The Beginner's Guide to Consignment Stores, Thrift Shops and More - Man vs Debt (2024)

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Note: This is a post from Courtney Baker, chief seller and long-time running wo-man of MvD. This article may contain affiliate links that help support this website.

For the longest time, I misunderstood the world of second-hand shops. I assumed that all shops gathered their inventory by buying goods from people directly, or from donations. I was completely oblivious to consignments.

I also was completely unaware that online marketplaces like craigslist, andeBay are also considered second-hand shops.

It turns out there are four types of second-hand shops – consignment, pawn, classified and thrift.


The difference between each one comes down to:

  • When you relinquish ownership of the physical possessions
  • When you are paid
  • Whether someone helps you sell your items

Consignment

Consignment is when a shop sells goods for an owner. The owner keeps ownership of his item until it sells, if it sells. As the owner, you’d pay a small fee to the shop as compensation for them selling your item.

For example, you consign a children’s bicycle for $20. Generally, when they sell your bicycle, they take their 50% or $10. You receive $10. If the bicycle doesn’t sell, then you take your items home for no charge. (Some places do charge a small “activation” or consignment fee.)

There are two consignment options – physical shops and weekend sales.

Consignment shops

Consignment shops are locally owned businesses with a mom-and-pop feel. They set their own terms for how their consignments work, so it’s important to research the store policies before committing. When you visit the store, the items will have an identification code on the tag to identify which account gets credit for the sale.

How it works for the seller

It’s standard for you to drop off your items for a 30-, 60- or 90-day cycle. If your item doesn’t sell within that period, some shops will discount the item (by say, 30%), or you will need to pick it up. You can expect to be charged a 25% to 60% commission, which the shop collects as its profit. Some shops offer you higher percentages if you take in-store credit instead of cash.

Is it worth it?

There isn’t a ton of inventory in these shops, so your item has less competition, but in many cases, there also isn’t a ton of traffic coming through the door. It takes quite a while to see results from many of these shops, so it’s not a great idea if you need cash pronto.

I think consignment shops are only worthwhile if you have quality goods to sell. For clothing, you need to have high-end brands. You’ll need antique furniture or nearly new high-end pieces. Auctions are hit and miss. I’ve even found the children’s consignment shop circuit to be impossible to make money at with kids’ stuff unless you have some really high-end brands.

I avoid consignment shops as a seller, but love them as a buyer!

Examples of consignment shops:

Consignment sales

Consignment sales are short, but intense events. They usually pop up for a weekend, 2 to 4 days, in random vacant spaces. I’ve seen them in strip malls, hotel conference rooms, and school gymnasiums. They are intense, because hundreds of people will be thumbing through the items throughout the weekend. The energy is high, and you can expect to see shoppers’ cars packed to the brim!

How it works for the seller

The week before the sale, you’ll prepare your items with tags specific to your sale (most sales have a website with full information). A few days before the sale, the organizers will open the doors for you to drop off your items. It’s standard to earn 60% of the sale price as a base rate on your sold items, but you’ll also pay a $10 to $15 entry fee.

After the sale, you can either collect your items or have them donated on your behalf.

Is it worth it?

Consignment sales have the opposite problem of consignment shops. There’s an incredibly large inventory. I’ve never seen so many play mats, strollers or onesies in one place! Your item will have a harder time standing out, but there are literally hundreds of shoppers ready to load up their cars.

I personally prefer a consignment sale over a consignment shop, because I get immediate results. I find that I can send less-than-perfect items to a consignment sale that wouldn’t be accepted in a consignment shop.

Plus, I love the frenzy, which would be an absolute con for several of my girlfriends!

The most important thing to know about consignment sales is that they are only worth it if you have a large selection of things to sell. It’s hard to turn a profit with five smaller items and a $10 entry fee.

Examples of consignment sales:

Pawn shops

I have a very stereotypical picture of pawn shops. It involves jewelry, ripped-off cell phones and wrought-iron bars. I never thought of resale clothing stores as pawn shops, but technically, they are.

