How to Open a Consignment Shop

Consignment shop retailers get a percentage of each item sold. With determination, hard work and retail sales knowledge, you can open a profitable consignment shop. Use these steps to sell second-hand items, from baby clothes to wedding gowns.

Things You'll Need

• Business name
• Retail license
• Website
• Tax number
• Items for resale
• Credit card machine
• Consignment contracts
• System to catalog consignment items
• Marketing plan
• Signs
• Display shelves and racks

Instructions

1. Decide on the name of the company and establish a web presence. Get a logo and business cards from a graphic designer, and request an Employee Identification Number from the Internal Revenue Service. You'll also need and sales tax licenses. Inquire about insurance for your business.Hire an attorney to structure the business as a limited liability company or corporation. Find a bookkeeper to set up your company records before you make one sale, and determine what other business documents your state requires when forming a new company.

2. Assess your target market and competition. Make a list of all consignment shops in a 50-square-mile radius of your location. Determine what type of items you will sell, based on your research. If there are 10 consignment shops in your area and the majority sell designer items resale, there may be an opportunity for a children's or men's shop to meet the needs of your community.

3. Gather an abundance of inventory before you open. Announce in neighborhood publications and church bulletin boards that you are looking for inventory. Be specific on the types of merchandise you want and your terms. Customers will place their items on consignment and receive a percentage of the sale after the item is sold. Don’t purchase an item unless it is so rare and valuable that you are sure you can sell it.

4. Your sales space needs to be warm and inviting with space for dressing rooms and displays. If you are selling clothes, accessories and shoes, a smaller boutique is best for a new start-up consignment shop.

5. Write press releases announcing the opening of your store, and start a blog. Write an article titled the “20 Things Every Consumer Should Know About Consignment.” Distribute this free to friends, potential customers and the community.

Tips & Warnings

• Have your attorney review your consignment contracts for any liability issues.

• Lease a credit card machine.

• Network with other retailers and salons to advertise your business.

• Don't price your inventory too high.

• Include a plan for profit in your business plan.

• Don't neglect your advertising costs when planning.

Resources

• How to Open a Consignment Store
• How to Open A Thrift Store