The consignment industry is made up of small business owners who have had to create and brand their business all on their own. Limited materials and resources on how to properly open a consignment business are readily available, so unless you have had previous experience in the industry you may be having to learn as you go. Many consignment stores have their own tricks an techniques they utilize to run and grow their business, but there are still many tools of the trade that go unused by store owners.
1. Auto Discounts and Expiration Dates
When you accept inventory from a consignor you should always set periods of time before items get automatically discounted, when they no longer will be sold, and if the consignor fails to pick the items up, donated to the store. This ensures that you are constantly moving inventory and not keeping pieces on your sales floor that your customers are not interested in. After 30 days many consignors will drop the price of an item 20%. This is just an average so take this into consideration depending on the quality and price of the inventory you sell. After 60 days many consignment stores will take the item off the sales floor. This is extremely beneficial to consignment stores who carry large items like furniture or outdoor equipment. At this point consignment stores will normally give the consignor 7 days to pick up their items, and if the consignor has not picked up their items within that period of time then the item then gets donated to your store. Make sure to add your auto discounts and expiration dates to your consignor contracts, and set each date and discounts to your consignment business.
2. Item Fees
Item fees are fees added to merchandise that is not split with the consignor but added to the total price of an item. These fees normally go to marketing costs or general store upkeep, and can greatly impact your profit margins. Depending on the size and price of a piece of merchandise, item fees can range greatly but usually average out to be a dollar per item. This is a tool that some shop owners shy away from, but when you take into account the amount of items you sell per week, month, even a year, item fees can generate a steady source of income to grow or market your consignment business. Item fee’s normally range anywhere from .50 – 1.00, and can be set as a flat rate for the store or can change depending on the items being sold. Once again make sure to establish either verbally or in your store contract that you are adding an item fee to the items a consigner brings into your store to avoid altercations at payout.
3. 24 Hour Holds / Take Home Trials
With consignment stores offering very limited refund opportunities, allowing your customers to take sometime to consider the purchase is a great way to build loyalty and alleviate buyer stress. 24 Hr holds not only allow you to capture customer attention in the store, but online as well. If you are posting your inventory on your website or social media pages, allowing your online audience to call and hold items is another great way to get people into your store. Another option is to offer your customers the chance to take the item home with them and see if it works within their space. This option can be a little tricky to manage, so make sure to either take down the customers personal and credit card information, or make copies of their drivers license and credit card. Some consignors will go as far as to create specific contracts for take home trials depending on the size of their store or frequency of customers, so do whatever you think is best to protect you and your consignment business.
