measures to protect customer and consignee data from unauthorized access or breaches.
- Offer training and support to consignees on how to effectively use the website platform and manage their inventory.
- Establish clear communication channels with consignees and customers to ensure smooth and timely interactions.
In conclusion, creating a business plan for a web consignment store involves several important steps. By thoroughly researching the market, identifying the target audience, conducting competitor analysis, defining the unique selling proposition, determining the business model, creating a detailed financial plan, establishing a pricing strategy, developing a marketing and advertising plan, and outlining the operational requirements, entrepreneurs can set themselves up for success in the competitive world of online consignment. With a commission-based model, web consignment stores can generate revenue while offering a convenient and seamless selling experience for consignees. By following this checklist, aspiring web consignment store owners can have a solid foundation for their business plan and increase their chances of building a thriving online store.
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A guide to the very best shopping in Moscow
Sep 17, 2019 • 5 min read
While shopping in GUM department store be sure to check out its famous glass roof © Popova Valeriya / Shutterstock
Shopping in Moscow can be quite a daunting experience – you can walk for miles without finding anything but mass-market brands and overpriced boutiques. But, if you do it right, it can also be quite fun. Here are our top tips on how to get the most out of your shopping trip in Moscow.
There are many shopping malls all around Moscow, but there three that double as bona fide tourist attractions: GUM, TsUM and Detsky Mir, all within walking distance from each other. GUM is one of the oldest department stores in the country. It’s famous for the glass roof designed by one of Russia’s most celebrated architects, Vladimir Shukhov. Today it serves as a high-class shopping mall. There are plenty of luxury shops, a supermarket that sells lots of signature Russian goods and several places to eat. Head to the more expensive Bosco Cafe with a Kremlin view or, for a budget option, try the Soviet-style cafeteria Stolovaya No 57 . GUM also occasionally hosts contemporary art exhibitions in one of its three main aisles.
The Red Square and beyond: a guide to Moscow’s neighbourhoods
TsUM is another shopping mall from the pre-revolutionary times. It’s the most luxurious store in the city, famous for its paper bags that many Muscovites carry around or post pictures of on Instagram to let everyone know they shop there. Full of haute couture boutiques, TsUM also has a rooftop restaurant Buro , frequented by Russian celebrities. Tsentralny Detsky Mir children's store is perfect if you are looking for a gift for a kid or want to check out its awesome viewing platform with good views over central Moscow. At just R50 per ticket it’s a steal.
Food stalls and markets
There are two food markets that are worth checking out in Moscow. Danilovsky Market became the trailblazer of Moscow’s foodie revolution when it got an uplift in 2017. As well as many trendy food stalls, the market also hosts lectures, film viewing and even theatre productions, and it recently opened an antiques section. It’s an architectural landmark, a masterpiece of late Soviet modernism that looks like a UFO. Food at Usachevsky Market tends to be a bit more pricey and upmarket. Both markets also sell plenty of fresh produce, local cheeses and cured meats.
Antiques and flea markets
Shopping can also be a way to get away from the major landmarks and explore some sights off the beaten path. Moscow’s #1 flea market is Izmailovsky , located in and around the pseudo-historical complex 'Izmailovsky Kremlin' with its colourful walls and domes. Open daily, it’s best to come here on the weekend to catch better deals. Admittedly tacky, Kremlin has a handful of weird museums like the Vodka History Museum or Baba Yaga Museum (Baba Yaga is a Russian fairy tale character). Part of the market had been gentrified into creative cluster Vernissage , with hipster coffee shops, various workshops and Svalka , an enormous two-floor secondhand shop with everything from used books to vintage clothing.
For high-class antiques, rare books and icons head to Antikvarnaya Lavka (Antique Store) just off Bolshaya Nikitskaya street (5 Kalashny Pereulok). Here you can snag a real masterpiece – a painting or a sculpture – but the prices are quite steep.
Four great day trips from Moscow
If you are looking for a more authentic place with less hustle, one option is the antiques market on the premises of vodka distillery Crystal (4 ul Samokatnaya), which you can reach by taking tram 20 to Samokatnaya ul from the exit of metro Chkalovskaya. The market is located in the basement of one of the red-brick factory buildings. There are plenty of antiques, books and various Soviet-time memorabilia, such as Stalin and Lenin busts. While at Crystal, be sure to check out great works of street art – they are all around the factory premises.
For die-hard antique collectors there’s also a place right outside of Moscow – Novopodrezkovo market (also know as Levsha market). Take a suburban train from Leningradsky station to Novopodrezkovo (approximately half an hour), cross the tracks to the other side and there you’ll find it – a treasure trove of used books, vinyl records, clothing, paintings and antique furniture.
