How To Start a Consignment Shop in 12 Steps

Becoming a consignment store owner can be a smart business move. In 2023, the global secondhand and resale industry was valued at $197 billion, and is projected to soar by another $100 billion by 2026—and that’s just in apparel.

Whether you’re selling vintage fashion, unique furniture, or eclectic home décor, a consignment business offers a low-cost inventory model, where you only pay for items once they sell. This setup attracts a diverse customer base eager for unique, affordable finds.

But where do you start? Ahead, you’ll learn how to start a consignment shop from start to finish. 

How to start a consignment shop

1. Decide what kind of store you want to open
2. Make a budget for your store
3. Create your store’s business plan
4. Choose a legal structure
5. Open a business bank account
6. Find a storefront
7. Acquire your products
8. Design your consignment shop
9. Choose a POS system
10. Market your consignment shop
11. Hire and train staff
12. Launch your consignment store

1. Decide what kind of store you want to open

This decision shapes every other aspect of your business, from your inventory to your target audience, and even your location. Here are some considerations to determine the best type of consignment store for your vision:

• Passion and expertise. Do you love vintage finds or quirky home décor? Maybe you’re into art and jewelry? Your passion will drive your business, so pick a niche you genuinely care about.
• Market demand. Look at your local market. Are there lots of consignment stores for home furniture? Maybe there’s a gap for high-quality vintage clothing or children’s items. You can also use local business directories and Google Trends to understand the market demand.
• Competition. Visit other consignment stores in your area. Make note of their strengths and weaknesses, product offerings, pricing, and customer service. Use this as a learning opportunity to understand what works and find ways to stand out.
• Target audience. Who are your potential customers? It could be young professionals, collectors, parents, children. Knowing your audience helps with product selection, store atmosphere, and marketing efforts. Consider creating customer personas to visualize your buyers.
• Your resources. Take stock of your available resources: time, money, and skills. Align your consignment shop with your strengths to improve your chances of success. For instance, are you good at staging furniture? Or do you have a knack for identifying valuable vintage pieces? 

?Top Tip: Sustainable shopping is on the rise. Offering eco-friendly goods can attract customers willing to pay a premium.

Popular consignment store types and niches

Designer goods

Specializing in high-end designer items can attract brand-savvy customers, but authenticity is key. LaliSimone, for instance, offers an impressive collection of verified designer wear.

While this niche comes with high profit margins and a loyal customer base, it requires a significant initial investment and rigorous authentication.

Footwear

Here, you’ll be catering to specific markets (e.g., athletic, vintage, designer shoes) and stocking a variety of sizes and styles to meet different customer needs. Take a cue from Kick Game—the brand offers all kinds of sought-after streetwear brands.

Expect high demand and potential high resale value, especially among sneaker enthusiasts. However, managing inventory can be challenging, and competition is stiff.

Books

Consignment book shops typically offer rare finds, first editions, or popular genres. You can also host events like book clubs and coffee chats to build a loyal community, similar to Crow and Co. Books.

This niche has a steady demand and opportunities for engagement but also has lower profit margins and requires large inventory space.

Children’s wear

If you choose this niche, you’ll be stocking affordable, gently used items for kids, from newborn to teen. Focusing exclusively on children’s apparel, like Thrifty Baby, can result in high turnover and strong demand. However, be prepared for challenges such as constant inventory replenishment, quick wear-out of items, and strict adherence to safety standards.

Online only

To run a flexible, broad-reaching online consignment shop, like ThredUp, requires a user-friendly website with high-quality photos and detailed descriptions.

This approach offers lower overhead costs, global reach, and flexible inventory management. The catch? It also demands strong digital marketing and comes with challenges related to shipping and returns.

2. Make a budget for your store

First, take a good look at your current income and savings. This will help you see how much you can invest in your new business.

Consider how much additional funding you might need. You can look into personal loans, business loans, or credit cards. Also, think about the cost of leasing or buying your store location, including the deposit, monthly rent, and any renovation expenses.

Then, take into account taxes, business licenses, and permits. Don’t forget essentials like fixtures, shelving, display cases, and a point-of-sale (POS) system. Plus, other supplies like pricing tags and hangers. 

Estimate the cost of your initial inventory, including upfront payments to consignors or purchasing high-demand items.

Next up are ongoing operational costs. This includes:

• Employee salaries, benefits, and training
• Monthly utilities (electricity, water, internet) and maintenance
• Business insurance for liability, property, and inventory protection
• Marketing costs, including website development, social media, local ads, and events
• Fixed bills like rent, phones, internet, payment processing, merchandise orders, and store supplies

After budgeting for expenses, focus on your store’s revenue projections. Plan for lower sales initially to ensure you have enough cash flow to cover expenses. Subtract your estimated monthly expenses from your estimated monthly sales to get an approximate monthly cash flow.

