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How to Start a Resale Shop Business in 22 Steps

Do you want to start a resale shop? If YES, here is a 22-step guide on how to start a profitable resale shop business with no money and no experience. A resale shop is one of the many business ideas within the retail industry that an aspiring entrepreneur can successfully start in in part of the world with little or no prior experience.

If you are interested in starting a resale shop in the United States of America or in any art of the world, you should be able to conduct your due diligence so as to know the type of goods to sell and how to get your supplies.

22 Steps to Starting a Resale Shop Business

Table of Content

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1. Understand the Industry

A resale shop is any shop that gets used goods for resale in their store. Resale shops can be categorized into three areas and they are consignment shops, buy-outright shops and thrift shops. A consignment shop accepts goods from customers, merchandises them for sale and pays a portion to the contributor. A buy-outright shop purchases used goods and marks them up to earn a profit. A thrift store is more likely to be run by a nonprofit organization or to support charitable causes.

The United States of America resale industry is estimated to be a multi-billion dollar industry. The industry rakes in an estimated revenue of 16 billion dollars annually and this amount includes the revenues that are generated from antique stores which is put at about 13 percent of the annual income of the industry.

Statistics has it that in the United States of America, the number of resale shops opening across the nation is on a steady growth of 7 percent and there are presently well over 25,000 registered consignment and resale stores in the whole of the United States of America.

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In the United States and in most parts of the world, many businesses are forced to close shop because of the bad state of the economy, but resale shop business remains ever growing and perhaps more profitable are the years go by.

From the recent research published by a consumer research firm, the America’s Research Group, about 16 – 18 percent of Americans will shop at a thrift store during a given year and for consignment shops (resale shops), it’s about 12 – 15 percent. To keep these figures in perspective, consider that during the same time frame; 11.4 percent of Americans shop in factory outlet malls, 19.6 percent in apparel stores and 21.3 percent in major department stores.

Interesting Statistics About the Industry

The Resale Shops Industry is indeed a very large industry and pretty much active in all the parts of the world. Statistics has it that in the United States of America alone, there are about 8,960 registered and licensed resale stores, responsible for employing about 117,918 people and the industry rakes in about $10 billion annually.

Going forward, the industry is projected to grow at the rate of 3.2 percent annually. The companies with the lion share of the available market in this industry are Goodwill Industries International Inc., Savers and The Salvation Army.

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It is a proven fact that the turnover of an average resale shop business can be as high as 50 percent and above that is why entrepreneurs who intend making good money from a business with little startup capital open their own resale shop; they either start by using a garage (garage sales), their cars/vans or rent a shop.

The resale industry is indeed flourishing because more and more consumers are becoming aware of the need to cut unnecessary spending. Besides the awareness of recycling is also a big boost for the industry.

Some of the factors that encourage aspiring entrepreneurs to open a resale shop is the fact that the amount needed to start the business, especially when you choose to start a mobile shop is not high compared to other small scale businesses. That makes it easier for people to come into the industry anytime they so desire.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition for a resale shop cuts across people of all ages and cultures, tribes and political affiliations, races and religions et al. The truth is that anybody who has the financial capacity is indeed a potential client of a resale shop business; from school children to corporate workers, from corporate organizations to individuals, from religious organizations to households et al.

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Generally resale shopping attracts consumers from all economic levels. There is no distinctive resale shopper, just as there is no distinctive resale shop. The truth is that everybody irrespective of their financial status would usually look towards saving money and it could come from selling used items or purchasing used items.

Usually, people with low income take advantage of the opportunity resale offers to save money on apparel, furniture and other consumer items. The money you saved from either purchasing used items or selling your used items can be diverted to other areas. Here are a few of the demographic composition for resale shop business;

  • Households
  • Corporate Executives
  • Business People
  • About to wed couples
  • Expectant Mothers
  • Students

3. Decide What Niche to Concentrate On

It is important to state that resale shop business is under the retailing industry and this industry is very broad. The truth is that almost every commodity that is manufactured can be retailed. Having said that, if you are looking towards starting a resale shop business, aside from the types of goods you want to retail in your shop, you have the option of starting a;

  • Consignment shops
  • Thrift shops
  • Outright – buyout shops
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The Level of Competition in the Industry

A resale shop business is easy to start, requires low startup capital, requires no technical skills and it is a profitable venture, hence there is a high level of competition in the industry. The truth is that despite the level of competition in the resale shop business, entrepreneurs who are running the business are still making their profits and some of them generate as high as 50 percent turnover especially those that are well positioned and have been able to secure loyal customers.

Creativity in the industry is obviously what led to online resale stores, clearance sales, and loads of other marketing strategies that is helping the business to grow despite the competition in the industry.

4. Know the Major Competitors in the Industry

Irrespective of the industry that you decide to pitch your business tent, it is the norm that there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands have been in the industry for a long time while others are best known for the quality of their products, how they conduct their businesses and the results they have achieved over the years.

