How to Open a Consignment Store

Make sure the space is inviting.

You do not need to have a business background or retail experience to open a consignment store. What you do need is the willingness to work long hours, good people skills and good organizational skills.

Things You'll Need

• Storefront
• Display racks
• Cash register
• Hangers
• Inventory
• Tax ID number
• Business license (depends on your city/county codes)
• 3-ring binder to keep contracts
• Consigner contracts

Instructions

1. Decide how you will take consignments. You can take goods for consignment and split the revenue according to a formula, or you can buy the goods outright and resell them. The former will require meticulous bookkeeping and a regular system for making payments, but it also requires less of an initial investment.

2. Determine what kind of merchandise you will consign. Will it be high-end, low-end, baby, adult, clothing only, toys, furniture or big machinery? Once you know what you will resell, you can choose your location. You don't want to sell high-end items in a poor part of town, and you don't want to sell low-end items in an upscale neighborhood.

3. Purchase the retailing equipment you will need, like hangers, a cash register, display racks, phones and more, inexpensively at auctions. Search through other resale stores, garage sales and online auction sites for inexpensive items.

4. Accumulate your stock. Adele Meyer, director of the National Association of Resale & Thrift Shops, says this isn't as hard as you might think. Simple ads in shopper newspapers or flyers in your neighborhood will attract people with items they want to get rid of. She also notes that you can always start with friends and family.

5. Target your buyers and market directly to them. If you will consign children's items, see if you can leave information at a pediatrician's office or places that children frequent with their parents. If you'll be consigning antiques, attend auctions and pass out your business card. Do this before you open the store and then do it bi-monthly after. It's inexpensive and you'll see great results.

6. Have your consigner contracts ready to go the first day you are open. These should explain the process, the percentage of pay the consigners will receive, how and when you will pay them and any other information that is store specific. It should also have a space for contact information and signature. You will retain the original and give the consigner a copy. This will avoid any confusion or bickering after a sale.

7. Set your space up for convenience. Think of your customers and design for them. If you're a children's store, make sure there is enough room for strollers and consider putting in a play area.

8. Send a press release to the regional papers a week before you open, use word-of-mouth and rely on everyone you know to spread the word. Consider having a grand opening with light refreshments or special sales to attract your first customers.

Tips & Warnings

• Before you open your doors, there is a small amount of legwork. You need to have a tax ID number (which you can get at your local tax office or apply online), possibly a business license (depending on your city, county and state laws) and a storefront.

• Make sure your consigners know what happens with unsold items. You may want them to pick up unsold items, or they may become yours after a certain period of time. You can also give consigners the choice, but make sure you get it in writing.

• Be sure you know IRS, state and local tax rules as they apply to consignment shops. You may want to consult with an accountant or tax professional.

References

• The Wall Street Journal: How Do I Start a Consignment Shop?