How to Start an Online Consignment Store? - Merehead (2023)

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Yuri Musienko

January 19, 2021

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Consignment stores profit by helping people to sell their used items – this is a great business model, which can make you a great deal of money if you do everything right. Our article will reveal a detailed guide to starting an online consignment store. We’ll tell you how to identify your niche, how to create a website, and how the top consignment stores promote their business on the Internet.

A store’s business model

Consignment is an arrangement, in which one party (a user) gives another party (a store) the goods to sell. The user is still an owner of the goods until they’re sold. The store keeps a part of the sales revenue for its services. If the goods weren’t sold during the pre-specified time, the store would return them to the owner.

This is quite a simple model, which may be used to sell anything – starting with real estate and ending with paperclips. Nevertheless, the majority of ordinary people experience it only when selling second-hand items. That is why consignment stores are usually confused with thrift stores. Notwithstanding, they’re not the same thing – there are major differences.

How to Start an Online Consignment Store? - Merehead (3)

Monetization. The main revenue generator of an online consignment store is a percentage of each transaction, which is concluded at its mediation. Nevertheless, it’s not the only possible source of profit for such a platform. Apart from it, you can also use other monetization methods:

  • Payment for listing. It’s most often implemented in the sale of expensive items or to avoid spam with ads; for example, when competitors hire people, who publish thousands of similar and/or fake ads on your platform to wean people off of your store.
  • Integration with other services. For the most part, it’s the integration with postal services. However, there might be other options: repair services, insurance, local business, financial services (loans), etc.
  • Promotion of separate goods on the platform due to a brighter ad or a place at the top of the listing or in the recommendations. Besides, new online stores oftentimes use Google Ads.

A niche of a consignment store

The choice of a niche plays a pivotal role in any online consignment store since it’s quite a size limited market, which happens to be bound to location. Market size is limited because you’ll collect the products not from suppliers or factories, but ordinary people. Only a small percentage of people sell unnecessary items in consignment stores.

For instance, if your store specializes in selling the used books, then you’ll probably have a lot of sellers and buyers. However, if you choose a narrower niche; for example, books about the Great depression or pin-up jackets, this store is unlikely to be successful because of the small size of these markets.

Besides, due to the fact that you’ll receive the goods from people, you should keep in mind that they tend to search for the platforms in their area or country to speed up and cheapen the delivery of these items to the online store. No one would send pants for $10 to another country even if they were guaranteed to be sold there.

Consequently, when choosing a niche you should follow two rules. Firstly, you should sell a quite popular product, which oftentimes is sold in consignment stores and thrift stores. Secondly, such products should be popular in your city or country (you shouldn’t sell the used books in Spanish in Russia or old skis in Egypt).

You can find a niche in the following ways:

  • Specialized websites. You can find many useful insights about the market including data on popular trends, regulations for company registration, and marketing on such platforms as NARTS, TGTBT, Consignment Pal, and Auction Bytes.
  • Analytical tools. Google Trendsand Google Keyword Planner will help you analyze search queries in the needed region or country. SaleHoo Market Research Labs, Spocket, Jungle Scout, Sell The Trend, Niche Scraper and their analogs will help with the analysis of sales and competitiveness of the product.
  • Studies and surveys. A lot of consulting companies, institutions, and marketplaces research consumer behavior including second-hand things, which people are willing to buy/sell. For instance, such information can be found on Statista or in the specialized thredUP section.

A showcase of your online store

Social networks. Many businessmen, who are selling second-hand goods, started with apps like Instagram, Facebook, andTwitter because it’s easy, fast, and, most importantly, free. It’s enough to create an ordinary account and post pictures with products for sale and the online store is ready for work. Whereby you can run an advertising campaign right away or find specialized communities for them to repost your information about selling second-hand items.

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E-Commerce platforms. Due to such services as Shopify, BigCommerce, WooCommerce, Magento, and their analogs, you can start an online store quite quickly with payment services, marketing tools, and other useful features connected. You don’t need to have technical skills to do so – it’s enough to pay for a subscription and select a template with necessary features.

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Unique website and app.To start your online store is often the best solution because it makes it possible to implement any design ideas and add those features to the site that you need (and not buy them as a package as in the case of e-Commerce websites). Besides, only the creation of your website of an online consignment store will allow scaling this business up to the level of Amazon or eBay. Other options are not designed for really significant traffic of users.

How to Start an Online Consignment Store? - Merehead (6)

Large marketplaces. You can arrange the sale of items of the consignmentwebsite like OLX, Amazon,eBay, LetGo, Craigslist or other marketplaces. It’s quite simple and more convenient than the sale via social networks. That said, you’ll need to give a part of your revenue to the marketplace (5-30 %). Besides, it’s almost impossible to stand out on these platforms otherwise than cutting the prices down.