Where to shop for Russian designs
Gosha Rubchinskiy might be the only Russian clothing designer of world renown, especially after his collaboration with Kanye West, but there are many more up-and-coming fashion stars worth checking out. One of the places to do it is KM20 , the place Moscow fashionistas, with streetwear brands from all over the world and a lot of very rare items. There's also one of the best vegetarian cafes in Moscow on second floor.
GUM shopping mall has a two-storey store devoted to Russian designers – Sektsiya (Section). Section sells products made by 50 Russian brands, from accessories to Heart of Moscow souvenir pins. Plus there’s a bar overlooking the Red Square.
If you are not into high fashion, but still interested in getting a cool outfit with Cyrillic script, check out the creative cluster centred around two abandoned factories: Flakon and Khlebozavod . One of the biggest stores is Zaporozhets Heritage at Flakon , which sells clothing and accessories styled after various Soviet pop culture icons. The northern part, Khlebozavod, hosts several shops like Yunost and Khlebny that take a more punk-rock approach to streetwear. After shopping, have a pint at a great local craft beer bar Svoboda or a coffee at Floo .
Sputnik 1985 is a Russian clothing brand specialising in hoodies and hats with quotes in Cyrillic and retro prints. The store is located in a courtyard on Pokrovka street (19 Ulitsa Pokrovka).
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THE 10 BEST Moscow Antique Stores
Antique stores in moscow.
- Gift & Specialty Shops
- Art Galleries
- Shopping Malls
- Antique Stores
- Flea & Street Markets
- Farmers Markets
- Department Stores
- Shopping Tours
- Factory Outlets
- Fashion Shows & Tours
- 3rd Transport Ring (TTK)
- District Central (TsAO)
- Garden Ring
- Good for a Rainy Day
- Good for Couples
- Good for Kids
- Good for Big Groups
- Honeymoon spot
- Good for Adrenaline Seekers
- Hidden Gems
- Things to do ranked using Tripadvisor data including reviews, ratings, photos, and popularity.
1. 818 Vintage
2. Gift Shop Byuro Nakhodok
3. The Albion Gallery
4. Sto Vekov
5. Tvrandot Antique Gallery
6. Vintage Heritage
7. Shop of Rarities Starivina
8. Svoya Polka
9. Antique Shop A. Vitt & D. Leontyev
10. Commission Shop Vorontsovo
11. Vinyl Record Store DiG
12. Mir Art Gallery
13. Mark Patlis Studio
14. kentavr art studio.
15. Vishnevy Sad on Trubnaya
17. Freak Frak
18. Antikvarnaya Lavka v Kalashnom Pereulke
19. Moskovskiy Bukinist
21. Russian Antique Gallery
22. Gallery of Antiquity and Art De Putti
23. Vintage Centre
24. BersoAntik Gallery
26. Strogo Vintage
28. russkiy modern.
29. Vintage Gifts
What travelers are saying.
- Vintage Heritage
- The Albion Gallery
- Shop of Rarities Starivina
- Antique Shop A. Vitt & D. Leontyev
COS celebrates the opening of its first store in Russia in Afimall, Moscow
Last night COS hosted an in-store cocktail party to celebrate the launch of the first COS location in Russia at the AFIMALL in Moscow.
Guests from the creative worlds of fashion, art and design were invited to browse the Autumn Winter 18 collection and explore the new store which follows the COS aesthetic of considered, functional design, combining natural elements such as a local Dagestan limestone façade.
Moscow’s Voda bar served bergamot negroni, sake yudzu and pink fizz cocktails while guests enjoyed a selection of canapes including tuna tartare with avocado and caramelized chilli, Far Eastern scallop and matcha with apricot petit four, accompanied by a dj set from Kate Shilonosova also known as KATE NV.
Attendees included: Yasmina Muratovich, model Angelica Timanina, Olympic champion Anna Khudoyan, stylist, model Varvara Protasova, model Liza Aminova, artist Tatyana Arno, Spletnik Editor-in-Chief Sergey Nebotov, architect Alexey Novoselov, MMOMA Asya Zalogina, Naked Heart Foundation Caterine Boti, model Ilyana Erdneeva, GLAMOUR Editor-in-Chief Julia Kvin, TV host Dilyara Minrakhmanova, OUTLAW Katya Gousset, stylist
Spanning 540 square metres across one floor, the new store holds womenswear, menswear and childrenswear and will officially open to the public today (2 November).