These are some of the leading resale shops in the United States of America and in the globe;

  • HALO Thrift Shop
  • Buffalo Exchange
  • Crossroads Trading Co
  • Trunk Show Consignment
  • Michael’s Consignment
  • Beacon’s Closet
  • The Dressing Room
  • Second Time Around
  • Encore
  • Cadillac’s Castle
  • Annie Creamcheese
  • My Sister’s Closet
  • Hip Zipper
  • Flo’s on 7th
  • Kimberley’s Consignment
  • NYC Opera Thrift Shop
  • Guvnor’s Vintage Thrift
  • Disney Character Warehouse
  • Cure Thrift Shop
  • Out of the Closet
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Economic Analysis

Starting a resale shop business requires that you conduct your feasibility studies and market survey so as to get your economic analysis right. As a matter of fact, you just have to get your economic analysis right if your intention of building the business is to generate profits, grow the business and perhaps expand the business.

When conducting economic analysis for your resale shop business, you would have to critically examine these key factors; place, product, pricing, and promotion. You would have to continue to review these factors while running your resale shop business.

Running a single resale shop outlet (an independent resale shop) is different from managing or operating a resale shop chain or franchise. Managing or operating a resale shop chain or franchise attracts additional impediments like incentive alliance, bureaucracies, growth strategy, and operational guidelines et al.

5. Decide Whether to Buy a Franchise or Start from Scratch

If your aim of starting a resale business is just to earn money and make a living without much stress, then you can afford to look for a successful resale chain and buy their franchise; but if your aim of starting a resale business is to build a business that will grow from just one shop outlet in one city to chains of resale shops in different cities all around the world and perhaps sell franchises, then starting from the scratch is your best bet.

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Although starting a business from the very scratch might not be easy, but if you are diligent and you apply the right business strategies, it won’t be long before your business brand becomes recognized not only in your city or state, but throughout the United States of America.

6. Know the Possible Threats and Challenges You Will Face

The threats and challenges that are likely going to confront a startup resale business is the fact that they competing with already established resale shops. You would have to compete for the available market in the location you choose to set up your own resale shop.

Other threats and challenges that you are likely going to face when you start your resale shop business are economic downturn and unfavorable government policies. For instance, if you export second hand goods to other countries and the government of one of the countries you usually export goods to place a ban on such trade, it will definitely affect your business negatively.

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7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

It depends on what you want and the type of business model that you intend building, you can either choose a limited liability company which is commonly called an LLC, or a sole proprietorship. Sole proprietorship should have been the ideal business structure for a resale business especially if you are just starting out from your garage or van. But if your intention is to open several outlets of your retail shops in the different cities and to sell franchise, then choosing sole proprietor is not an option.

Setting up an LLC protects you from personal liability. It is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.

8. Choose a Catchy Business Name from the ideas Below

Usually, when it comes to choosing a name for your business, it is important that you choose a name that clearly indicates the type of business you are into, it will make it easier for people to identify with your brand name. However, there are no hard and fast rules when it comes to choosing a name for a resale business; you can afford to name your resale business anything as long as you have perfected your marketing strategy.

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These are some catchy business names that you can choose from if you are looking towards starting your own resale shop business.

  • Friendly Pocket® Resale Shop
  • Orlando Community® Thrift Shop
  • Penny Wise® Consignment Shop
  • Ella George® Resale Shop and Franchise, Inc.
  • Mama Joy® Resale Shop
  • Glory Land™ Thrift Stores
  • Becky Aston® Consignment Shop
  • New Dawn® Resale Shop
  • Sparrow Wisper® Resale Shop
9. Discuss With an Agent to Know the Best Insurance Policies for You

When it comes to starting a resale or any retailing business for that matter, there are key insurance policies that you must have in place. You should note that you can’t be permitted to run a retailing business in the United States if you don’t have insurance cover for your business.

These are some of the basic insurance covers that you should consider purchasing if you want to start your own resale shop business in the United States of America and also in most parts of the world;

  • General insurance
  • Health insurance
  • Liability insurance
  • Workers compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Credit insurance
  • Payment protection insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are running a franchise model, it is compulsory that you file for intellectual property protection. It will come handy as your resale brand begins to expand. The truth is that even if you are starting your own resale shop business from the scratch, you would still need to secure your brand name from an intellectual property clearinghouse.

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It is quite challenging to build your resale shop brand from the scratch, and then watch the brand name slip off your hands. Even if you intend buying a resale shop franchise, you would still need to contract the trademarks and servicemarks from the franchising company.

11. Get the Necessary Professional Certification

You do not have any need for professional certification before you can be allowed to legally operate your resale shop business in the United States of America. It is a business that is open to the skilled and the unskilled hence there is no need for a special professional certification.

Be that as it may, if you come across any certification, especially in the retailing industry, that will help you conduct your resale business in such a way that will position you to compete with leaders in the industry, then by all means acquire such certification.