Knowing your potential income will help you make smarter decisions for your consignment store, like what inventory to buy, how to market your store, and when to hire staff.

?Top tip: Set aside a contingency fund for unexpected expenses like urgent repairs, sudden rent increases, or emergency stock purchases. Aim to save at least three to six months’ worth of operating expenses to handle unforeseen challenges without disrupting store operations.

3. Create your store’s business plan

Author Lee Bolman once said, “A vision without a strategy remains an illusion.” That’s why the next step is creating a solid business plan that sets your reseller business up for success. Your business plan should combine all your ideas into a clear strategy for making your consignment store profitable. 

Be sure to include:

• Executive summary: Provide a concise overview of your consignment business, including your mission statement, product offerings, and business goals. 
• Company overview: Describe your business, including its name, location, legal structure, and brief history. Highlight what sets your consignment store apart.
• Products or services offered: Detail the products or services you’ll offer, such as vintage fashion, furniture, home décor, or children’s items. Highlight any unique selling points or special services.
• Market analysis: Research your target market, competitors, and industry trends. Identify your target audience and explain how your store will meet their needs better than competitors.
• Marketing plan: Outline your strategies for attracting and retaining customers through online and offline tactics, such as social media, local advertising, email marketing, and in-store events. Define your brand positioning and customer loyalty plans.
• Logistics and operations plan: Explain your daily operations, including supply chain management, staffing, inventory control, and store layout. Mention the technology and systems you plan on implementing for efficient management.
• Financial plan: Mention how you plan on becoming a profitable business and include a projected financial timeline of at least five years. For external funding, outline your funding requirements and mention how you plan on repaying the loan. 

4. Choose a legal structure

Your business’s legal structure affects taxes, personal liability, and your ability to raise money. Here are your options:

• Sole proprietorship: Easy to set up, but you’re personally liable for everything.
• Partnership: Shared responsibility and profits with one or more people.
• Limited liability company (LLC): Offers liability protection and flexible management.
• C Corporation: Provides strong liability protection but is more complex and costly to establish.

Consult a legal adviser to pick the best structure for your business. This choice can also impact your funding options, as lenders and investors may have preferences.

5. Open a business bank account

Once your legal structure is set, open a business bank account. This keeps your personal and business finances separate, making accounting and tax prep easier. You’ll need:

• Your business’s legal name and structure documentation
• Business tax identification. For instance, US store owners need an employer identification number (EIN) or Social Security number (for sole proprietors)
• Personal identification (driver’s license or passport)

Once you have a business bank account, it’s time to fund your business. Some options include: 

• Personal savings: Using your savings is a common way to fund a consignment shop. You won’t incur debt or have to pay interest, and keep ownership of your entire business. But funds are limited to the amount of savings you have.
• Credit cards: These provide quick and accessible funding, often used to cover short-term expenses and manage cash flow. Credit cards come with high interest rates that can lead to massive debt if not managed properly.
• Startup loans: These loans are designed for new businesses and can provide the capital you need to launch and grow a consignment shop. They are offered by banks, credit unions, and online lenders, and can provide more funding compared to your savings. 

Once you’ve secured the funding you need, you can start looking for a storefront.

6. Find a storefront

Look for locations with high foot traffic. Think: bustling streets, shopping centers, or areas near popular attractions and public transport hubs. Visit potential store locations at different times of the day to assess the flow of pedestrian traffic.

Make sure the area’s demographics match your target market. Research the age, income levels, and shopping habits of the local population. For example, if you’re targeting young professionals who love vintage fashion, an urban area with a vibrant nightlife would be perfect.

Next, ensure the space meets your needs for displaying inventory and accommodating customers. Consider:

• Product display: Is there enough room to showcase your items effectively?
• Customer flow: Can customers move around comfortably?
• Back-end operations: Is there adequate storage and space for staff?

Finally, your store should be easy to reach by car, foot, and public transport. Adequate parking is a major plus—customers might skip your store if parking is a hassle. In case street parking is scarce, consider partnering with nearby businesses for shared parking options.

Other things to consider include: 

• Lease terms and conditions: Understand the lease details, including duration, renewal options, rent increases, and extra costs like maintenance fees, taxes, and utilities. Negotiate for favorable terms.
• Local zoning and regulations: Ensure your location complies with local zoning laws for retail consignment stores. Check for any restrictions on business types, hours, or signage. Consult a zoning officer or legal adviser to avoid legal issues.