Throughout the last decade London-based COS has remained true to its philosophy; to offer high-quality fashion collections comprised of wardrobe staples as well as reinvented classics, in keeping with the brand ethos of modern, timeless, functional and tactile design. COS uses traditional methods and new techniques to form understated collections made to last. Committed to both timeless design and innovation, COS has supported the arts since the launch of the brand through collaborations with established and emerging artists, galleries and creative studios. COS has worked on projects with The Serpentine Galleries, Salone del Mobile, The Guggenheim New York, Frieze London and New York, Design Miami/, Opening Ceremony and Mr Porter and with artists such as Snarkitecture, Sou Fujimoto, Studio Swine, The Donald Judd Foundation and AFSO / ANDRÉ FU.
Afimall has a qualitative audience which is relevant for the brand. The mall has great development potential and already shows high rates of growth in attendance by 30% or more over the past year. Afimall is a unique project, located between the skyscrapers in the business center of Moscow City. Its total area is 283,182 square meters. The mall includes six above ground levels and three underground levels. The huge glass dome of the shopping center reflects the beauty of the towers of Moscow City. In its central part there is an unusual dancing fountain, which turns on every half an hour. The mall is interesting for visit in all kind of weather and it is comfortable for meetings with friends and business partners.
AFIMALL City Presnenskaya Naberezhnaya 2 Moscow 123317 cosstores.com
For any enquiries please contact: [email protected]
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Companies Linked to Russian Ransomware Hide in Plain Sight
Cybersecurity experts tracing money paid by American businesses to Russian ransomware gangs found it led to one of Moscow’s most prestigious addresses.
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By Andrew E. Kramer
MOSCOW — When cybersleuths traced the millions of dollars American companies, hospitals and city governments have paid to online extortionists in ransom money, they made a telling discovery: At least some of it passed through one of the most prestigious business addresses in Moscow.
The Biden administration has also zeroed in on the building, Federation Tower East, the tallest skyscraper in the Russian capital. The United States has targeted several companies in the tower as it seeks to penalize Russian ransomware gangs, which encrypt their victims’ digital data and then demand payments to unscramble it.
Those payments are typically made in cryptocurrencies, virtual currencies like Bitcoin, which the gangs then need to convert to standard currencies, like dollars, euros and rubles.
That this high-rise in Moscow’s financial district has emerged as an apparent hub of such money laundering has convinced many security experts that the Russian authorities tolerate ransomware operators. The targets are almost exclusively outside Russia, they point out, and in at least one case documented in a U.S. sanctions announcement, the suspect was assisting a Russian espionage agency.
“It says a lot,” said Dmitry Smilyanets, a threat intelligence expert with the Massachusetts-based cybersecurity firm Recorded Future. “Russian law enforcement usually has an answer: ‘There is no case open in Russian jurisdiction. There are no victims. How do you expect us to prosecute these honorable people?’”
Recorded Future has counted about 50 cryptocurrency exchanges in Moscow City, a financial district in the capital, that in its assessment are engaged in illicit activity. Other exchanges in the district are not suspected of accepting cryptocurrencies linked to crime.
Cybercrime is just one of many issues fueling tensions between Russia and the United States, along with the Russian military buildup near Ukraine and a recent migrant crisis on the Belarus-Polish border.
The Treasury Department has estimated that Americans have paid $1.6 billion in ransoms since 2011. One Russian ransomware strain, Ryuk, made an estimated $162 million last year encrypting the computer systems of American hospitals during the pandemic and demanding fees to release the data, according to Chainalysis, a company tracking cryptocurrency transactions.
The hospital attacks cast a spotlight on the rapidly expanding criminal industry of ransomware, which is based primarily in Russia. Criminal syndicates have become more efficient, and brazen, in what has become a conveyor-belt-like process of hacking, encrypting and then negotiating for ransom in cryptocurrencies, which can be owned anonymously.
At a summit meeting in June, President Biden pressed President Vladimir V. Putin of Russia to crack down on ransomware after a Russian gang, DarkSide, attacked a major gasoline pipeline on the East Coast, Colonial Pipeline , disrupting supplies and creating lines at gas stations.
American officials point to people like Maksim Yakubets, a skinny 34-year-old with a pompadour haircut whom the United States has identified as a kingpin of a major cybercrime operation calling itself Evil Corp. Cybersecurity analysts have linked his group to a series of ransomware attacks, including one last year targeting the National Rifle Association. A U.S. sanctions announcement accused Mr. Yakubets of also assisting Russia’s Federal Security Service, the main successor to the K.G.B.
But after the State Department announced a $5 million bounty for information leading to his arrest, Mr. Yakubets seemed only to flaunt his impunity in Russia: He was photographed driving in Moscow in a Lamborghini partially painted fluorescent yellow.
The cluster of suspected cryptocurrency exchanges in Federation Tower East, first reported last month by Bloomberg News, further illustrates how the Russian ransomware industry hides in plain sight.