How to Start an Online Consignment Store? - Merehead (7)

Marketing strategy

How to attract sellers. The main marketing challenge of an online consignment store is to attract people, who will agree to sell their items via this platform. And the problem is not only to get in touch with the necessary target audience but also to make people trust a store, which was just opened. After all, they need to send their things to a stranger with no guarantees.

This problem may be solved in several ways:

  • The simplest way is to start with selling things of your family, neighbors, friends, colleagues, and other acquaintances. You can persuade them easier especially if you’ll be doing everything by yourself and they will only bring you their stuff (although that’s not necessary either). Besides, this makes it possible to test a concept, a sales scheme, and a website/app of the online store without any major risk.
  • Another option is a guarantee by a famous person or an organization; for instance, a bank, a charity fund, or other organization. This might be both a simple guarantee and a monetary guarantee (the store will pay the guarantor if it breaks the terms).
  • The last way — is an assurance by way of caution money. In this case, the online store and the seller agree to reserve the goods’ sales price in the bank account or another payment solution. The easiest way to do it now is smart contracts.

How to attract buyers. As soon as you get 5-10 items for sale, you can think of customer attraction. People usually do it with the help of ordinary marketing tools starting with advertisements on Google, Facebook, or Instagram and ending with SEO and influencer marketing. In so doing, they always bet on bright and high-quality pictures of the items, which you should take by yourself.

The rules of good photos for a consignment store are the following:

  • You can’t distort the colors, texture, and sizes. Aspiring sellers of second-hand goods usually do that wishing to increase the attractiveness of the item. However, this is wrong and irrational because this might help you sell the item but its buyer is unlikely ever to buy something from you again. He might also write a bad review of your online consignment store.
  • Use a contrasting background. A white background will do for most cases, but sometimes you should think of options. You can find tips on websites that are dedicated to photography, web design, and marketing.
  • Use a lot of light. A well-lit product allows taking a good picture. You better use natural light, but if it’s impossible, then turn on as many light sources as possible and hold them close to the item not to distort its form.

Warehouse and equipment

Choosing a warehouse. As far as you’ll accept the goods from the sellers, you better find a storage unit close to your house in advance. You need to select the place according to the store’s niche. For instance, optimal conditions for the clothes: temperature — +20-25 °C (about 75 ℉), relative humidity — 55 %. Interestingly, the books require +20 °C (68-70 ℉) and 40-50 % relative humidity.

Here are the average rental costs in the USA:

How to Start an Online Consignment Store? - Merehead (8)

Data are taken from

Choosing the equipment. To start a consignment store, you’ll need the following things: a washing machine, an iron and ironing board, a camera (smartphone), and studio light equipment. As a rule, everything aside from studio light equipment ($150) is in every household, so you can save with this at the beginning. However, as soon as you reach a more or less impressive turnover, you won’t be able to go without a professional washing machine ($1000-3000), a steam press ($200-600), and a professional camera ($500).

How to Start an Online Consignment Store? key takeaways:
  1. A store’s business model
  2. A niche of a consignment store
  3. A showcase of your online store
  4. Marketing strategy
  5. Warehouse and equipment

Merehead does professional development of Online Consignment Store. If you have questions, contact us for a free consultation.

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How to Start an Online Consignment Store? - Merehead (11)


How much does it cost to start a consignment store? ›

1.) Develop a business plan

According to, a consignment clothing store requires $3,000 – $10,000 to launch. Then, it takes at least two years to work out all the kinks. Carefully consider your business structure, consignment policies and your goals for the future.

How do online consignment stores work? ›

Sellers send items to online consignment shops which then list and market them on their website. When an item sells, the store handles packaging and shipping, and sellers may be paid by check, direct deposit, PayPal or store credit.

Why do consignment shops fail? ›

Leasing or buying the wrong location. A big reason many consignment shops fail is poor location. Just because the rent is cheaper doesn't mean your sales will go farther. It could mean there will be no sales at all.

Is owning an online thrift store profitable? ›

Online thrift stores can generate a wide range of income depending on what you sell, your markup and how much work you put into it. Online resellers sometimes make a few hundred dollars per month to supplement their 9-to-5 income.

