How to Run a Consignment Store
A consignment store is a retail space that sales items for suppliers or individuals without buying the items and then reselling them. This method of operation reduces your overhead by eliminating the need to buy items before you sell them. Consignment stores usually sell items made by small suppliers or gently used items from people who will bring in their items and let you sell them giving you a profit, and possibly making a larger profit for themselves. This method of sales also leaves the burden of salability mostly on the suppliers' shoulders.
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Instructions
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Go to your local business license issuing agent and obtain a retail license. Fill out all of their paperwork honestly and in as much detail as possible.
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Search the Internet and talk to real estate agents to find the piece of retail space that best suits your needs. Negotiate the deal and obtain the lease for the property you have chosen.
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Go to the IRS.gov website and search for "obtaining an EIN." Fill out the appropriate information on the screen and submit it to the IRS. You will be contacted with your Employer Identification Number.
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Contact your insurance agent. Discuss the nature of your business with them and answer all of their questions. Obtain liability, theft and fire insurance for your business to protect you from losses.
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Set up an electronic store front on the internet for your business. A dedicated site can work together with pages on auction sites to increase your business.
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Draft and print contracts that you will use with your suppliers. Include the details needed to outline your entire agreement with each supplier.
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Have every seller sign one of the supplier contracts before the delivery of their first consignment. Monitor the suppliers and track their inventory and sales in detail to ensure accuracy.
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Review each shipment from every supplier. Log each item into that supplier's file. Have the supplier go through this process with you at every delivery and be sure both of you sign and keep a copy of the receipt.
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Display items in from your suppliers in your store. List the items on your e-commerce site(s) as well to increase revenue for yourself and your suppliers. Track every sale and keep detailed records.
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Contact your suppliers periodically as dictated by your contracts. Pay the suppliers the money that their items have made after deducting appropriate taxes and your share from each sale. Arrange for new shipments as inventory runs low.
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Tips & Warnings
Finding items to fill your store may be the biggest challenge you face when starting/running your consignment store. Advertising your store on social networking and other high-traffic websites will bring in online suppliers. A visit to local flea markets and small manufacturers can bring physical items into your storefront. Remember that the more you get your name out into public the more you will have suppliers and customers approaching you.
A contract is a legal and binding document that outlines an agreement between two or more people or entities. Breaking a contract without cause leaves you vulnerable to lawsuits.
References
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