In a pawn shop, you relinquish your ownership of your item in exchange for immediate payment.

There are actually several nationwide chains that resell goods under pawn-shop policies, like Half Price Books and Plato’s Closet.

How it works for the seller

For example, you want to sell baby clothes. You bring in your tubs of clothes for the shopkeeper to evaluate. At the end, they offer a quote for the cluster of items they’re interested in. If you agree, then they’ll pay you from the cash register.

The items no longer belong to you. They may never sell the clothes, but it doesn’t affect your payout. All the risk falls on the store.

I’ve found these types of shops to be inconsistent in how much they pay you. Your quote may be different on a Tuesday than on a Thursday for no real reason.

I say this very lightly; but technically, it’s 50% of what they’d sell it for. So, if a pair of Children’s Place pants in their store resells for $7.50, you’d earn $3.75 up front. A book will resell for $10, so they pay you $5 for it.

Is it worth it?

You don’t have any control over how much your item sells for. The company will make an offer, and you can accept it or turn it down. This is a great option if you want immediate, same-day results and never worry about your crap again.

Do I think you’re getting the best for your money? No, not really. I think you’ll get better results from the next types of second-hand shops – classifieds. I do think they’re better than consignment shops.

This is where you have to look at your priorities for time and money. Is it better for you to just be done with it? Or are you wanting to really recoup as much value out of it?

Examples of pawn shops:

Classifieds

Classified ads are the alternative to the standard second-hand shop. They’re widely popular for eliminating the expensive middle man. While there nominal fees for placing your ad in a newspaper, magazine or online marketplace, it’s usually smaller than consignments or pawn shops.

Classifieds also provide a marketplace for items that are rarely sellable in the other shops, including RVs, collector’s items, renovation scraps or items in bulk.

How it works for the seller

The costs and procedures drastically vary from platform to platform. Newspaper spaces can cost $15 or more for an ad, while the online marketplaces can cost $1. Craigslist is beloved, because it’s a completely free marketplace for selling your stuff.

The pro to a classified ad is that you have more control over your item, but that also means you have more decisions to make and more responsibilities to get it sold.

You’ll want to consider:

  • How much is the ad?
  • How many people will see my ad?
  • Do I know anyone who’s successfully used this platform?
  • How much time do I have to sell my item?

Is it worth it?

With other types of sales, you are paying some of your profit to businesses to get the job done. With classifieds (person-to-person sales), you can save that money, but now you are the one connecting with potential buyers, negotiating prices and handling the transaction.

I’ve found a system that makes this a no-brainer for me. I’ve learned how to quickly write ads, to know which marketplaces to sell different items in, and how to handle interested buyers.

This is the route that allows me to get the most money out of my used crap, most efficiently. As a warning, though, this type of second-hand selling can also flop if you don’t do any research.

Examples of classifieds:

Thrift shops

It’s important to point out that some second-hand shops operate solely based on donations. These thrift shops frequently work as non-profit organizations, but not always.

How it works for the seller (or in this case, donater)

You drop of your donations at the store (although some offer a pickup service), and they’ll give you a tax-deductible receipt based on the estimated value of your items. You feel good about yourself while increasing your tax deductions, and they place your items on their shelves.

Is it worth it?

There are some scenarios (like donating an old car) where the tax-deductible receipt is a lifesaver, but I rarely actually use it.

When the payouts from other second-hand shops would be tiny, I prefer to just donate those items. I might be missing out on a couple of bucks from that item, but I’m avoiding the hassle of selling it while also helping a good cause.

I regularly donate my baby clothes to local shelters (obviously, not a second-hand “shop,” but a non-profit). Every time I take them into consignment or pawn shops, I get offered quarters for nice clothes. Instead, I’m happy to give it to a needy family!

Examples of thrift stores:

The resale store full of donated goods down your street might not be labeled a thrift shop. And Half-Price Books doesn’t market itself as a pawn shop. But it’s true!

Selling your stuff second-hand is a great way to clear out your house and pocket some extra cash. Hopefully these tidbits will help you decide which second-hand marketplace is the best option for you.