What items sell best on consignment? ›

  • Upholstered items. Solid-color sofas, sectionals and comfortable chairs are in demand, says Kellie Scott, owner of Divine Consign in Chicago. ...
  • Leather furniture. ...
  • Wooden furniture. ...
  • Dining sets. ...
  • Buffet tables. ...
  • Midcentury modern furniture. ...
  • Inexpensive, unframed modern art. ...
  • Contemporary lamps.
Jun 21, 2013

What percentage do most consignment shops take? ›

Depending on the consignment shop and the item being sold, the seller may concede 25% to 60% of the sales price in consignment fees. Consignment arrangements typically are in effect for a set period of time. After this time, if a sale is not made, the goods are returned to their owner.

How do you price consignment items? ›

How to Price Items
  1. The basic rule of thumb in consignment is to price the item 25% – 40% of the original price you paid.
  2. You set the price on all items, so price to sell. ...
  3. Price your items as if you were the buyer, not the seller. ...
  4. We recommend that you write your tags in red.

Who bears the risk in consignment? ›

In consignment, the consignee can return the unsold goods to the consignor while the buyer has to take permission of the seller for returning the goods in case of sale. All the risks and rewards rest with the consignor in case of consignment.

Why is a consignment risky? ›

This can be risky, because the consignor is committing a large amount of money into a large amount of inventory that might not sell. Cash flow can be unpredictable: Depending on the consignment agreement, suppliers may not receive any money at all until a certain percentage or all of the consigned stock is sold.

What is a fair consignment split? ›

So what is a fair consignment percentage split in today's market? Most trade analysts agree that a 60:40 split in favour of the consignor is fair. This means that the owner or maker receives 60% of each item's selling price, while the consignment shop gets 40%.

What sells the most in thrift stores? ›

Clothing. Clothing is an item that sells best in thrift stores. Accounting for 31.8 percent of industry revenue, clothing is the largest revenue generator in the Thrift Stores industry, according to IBISWorld. Instead of paying higher retail prices, many people are switching to thrift stores for their clothing needs.

Can you make a living off reselling clothes? ›

Reselling is a full-fledged business for plenty of people and despite how crowded the market has become, it can still be a great way to make a bit of money if you know what you're doing. “The possibilities are endless. I have friends who do similar things to me who make hundreds of thousands of dollars a year.

How much do online store owners make? ›

Data shows that at three months, a newly set eCommerce store can make just over $63,000 in monthly revenue. While at one year they can average $127,000 in monthly revenue, and after three years they are ready to churn out an average monthly revenue of $352,000; an increase of over 175% between year one and year three.

What is the fastest item to sell? ›

The 20 Best Things to Sell for Quick Money Right Now
  1. Jewelry and watches. ...
  2. Video game consoles. ...
  3. Old phones and accessories. ...
  4. Purses, wallets, and backpacks. ...
  5. Yard equipment. ...
  6. Jeans, workwear, and designer clothing. ...
  7. Furniture. ...
  8. Baby gear.

What are the easiest products to sell? ›

The following are some of the best products to make and sell online.
  • Soap. It can be an excellent opportunity to produce homemade soap and launch your business brand. ...
  • Bath Bombs. ...
  • Lip Balm. ...
  • Body Scrubs. ...
  • Perfume. ...
  • Soap Dispensers. ...
  • Milk Bath. ...
  • Face Powder.
5 days ago

Who sets the price for consignment? ›

The consignor establishes a resell price, based on a variety of factors, and a display schedule, then presents a contract to the seller to sign. Consignors may also receive donations or buy the items outright from the seller.

What is the consignment rule? ›

Consignment is a type of contract in which the consignor delivers the goods to the consignee for sale. The consignee takes care of the goods and sells them. Until the goods are sold, the consignor does not lose ownership of the goods. After the sale, the consignee pays the consignor a certain amount of sale proceeds.

Is it better to sell or consign? ›

The benefit of consignment is that you may earn more money for your items in the end; however there is a longer waiting period, and there are no guarantees that an item will sell.

How do I start selling on consignment? ›

Here's how consignment works:

The wholesaler (consigner) will bring a product to a shop. It can be clothing, furniture, or almost any household item. The consigner will keep ownership until the product has been sold by the retailer. The retailer (consignee) will agree to sell the item for a fee at their store.

What consignment store gives you the most money? ›

The RealReal. The RealReal pays as much as 85% of the sale price of any item sold on consignment. The company deals primarily with high end designer items, including women's and men's fashion and accessories, men's sneakers, handbags, fine jewelry and watches, fine arts and home decor.

What is the formula of consignment account? ›

Formula: Calculation of Value of Unsold Stock:

Consignment Account. Alternative Method, The cost of stock implies the value at which goods are consigned by the consignor to the consignee. Cost Of Unsold Stock = (Cost of goods sold+Proportionate of all expenses/Total Quantity) X unsold stock.