7. Acquire your products

To stock your consignment store with fabulous finds, try these strategies:

• Consignors: Partner with individuals looking to sell their gently used items. Promote your consignment services through local advertising, social media, and word of mouth. Highlight the benefits of consigning with you, like earning extra income and decluttering their homes.
• Local partnerships: Build relationships with local businesses, like boutiques or furniture stores, that may have excess inventory. These partnerships can provide a steady stream of high-quality items. Collaborate for mutual promotion, driving traffic to both your store and theirs.
• Community events: Attend garage sales, estate sales, flea markets, and conventions (ThriftCon, GotSole) to find unique items for your store. These events are a goldmine of potential inventory—you’ll likely find rare and interesting pieces to entice customers.
• Online platforms: Source inventory from online marketplaces where people sell second-hand goods. Think: websites like eBay, Craigslist, and Facebook Marketplace. Set up alerts for specific items to get notified when something relevant is listed.
• Association of Resale Professionals (NARTS): Join NARTS, the professional organization that connects resale buyers with suppliers. Being a member provides valuable networking opportunities, industry insights, and access to a wide range of inventory sources.

?Tip: Draft clear consignment agreements outlining terms, conditions, and commission structures (anywhere from 20% to 60%). Ensure both parties understand and sign these agreements.

8. Design your consignment shop

When designing your store, you want to maximize space and deliver a pleasant shopping experience. Take a page from Creative Goods & Co., a family-owned store that balances aesthetics with functionality, creating a welcoming shopping experience.

Here’s what to keep in mind: 

Store layout and floor plan

• Plan a store layout that allows easy navigation with wide aisles and accessible popular items. Consider a grid or racetrack layout for specialty stores or a free-flow plan for high-end boutiques.
• Create distinct areas for different product types like clothing, furniture, and home decor to help customers find what they’re looking for.
• Design a flexible floor plan that can be rearranged for seasonal changes or promotions.

Aesthetics

• Reflect your store’s branding with cohesive colors, décor, and fixtures.
• Use ambient, task, and accent lighting to highlight products and create a warm atmosphere.
• Invest in attractive displays and clear signage to showcase products effectively and provide useful information.

Customer experience

• Provide comfortable seating areas and mirrors, especially in clothing sections.
• Design an efficient and pleasant checkout area with space for queuing and an accessible POS system. 
• Place small, inexpensive items near the checkout for impulse buys.

Practical considerations

• Plan adequate storage space for inventory, supplies, and consignor items awaiting processing.
• Implement security measures like cameras, alarm systems, and strategic staff placement to protect inventory and ensure customer safety.

9. Choose a POS system

A POS system can be a game-changer for your consignment store, making daily operations smooth and keeping your customers happy.

With the right POS system, managing sales, inventory, and consignor accounts becomes effortless. It also helps you track what items customers buy, how often they shop, and their preferred payment methods. Using these insights, you can then tailor your inventory, marketing strategies, and promotions to better meet their needs. 

For instance, Shopify POS ensures secure payments, syncs seamlessly with online sales, and provides detailed sales reports to help you make informed business decisions.

“Shopify POS makes the customer experience I want to offer customers possible, without burdening me with more admin work,” says Mandalyn Renicker, owner of Offbeat Bikes. “It was easy to migrate, easy to learn, and makes running my business more straightforward than it used to be.”

?Learn how Offbeat Bikes improved customer service and saved time by migrating to Shopify POS.

10. Market your consignment shop 

This step is all about creating a buzz around your consignment store—one that attracts customers and gets the money rolling in.

Here’s how you can do it, both online and in-person:

Online marketing

• Website and SEO: Create a user-friendly website showcasing your products. Optimize it for search engines with relevant keywords, meta tags, and high-quality content so potential customers can easily find you.
• Social media: Start building your presence on platforms like Instagram, Facebook, and Pinterest. Share sneak peeks of your inventory, BTS setups, and countdowns to your grand opening. Use high-quality images and videos to engage your audience.
• Email marketing: Collect email addresses through a sign-up form on your website and social media. Send out teasers and updates about your opening, and build excitement with exclusive previews and special launch offers.
• Online advertising: Run targeted ads on Google and social media to reach your local community. Focus on creating buzz and awareness about your upcoming store. Adjust your strategy based on engagement and feedback.
• Influencer collaborations: Partner with local influencers or bloggers to spread the word about your opening. Their endorsement can build trust before you even open your doors.