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Where do you sell your stuff second-hand? Have you had any success with consignment shops?

Comment and let us know!

The Beginner's Guide to Consignment Stores, Thrift Shops and More - Man vs Debt (2024)

FAQs

Is selling to a consignment shop worth it? ›

Lower Your Expectations. Unless you plan on consigning a luxury item where you can predict a decent sale, expect to make on average $7 per item. Walk around the store and get a sense of how items are priced, then divide that number by half: that's most likely going to be your profit if your item sells.

What's the difference between a thrift store and a consignment shop? ›

Thrift stores accept most donations as is, so you will find a variety of items that range from brand new to antiques from your grandmother's home. Donations are not accepted at consignment stores. Consignment shops pay you for your goods once they sell them. You will receive a percentage of the item's total sale price.

Why do consignment shops fail? ›

Several factors contribute to the failure of a consignment shop. These include poor financial management, lack of marketing, and inadequate inventory management. By analyzing these factors, SimpleConsign helps our stores avoid these pitfalls and set them on the path to success.

Why are consignment stores so expensive? ›

Operational costs: Thrift stores have operational expenses such as rent, utilities, and staffing. Real estate of all sorts has reached ridiculous prices; when you couple that with the size of most thrift stores (especially in the States), that alone can explain the higher costs of goods.

What percentage do most consignment shops take? ›

The percentage of sales taken by consignment shops varies, but typically ranges from a 40% to 60% cut. Each consignee creates its own consignment arrangement. The distribution of sales revenue often depends on a consignment business's brand reputation and sales volume.

How do consignment stores make money? ›

How does consignment make money? As the consignee, you make money by selling items on behalf of consignors and taking a percentage of the sale price as a commission.

Are thrift stores lucrative? ›

Can you make money having a thrift store? Yes, it is possible to make money by opening a thrift store. Some online thrift store companies make a high-profit margin of 80%.

Is thrifting actually worth it? ›

Thrifting is a sustainable and budget-friendly way to shop new-to-you clothes! It gives you the opportunity to find unique garments for your wardrobe while saving money. Not to mention, it's great for the environment, benefits local businesses, and forces you to slow down the rapid consumption of new clothes.

Why should selling on consignment be avoided? ›

Disadvantages of consignment selling

Since the goods are out of your physical control, you cannot control the damage and shopper abuse which inventory merchandise is generally subject to.

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

Starting a consignment store typically costs around $10,000-$50,000.

Why do consignment shops smell? ›

Cleaning Practices

While some items might be washed with detergents, others might be sprayed with disinfectants. The combination of cleaning agents, each with its unique scent, can often leave a residual aroma that lingers on the items and in the store.

Why is everyone thrifting now? ›

As secondhand shoppers feel like they're saving something from ending up in a landfill, buying used clothing is no longer viewed as inferior to buying new. Thrifting today is "not only not a stigma," Craig said, "it's a badge of honor."

Why does thrift store shopping keep getting worse? ›

The popularity of fast fashion brands coupled with changing trends fueled by social media means that many lower quality fast fashion items are donated to thrift stores, making durable vintage items harder to find. And those are just the pieces the store decides to put on the floor for sale.

Why is thrifting becoming more expensive? ›

The popularity of thrifting has created an inflation in the prices these thrift companies can get away with. The modern generation is also quick to blame TikTok and reselling apps for the rise of thrift prices. And, while not the main contributor, these apps have proved to be a threat to thrift stores.

Can you make money with a consignment store? ›

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.

What is the profit margin for a consignment store? ›

As we have observed, consignees will typically take a 40% commission on sales - that is, a 60:40 split favouring the maker. However, there may be circumstances when the consignment shop's percentage might be higher.

Are consignment shop prices negotiable? ›

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.

Should I consign or donate? ›

If you need the money, make the effort to sell your excess—especially when it comes to big, expensive items. But if you do not need the money, just give your things away. Reselling your clutter adds time and energy, anxiety and frustration to the minimizing journey.

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