What are the two types of losses of goods in consignment *? ›

There are two types of losses that can arise in a consignment transaction:
  • Normal loss.
  • Abnormal loss.

How do you secure a consignment? ›

Steps to secure the consigned goods

Possess a Consignment Agreement signed by both the consignor and consignee stating the terms and conditions of the consignment, grant a security interest and describe the goods being consigned. The description of the goods must make them easily identifiable.

Who prepares the consignment account? ›

The consignor prepares the consignment Account, the Goods Sent on Consignment Account and the Consignee's Account in his books, whereas the consignee prepares the Consignor's Account and the Commission Account in his books.

How do consignment shops keep track of inventory? ›

In an RFID-based inventory system, your store associate uses a stationary or hand-held reader to scan each item's RFID tag data. The RFID system updates the consignor's inventory when the item becomes available for sale and again when it sells.

Is consignment a good idea? ›

However, consignment deals are a good option if your business is new and unproven. Consignment deals can also be a good opportunity to get your foot in the door with a retailer. They may not take the risk of buying your products wholesale when they're unfamiliar with them and your business.

What are the types of consignment? ›

There are two types of consignment:
  • Outward consignment.
  • Inward consignment.

How do consignment stores make money? ›

A consignment store makes money by selling consignor's goods. The store may charge an upfront fee to show items, take a fixed percentage of each sale, or it may do both.

What is an example of consignment goods? ›

Examples of goods often sold on consignment include light bulbs, produce, eggs, poultry, magazines, newspapers, Christmas decorations, garden seeds, batteries for flashlights and potted plants such as those found in supermarkets.

Is sale or return the same as consignment? ›

Sale or return, also known as 'in consignment', is basically a loan of stock to a wholesale customer. No money changes hands at the time of handing over the stock, but usually, a formal agreement is signed at this point.

What is a consignment Limit? ›

Consignment Limit means the maximum amount which the Insurers will pay in respect of Property despatched or received under one consignment note.

Can you negotiate price at a consignment store? ›

As mentioned earlier, consignment furniture is meant to be affordable, but some can still have high price tags. If you find one that you like but is expensive, you should ask about it because you can still get it at a lower price through negotiation.

Can you make money consigning? ›

Offering consignment is profitable and can be a good use of your time. Lots of items are in high demand even second hand: phones and certain electronics, high-end baby items, and designer clothing and accessories. If you can find a way to sell these, you're likely to make money.

Is owning a consignment store profitable? ›

Consignment shops are a great business idea for making money in 2022. More than 20,000 US-based used merchandise stores have a combined annual revenue of $17.6 billion, according to First Research.

Is owning a thrift store profitable? ›

Starting a thrift store can certainly be a lucrative business as the thrift industry continues to boom. According to market analyst IBISWorld, the size of the thrift store market is expected to grow by 2.4% in 2022.

How much money can you make from a consignment shop? ›

How much profit can a consignment store make? Consignment stores generally charge from 25 percent to 60 percent of the sales price of a sold item.

Are consignment shops worth it? ›

However, consignment deals are a good option if your business is new and unproven. Consignment deals can also be a good opportunity to get your foot in the door with a retailer. They may not take the risk of buying your products wholesale when they're unfamiliar with them and your business.

What sells best in a thrift store? ›

Clothing is an item that sells best in thrift stores. Accounting for 31.8 percent of industry revenue, clothing is the largest revenue generator in the Thrift Stores industry, according to IBISWorld. Instead of paying higher retail prices, many people are switching to thrift stores for their clothing needs.

How do you get inventory for a thrift store? ›

Unlike traditional retail stores, thrift shops have many ways to acquire inventory.
To summarize, thrift stores acquire inventory from:
  1. Online markets.
  2. Chain retail stores.
  3. Small businesses.
  4. Wholesale suppliers.
  5. Boutiques.
  6. Moving sales.
  7. Store liquidations.
  8. Donations.

Can you make a living flipping thrift store items? ›

Believe it or not, you can make meaningful money as a thrift store flipper. The most successful flippers make over $100k per year reselling their thrift store finds. If you do a quick Google search, you'll find many stores of people pulling big numbers from reselling all sorts of items.

Do you get a 1099 for consignment? ›

It depends. You need to send 1099's to the people whose work you sold IF you sold more than $600.00 for that person in the year. It would be a 1099-Misc. If you did not sell more than $600 for that person, then you do not need to send a 1099-Misc.

What is consignment fee? ›

Consignment is based on a percentage of the final sale price of the item. The consignment percentage refers to the portion of the sale that the consignor gets, while the consignee gets the rest. Depending on the situation, you may not know what the sale price of an item will be until it sells.


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