In-person marketing

• Local advertising: Promote your store through local newspapers, magazines, and community bulletin boards. Use flyers and posters in high-traffic areas to get the word out. And if you’re up for it, get on the local radio or TV segments.
• Events and workshops: Plan pre-launch events such as pop-up shops, preview parties, or DIY workshops. These events can create excitement and give potential customers a taste of what to expect. Offer special promotions or discounts during these events to encourage early interest.
• Customer loyalty programs: Announce a loyalty program before your launch to entice potential customers. Offer points for signing up early, which can be redeemed for discounts or special offers once you open.
• Street presence: Make your storefront attractive and inviting with eye-catching window displays and clear signage. Use sidewalk signs to build anticipation and inform passersby of your opening date.
• Word of mouth: Encourage early supporters and friends to spread the word about your upcoming store. Offer referral incentives or discounts for those who bring in friends and family. Positive buzz can significantly boost your launch success.

11. Hire and train staff

With the store launch on the horizon, it’s time to build your dream team. 

Start by posting job listings on local job boards, social media, and your website. You’re looking for candidates with retail experience and top-notch communication skills. Conduct thorough interviews to find individuals who match your store’s culture and values.

Once hired, provide a detailed orientation to familiarize new employees with the store layout, inventory management processes, and safety protocols. Introduce them to your store’s mission and values to foster a sense of belonging and purpose.

We recommend setting up a thorough training program for your team. Cover all the essentials: store policies, customer service standards, and how to use the POS system. Make sure your new hires know your products inside and out so they can help customers with confidence. Incorporate role-playing scenarios to get them ready for real-life interactions.

12. Launch your consignment store

Pick a launch date that gives you plenty of time to plan and promote. Ideally, aim for a weekend or during a local event, when foot traffic is high.

Send out invites and teasers to your email list, and consider placing ads in local newspapers and online forums. Then, start building anticipation on Instagram and Facebook with sneak peeks, special offers, and event announcements. 

You can also invite local influencers, bloggers, and media outlets to your launch for more exposure.

Then, for launch day excitement, consider these grand opening ideas to make your event lively and engage the crowd:

• Special discounts: Offer exclusive launch-day discounts or promotions to encourage purchases.
• Event activities: Host engaging activities like live music, raffles, a fashion show, or DIY workshops to create a festive atmosphere.
• Refreshments and décor: Provide light refreshments and decorate your store to create a welcoming, celebratory environment. A photo booth or themed backdrop can also make for memorable customer photos.

Make sure your team is ready for the big day. Brief them on their roles, customer service expectations, and any special promotions. Encourage them to engage with customers and create a warm, welcoming atmosphere.

?Tip: After the launch, follow up with attendees via email or social media to thank them for coming. Offer a special discount or promotion for their next visit to keep the momentum going.

Tips for starting specialty consignment shops

Starting a specialty consignment shop can be exciting, but it takes some smart planning. Here are some tips to help you get started on the right foot:

Know your consignment shop types

Consignment shops come in many varieties—children’s clothing, crafts, sneakers, bridal wear, and general apparel, to name a few. 

Understanding these types can help you find your niche and tailor your business to meet specific customer needs. Specializing in a particular type of consignment can attract a loyal customer base and make your shop stand out.

Build strong relationships with consignors

Consignors provide your inventory, making them key to your success. Building strong, positive relationships with them ensures a steady flow of high-quality merchandise.

• Consignment agreements: Create clear, fair agreements outlining commission rates, payment schedules, pricing strategies, and policies for unsold items.
• Communication: Keep in regular contact with consignors. Post-launch, keep them updated on sales performance and share feedback on how their items are selling.
• Incentives: Offer incentives, like higher commission rates for high-demand items or bonuses for referrals. This can motivate consignors to provide better quality items and recommend your shop to others.

Set the right prices and profit margins

Getting your pricing right is key to your shop’s profitability. Here’s how to approach it:

• Market research: Do thorough market research to understand the pricing of similar items in your area. Visit other consignment shops, research online, and consider local economic conditions.
• Condition and brand: Price items based on their condition, brand, and demand. High-quality, well-known brands can command higher prices, while lesser-known or more worn items should be priced lower.
• Profit margins: Calculate your profit margins to ensure they cover your operating costs and provide a sustainable income. Take into account the consignment split and any additional costs, such as cleaning or minor repairs.

Handle the legal and financial stuff

Before opening your doors, get familiar with the legal and financial aspects of running a business. You’ll need the right licenses and permits, an understanding of local regulations, and compliance with tax requirements. 

Don’t forget insurance to protect your business and inventory. We recommend consulting a financial adviser to create a solid budget and financial plan.

Become the successful consignment shop owner you can be

With thoughtful planning, attention to detail, and a passion for your niche, you can successfully launch and grow your consignment shop. Use a reliable POS system to keep things running smoothly, build solid relationships with consignors, and offer top-notch customer service. Your dedication will pave the way for a thriving consignment business.

Source