How to Start a Consignment Business Using eBay
Consignment businesses provide a market to buy and sell secondhand goods. Entrepreneurs who operate consignment shops sell secondhand goods on behalf of a client. Online marketplaces such as eBay create a global trading hub that connects buyers and sellers of consignment goods around the world. Operating a consignment store through an online marketplace, instead of a traditional brick and mortar store, also cuts down on fixed costs such as rent and utilities, though the operations often have other costs and require a different sort of work in order to be successful.
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Instructions
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Getting Started
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Check local licensing requirements, as well as any shipping regulations you need to abide by. Acquire a business license from your local government and consider forming a limited-liability company (LLC), which will ease your tax burden. Forming an LLC also establishes your business as a legal entity which is liable for all losses and other business shortcomings.
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Create an online seller's account with eBay or the online marketplace that best meets your business needs. Online marketplaces such as eBay, Amazon Services, YardSellr or Gazelle act as third-party agents between you and your customers, which simplifies accepting payment and processing shipping information. Before you begin listing items for sale, open a bank account to manage business funds and be aware of all commissions and fees the online marketplace charges for its services.
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Acquire inventory and shipping materials and find a safe place to store it all. Advertise your consignment services to clients who might not have internet access or those who might be too busy to sell their own goods. Clients will want to know how you will sell their goods, so explain how you sell their goods, detail the costs and fees for which they are liable and be sure to get the entire agreement in writing.
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Entice your online customers by procuring appealing inventory and creating a theme, such as children's clothing, used books or collectible toys. "The Wall Street Journal" warns that a consignment shop's success or failure may rest upon a few decisions regarding the appearance of your store, what you try to sell and how you price your goods. Inform your clients of your policy regarding goods that might be damaged, might not sell well or those that do not fit your store's niche.
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Maintain a database of all inventory and all transactions, both with clients whose goods you sell and with customers. Keeping a record of everything you have sold, and at what price, provides you with sales data which will indicate what items sell best and the price your customers are willing to pay for them. As your online consignment shop grows, use your database of sales information to make informed future inventory decisions.
Making and Growing Sales
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List each item on your online storefront, including details that help sell the item, as well as those details which are necessary to any purchase, such as the selling price, accepted payment methods and the item's condition. Your online marketplace will provide you with a form to organize information for each listing. A vivid description of what makes an item unique, as well as pictures of the item, will pique your customers' interest in your item and could help you generate more sales.
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Market the business using online and traditional media to spread the word about the products you have for sale. The market for reselling goods is hot, according to "Entrepreneur" magazine, and the key to success is showing your customers the benefits of giving you their continued business. Knowing your market also helps, so keep an eye on current trends and make every effort to give your customers the deals they seek.
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Fill each order promptly. Once you receive notification that an item has sold, ship it via the buyer's preferred shipper to ensure the buyer rates you favorably and considers buying from you in the future. Few people enjoy waiting for service in person; the same is true online.
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Settle your account with your client. Once the consigned item has sold, pay your client his portion of the proceeds. If the item does not sell in the time frame determined by you and your client,, return it to the client in exchange for your service fee.
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Refresh your stock with items that are likely to sell and earn a profit. Use your sales data to determine which inventory is both appealing to your customers and which inventory is likely to become a staple of your online consignment store. To help select which items to stock, use a sales forecasting model, which predicts future sales based on past performance and expected market conditions, according to "Inc. Magazine."
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Locate and sign up for deals that help you lower your shipping costs. As your business grows, programs which offer deals on items you frequently buy, such as shipping materials, will lower your costs and raise your profit margins. If your sales data suggests a particular type of item is popular or is likely to be in demand, try to stock up on it by offering clients a similar discount.
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