Consignment Shop or Thrift, Which Online Store Should You Build?

A consignment shop is a type of second-hand store where customers buy resale products – unlike a thrift store, the money from the sale gets split between you (the seller) and the original owner of the item.

Picture a world where you can sell top-notch, gently used items online without the hustle of finding those goods yourself. That’s what online consignment stores are about! These digital storefronts let you as the seller operate as usual, but you don’t have to pay the supplier for the stock until the stock actually sells.

Pros and Cons of Consignment Shops

What is a consignment shop’s main pros and cons? Well, as with everything, there are positives as well as limitations to consignment shops, which can be useful to know when deciding if it’s the right model for your business.

Pros:

• Curated selection: Who doesn’t like fancy things? Consignment shops often carry high-quality, brand-name items that attract a more discerning clientele who are more likely to spend more for quality stuff with designer labels. Say yes please to fashionistas and collectors!

• Higher profit margins: Luxury items can mean luxury profits if you know which high-margin products to sell. Consignment shops can charge higher prices because their customers can expect to pay a little more. Cha-ching!

• Less inventory risk: Since you only pay the item supplier when an item sells, you won’t be stuck with a mountain of unsold inventory. This can be a godsend and make inventory management much easier!

Cons:

• More competitive: The market for online consignment shops is fierce. You’ll need to channel your inner Beyoncé to stand out and slay! To stand out, you’ll have to do a little more work with building your brand, perfecting your site, and curating and promoting your offerings.

• Trust factor: You’ll have to work your charm and prioritize website credibility to establish trust with both item suppliers and customers, so that they feel comfortable working with your shop.
• Inventory turnover: Sometimes selling higher-priced items can take longer, which can impact cash flow at any given moment. Since customers will often bounce to check whether the same item is available cheaper somewhere else, patience is a required virtue! This is a long game after all.

Thrift stores sell donated items second-hand, usually to raise money for a charity or non-profit organization. Whereas consignment stores pay the original owner of the product sold, but keep a portion of the sale, with thrift stores the donor gives up ownership when they donate the product, and the thrift store usually donates the proceeds rather than keeping profits.

Thrift stores are the treasure troves of the resale world, where you can find anything from vintage clothing to quirky home decor. An online thrift store offers a wide variety of secondhand items at more budget-friendly prices. It’s the digital equivalent of your local Goodwill or Salvation Army, but (when done right) it has a sprinkle of Etsy’s vintage charm.

Pros and Cons of Thrift Stores

Thrift stores come with their own perks and drawbacks which are important to consider before getting started:

Pros:

• Wide appeal: Thrift stores cater to a very diverse range of customers, from bargain hunters to vintage enthusiasts. We all love a good deal, and lots of customers like quirky, unusual things.

• Faster inventory turnover: It’s a given that the lower the price, the quicker it sells. Obviously it’s important to still make good decisions about what you’re selling, but you’re not putting high-prices in your customer’s face, so it will help you maintain a steady cash flow.

• Eco-friendly: By selling second hand items, you’re contributing to a more sustainable retail ecosystem. The RealReal alone has saved the planet 827,000,000 liters of water! There are so many benefits and Mother Earth will thank you!

Cons:

• Inventory sourcing: You’ll need to find a constant and reliable supply of secondhand items to keep your store stocked. Whether you use estate sales, garage sales, rely on donations, or scour real-life thrift stores for supplies, it’s time to flex your treasure-hunting muscles!

• Time consuming: Sourcing products, then sorting, pricing, and listing items can be labor-intensive, especially if you have a huge inventory. Grab some coffee, roll up your sleeves and download some podcasts so you can keep yourself entertained while you do the work.

• Potentially lower profit margins: Thrift store items can cost a lot less than fancy items. So you might have smaller profit margins (unless you’re a dynamo at finding overlooked, valuable stuff). You’ll probably have to go for volume, so always do your research about what types of products do well in thrift stores. Also, many thrift stores operate as non-profit, so if you’re planning to run a for-profit thrift store it’s a good idea to make this clear to customers who may otherwise assume their money is going towards a charitable cause.

If you’re looking to sell a curated, potentially trendy or luxury product range, without having to make your own products or risk the ethical and environmental questions that come with fast fashion, then starting a consignment shop is a great option for you!

If you’re less concerned with taking home profits, or want to generate donations for a cause – if you run a charity, for example – and are less concerned about operating within a product niche, then running a thrift store is a better option.

If you’re still unsure, there are some questions you can ask yourself to help you decide once and for all:

• Consignment: Is your target audience a fan of curated, upscale items?
• Thrift: Would your customers love the hunt for budget-friendly treasures?

• Consignment: Are you ready to work some ongoing trust-building magic with your suppliers?
• Thrift: Would you rather keep things more chill and passive and simply find items and post them online?

• Consignment: Do you have a good network of people that you can source awesome consignment-worthy items? This will give you a head start so you don’t have to convince 100% of your suppliers to send products to you with no reviews to verify you at the start.

• How much do profit margins and inventory turnover factor into your plans for total online resale domination?

At first glance, consignment and thrift shops may seem hard to tell apart. But when you dig deeper into the question, what is a consignment shop, it quickly becomes clear that there are some key differences – which means you need to choose the right option carefully.

In a nutshell, the choice between an online consignment shop and thrift store comes down to what you like, your goals, and the style of your business.

Consignment shops are all about offering high-quality, curated items with potentially higher profit margins. Meanwhile, thrift stores cater to a wider audience and deliver a delightful mix of budget-friendly finds. Trust-building is key for consignment shops, and sourcing inventory is a major part of the thrift store game.

At the end of the day, your decision is best when it honors your passions and the goals you’ve set for your online business. Reflect on the questions above, weigh the pros and cons, and trust your gut.

Whether you opt for a luxurious consignment shop or decide to start your own thrift store, your online resale adventure is sure to be an epic journey. Now, go out there and make your mark on the digital resale scene!