The 97-floor, glass-and-steel high-rise resting on a bend in the Moscow River stands within sight of several government ministries in the financial district, including the Russian Ministry of Digital Development, Signals and Mass Communications .
Two of the Biden administration’s most forceful actions to date targeting ransomware are linked to the tower. In September, the Treasury Department imposed sanctions on a cryptocurrency exchange called Suex, which has offices on the 31st floor. It accused the company of laundering $160 million in illicit funds.
In an interview at the time, a founder of Suex, Vasily Zhabykin, denied any illegal activity.
And last month, Russian news media outlets reported that Dutch police, using a U.S. extradition warrant, had detained the owner, Denis Dubnikov, of another firm called EggChange, with an office on the 22nd floor. In a statement issued by one of his companies, Mr. Dubnikov denied any wrongdoing.
Ransomware is attractive to criminals, cybersecurity experts say, because the attacks take place mostly anonymously and online, minimizing the chances of getting caught. It has mushroomed into a sprawling, highly compartmentalized industry in Russia known to cybersecurity researchers as “ransomware as a service.”
The organizational structure mimics franchises, like McDonald’s or Hertz, that lower barriers to entry, allowing less sophisticated hackers to use established business practices to get into the business. Several high-level gangs develop software and promote fearsome-sounding brands, such as DarkSide or Maze, to intimidate businesses and other organizations that are targets. Other groups that are only loosely related hack into computer systems using the brand and franchised software.
The industry’s growth has been abetted by the rise of cryptocurrencies. That has made old-school money mules, who sometimes had to smuggle cash across borders, practically obsolete.
Laundering the cryptocurrency through exchanges is the final step, and also the most vulnerable, because criminals must exit the anonymous online world to appear at a physical location, where they trade Bitcoin for cash or deposit it in a bank.
The exchange offices are “the end of the Bitcoin and ransomware rainbow,” said Gurvais Grigg, a former F.B.I. agent who is a researcher with Chainalysis, the cryptocurrency tracking company.
The computer codes in virtual currencies allow transactions to be tracked from one user to another, even if the owners’ identities are anonymous, until the cryptocurrency reaches an exchange. There, in theory, records should link the cryptocurrency with a real person or company.
“They are really one of the key points in the whole ransomware strain,” Mr. Grigg said of the exchange offices. Ransomware gangs, he said, “want to make money. And until you cash it out, and you get it through an exchange at a cash-out point, you cannot spend it.”
It is at this point, cybersecurity experts say, that criminals should be identified and apprehended. But the Russian government has allowed the exchanges to flourish, saying that it only investigates cybercrime if Russian laws are violated. Regulations are a gray area in Russia, as elsewhere, in the nascent industry of cryptocurrency trading.
Russian cryptocurrency traders say the United States is imposing an unfair burden of due diligence on their companies, given the quickly evolving nature of regulations.
“The people who are real criminals, who create ransomware, and the people working in Moscow City are completely different people,” Sergei Mendeleyev, a founder of one trader based in Federation Tower East, Garantex, said in an interview. The Russian crypto exchanges, he said, were blamed for crimes they are unaware of.
Mr. Mendeleyev, who no longer works at the company, said American cryptocurrency tracking services provide data to non-Russian exchanges to help them avoid illicit transactions but have refused to work with Russian traders — in part because they suspect the traders might use the information to tip off criminals. That complicates the Russian companies’ efforts to root out illegal activity.
He conceded that not all Russian exchanges tried very hard. Some based in Moscow’s financial district were little more than an office, a safe full of cash and a computer, he said.
At least 15 cryptocurrency exchanges are based in Federation Tower East, according to a list of businesses in the building compiled by Yandex, a Russian mapping service.
In addition to Suex and EggChange, the companies targeted by the Biden administration, cyberresearchers and an international cryptocurrency exchange company have flagged two other building tenants that they suspect of illegal activity involving Bitcoin.
The building manager, Aeon Corp., did not respond to inquiries about the exchanges in its offices.
Like the banks and insurance companies they share space with, those firms are likely to have chosen the site for its status and its stringent building security, said Mr. Smilyanets, the researcher at Recorded Future.
“The Moscow City skyscrapers are very fancy,” he said. “They can post on Instagram with these beautiful sights, beautiful skyscrapers. It boosts their legitimacy.”
An earlier version of a picture caption with this article misstated the year in which Colonial Pipeline was hacked. It was 2021, not 2020.
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Andrew E. Kramer is a reporter based in the Moscow bureau. He was part of a team that won the 2017 Pulitzer Prize in International Reporting for a series on Russia’s covert projection of power. More about Andrew E. Kramer
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