Definition of a Consignment Store

Consignment stores typically resell clothing, jewelry and accessories.

Consignment stores sell second-hand goods for reduced prices. Typical items include clothing, jewelry, belts and shoes. Consignment stores pay the consignor (seller) a percentage of the sale proceeds and keep the balance. Payment to the consignor occurs only after the goods sell. As a consignor, you retain ownership of the items until a sale is made and can terminate the arrangement at any time by asking that the store return your goods.

Restrictions

Selling items through consignment stores requires patience, time and an understanding of the store's policies. Consignment stores vary in the criteria used to evaluate goods for sale. Most stores require that clothing be clean, in good condition and in current style. Some consignment stores accept items only in groups of 5 or 10 and reserve the right to reject items. Typically, if the items fail to sell within a time frame set by the store, the consignor can either reclaim or donate the goods.

Advantages of Consignment Sales

Consignment sales allow the seller to generate revenue from items that otherwise would be thrown out or donated and offers a win-win relationship for store owners and sellers, both of whom benefit from sales. Consignment store owners benefit from low start-up costs and don't have to pay for unsold items, which permits store owners to house more inventory because they have more available capital. Customers also benefit from the diverse selection and affordable prices.

Disadvantages of Consignment Sales

For consignment store owners, screening potential sellers absorbs time that could be spent refining business operations, and building a client base requires clever marketing and constant self-promotion. Competing effectively in the market requires owners to offer sellers competitive rates, and stocking a consignment store well presents challenges because owners lack control over the items presented for sale.

Consumer Purchase Process

Shopping at a consignment store mirrors the experience at a standard retail establishment. Consignment stores tend to offer assorted styles and products, and it is up to the consumer to decide whether the reduced prices compensate for the extent of the products' wear. The majority of stores reject low quality goods. Typically, the value of the item exceeds the cost.

Future of Consignment Stores

Recent economic conditions and consumer awareness of recycling have contributed to the increased popularity of consignment stores. Consignment stores serve the marketplace by offering consumers the opportunity both to earn and to spend money.

References

• Ask Deb: Consignment Stock
• Reader's Digest: 13 Things Your Consignment Shop Owner Won't Tell You