How to Start a Consignment Store Business

29 December 2016 | By Scott Howard in Entrepreneurship

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Nowadays, we often hear headlines about how poorly retailers have been performing in these difficult economic times. That is the reason why there’s been one segment that’s been getting an unusual amount of attention. In this retail environment, consignment and resale stores have been getting a lot of press. However, in reality, is that these stores have been doing very well all along.

The consignment and resale business is a unique part of the retail landscape. These shops come in all shapes and sizes. They may be similar in a number of ways, but there are distinctions between consignment shops and resale stores:

The defining characteristic of a consignment shop is that the store rarely takes ownership of the merchandise. For the most part, merchandise comes to the shop from the local community. In some cases, consignment merchandise is augmented from estate sales and auctions to round out assortments.

However, consignment shops financial structure is very different from a regular retailer because they don’t take ownership of their merchandise,. They don’t carry a large inventory on their books, so they don’t have the same financing or accounts payables issues that a regular retailer does. They are not paying for merchandise upfront; they merely distribute the consigner’s portion of the proceeds after the sale has been made.

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