Opening an Online Consignment Shop

Allison Martin
Woman with Computer

Opening an online consignment shop can be an exciting venture. Increase your odds for success by following a step-by-step guide to prepare you to (virtually) open your doors for business.

Step-By-Step Guide

Although it can be difficult to get up and running, following the proper steps will significantly facilitate the process.

Step 1: Identify Your Niche

This is arguably the most significant step in the entire process as it will have a huge bearing on how your online consignment shop performs. Research various marketing statistics for products that pique your interest and select the one that is most marketable, appealing and unique. Also, get a feel for the consumer's preferences.

Websites to start with that are industry specific include:

  • NARTS: Visit the National Association of Resale and Thrift Shops to learn more about the business.
  • Consignment Pal: A directory of consignment stores and information about the consignment business itself, including ideas and resources for selling your items.
  • Too Good To Be Threw: A website that offers tips and blogging advice for sellers. Consider purchasing the book of the same name for more help on opening your consignment store.
  • Auction Bytes: A site devoted to news and resources for people who buy and sell online. Visit the forum or use the tools to help you manage your online consignment business.

Try to get as specific as possible since it can be extremely difficult to standout in an oversaturated market. Examples of this are online consignment shops that specialize in children's clothing, antiques, jewelry and high-end apparel.

Step 2: Solicit Assistance

Use organizations, such as SCORE and NARTS, to help you compose a business plan and help you get up and running.

Step 3: Legalize Your Business

Once you come up with a name for your new venture, visit the U.S. Small Business Administration's website to determine which legal structure you would like your business to follow. Register your business through your state's Department of Revenue. Also, and obtain a Federal Employer Identification number through the Internal Revenue Service.

Prior to going live, you will also need to visit the County Clerk's office to secure the licenses and permits required to operate your business. You will also need to apply for a sales tax permit.

Step 4: Purchase Accounting Software

To properly account for income and expenses for financial reporting purposes, you will need to purchase accounting software. Popular selections in the consignment sector include QuickBooks or a software program specific to retail such as Retail Pro.

If you discover that maintaining adequate accounting records is too difficult of a task for you to handle, it is wise to enlist the services of a bookkeeper or accountant.

Step 5: Create a Website

Since your storefront will be located online, it is important to have a high-quality website for your business. You can do-it-yourself or hire a web designer. When evaluating platforms, below are a list of items to consider:

  • Quality (look at other samples)
  • Search engine rank
  • Inventory tracking
  • Shopping Cart
  • Shipping Calculators
  • Discount Codes
  • Sales Tax Calculators
  • Detailed Reporting
  • Customer Service Reviews

There are plenty of reputable ecommerce providers from which to choose. The following platforms were ranked among the top ten ecommerce software solutions for 2013 by Top Ten Reviews and offer a free-trial, user friendly interface, customizable themes, extensive security features, and monthly or annual billing solutions.

Volusion Shopify Ashop Commerce Pinnacle Cart Big Commerce
Trial Period 14 days 14 days 14 days 14 days 15 days
Fee Assessment $15-195 per month

$14-179 per month

$25-249 per month $30-150 per month $24.95-299.95 per month
PCI Compliant yes yes yes yes yes
Annual Pricing Available yes yes yes yes yes
Quantity Restrictions 100-unlimited (varies by plan) unlimited 100-10,000 products (varies by plan) unlimited 100-unlimited (varies by plan)

Step 6: Connect with Consignors

In order to have an adequate supply of inventory on hand for purchase, you will need to collect items. Use flyers, online forums and newspaper advertisements to reach those who may be willing to use your store as a medium to discard old or unwanted items in exchange for cash. An additional way to locate items is via NARTS' online database.

Step 7: Locate Inventory Space

You will need a temperature-controlled open space to store inventory. It should have an area that is suitable for photographing items and be devoid of sunlight, pets, other non-related objects and odors associated with food, smoking and pets. In addition, the inventory space needs to accommodate shelves that facilitate the management and retrieval of items.

Step 8: Obtain Necessary Supplies

Low-cost shipping supplies can be located online at ULine or Nashville. For rapid deliveries, use Priority Mail through the United States Postal Service as shipping supplies are free and can be ordered online or shipped to you. Also, check membership clubs, such as Sam's Club and Costco, which sell items in bulk to the public at a reduced rate.

You will also need a professional camera to photograph your items for display on the website. If you are encounter difficulty selecting a camera that best suits your needs, you may want to strongly consider hiring a photographer.

Step 9: Compose Seller's Agreement

Contents of this document should include:

  • Consignment period
  • Payment details
  • Pricing structure
  • Insurance/liability obligations

Although templates are available online, you may want to consult with an attorney for additional assistance. Affordable legal guidance is also online via Rocket Lawyer and Legal Zoom.

Step 10: Promote Your Business

There are a number of ways to market your online consignment shop. Since word of mouth is the most popular form of advertisement, let all your family and friends know so they can do the talking for you. Promoting your business is an important step that you do not want to skip.

Prepare for Business

If you aren't quite ready to open the virtual doors of your own consignment shop, it is possible to operate through established resale companies, such as eBay and Yahoo! Merchant Solutions.

The start-up costs and profit margins for online consignment shops are more favorable than that of a traditional brick and mortar business. However, failing to follow these steps and carefully evaluate your marketing strategy, cater to the needs of your customers and understand the industry can drastically affect your business.

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Opening an Online Consignment Shop