12. Get the Necessary Legal Documents You Need to Operate

The legal documents required for running a resale business is perhaps the basic legal requirements needed to run any business in the United States of America. These are some of the legal documents needed before you can successfully start and run your own resale shop business;

  • Business and liability insurance
  • Tax Payer’s ID
  • Fire certificate
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Employment Agreement (offer letters)
  • Employee’s Handbook (optional)
  • Operating Agreement for LLCs
  • Building License
  • Franchise or Trademark License
  • Insurance Policy
  • Contract documents (for vendor’s / shipping partners)
  • Online Terms of Use (for online resale shop stores)
  • Online Privacy Policy Document (for online resale stores)
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13. Do a Detailed Cost Analysis

When it comes to starting a resale shop business, loads of factors influences the amount that will be required to successfully launch the business. Factors like the location you intend starting the business, the type of goods you want to retail, the size of the resale shop you want to open, and of course the state of the economy.

Irrespective of where you intend starting your resale shop business, you would be required to fulfill most of the items listed below;

  • The Total Fee for Registering the Business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services totaling – $1,300.
  • Marketing promotion expenses for the grand opening of your resale shop in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring Business / Franchise Consultant (if you intend selling franchise) – $2,500 (estimated figure)
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for payment of rent for a shop for 12 month at $1.76 per square feet in the total amount of – $52,800.
  • The cost for shop remodeling – $5,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits – ($2,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $10,000
  • The cost for Start-up inventory – $10,000
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • Office equipment and furniture – $3,600
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
  • The cost of Launching a website – $600 (for online resale shop stores)
  • The cost for an opening party – $2,000 (optional)
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If you want to start a medium scale resale shop business in the United States of America, you would need nothing less than ten thousand dollars ($10,000). And if your intention is to start a large scale resale shop business in the United States of America, then you should look towards generating over ten thousand dollars ($10,000).

14. Raise the Needed Startup Capital

It is often said that money is the lifeline of any business, and raising startup capital is perhaps one of the major concerns of entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from angel investors.

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The first thing to put in place before sourcing for startup capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business.

The truth is that no bank can give you a loan if you don’t have a good and workable business plan. Besides, investors will not take you serious if you don’t have a business plan. There are several options when it comes to raising money to finance a startup business. Some of the options are;

  • Raising money from personal savings and sale of personal stocks
  • Raising money from investors and business partners
  • Applying for loan from bank
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Sourcing for soft loans from family members and friends.
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15. Choose a Suitable Location for your Business

In starting a resale shop, it is very important to be strategic with the location and type of shop you get. It is important to note that your resale shop may likely not thrive in a highbrow area but would do well in the lower class suburbs of the city.

So you should locate your resale shop where the lower class of the society lives. Besides getting loads of people that might patronize you in this area, you would also get shops at a very cheaper rate. Before choosing a location for your resale shop business, ensure that you conduct a thorough feasibility studies and market survey.

The possibility of you coming across a resale shop that just closed shop in the location you want to open yours can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set up your resale business. These are some of the factors that you should consider before choosing a location for your resale shop;

  • The demography of the location
  • The purchasing power of the residence of the location
  • Accessibility of the location
  • The numbers of resale shops in the location
  • The local laws and regulations in the community
  • Traffic, parking and security

16. Hire Employees for your Technical and Manpower Needs

There are no technical requirements for starting a resale shop business aside from the fact that you might want to acquire POS machines for those who might want to pay via their debit/credit cards. You might also want to buy a CRM software application to help you manage your customer base; to inform them when you have new consignment and to keep in touch with them.

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As regard renting or leasing a shop, your financial capacity should influence your choice. If you have the required finance, it is to your advantage to acquire a property or lease a facility to be used for your resale shop; it usually gives you the freedom to design the facility the way you want. But if you are low on cash, then you don’t have any option other than to rent a facility or operate your resale shop from your garage or from your car/van.

Usually, an ideal resale shop would have the owner and one or more sales people. But if you intend operating a standard resale shop, then you should look towards hiring a store manager, purchasing manager, sales girls and sales boys and perhaps a driver. On the average, you would need about 5 employees to operate a standard resale shop in the United States of America.

The Service Delivery Process of the Business

Some resale shops operate on a walk-in basis. For example, they may choose to offer 30 percent cash of the current value of the goods you want them to sell or 50 percent store credit. When resale shops collect goods from clients, they are expected to remit the agreed amount when the goods are sold.

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Usually, checks are sent out every month to their clients as agreed in the contract document. If you bring your used goods to a resale shop to help you sell, the owner of the resale shop (the buyer) will let you know what they plan on selling your items for, and you’ll sign a contract for three months with the option of a fourth.

You’ll get 50 percent of the selling price, but items less than $400 will get marked down 20 percent after a month, and items more than $400 will get marked down after two months. If you choose that fourth month, another 50 percent will come off the selling price.

17. Write a Marketing Plan Packed With ideas & Strategies

When it comes to generating a marketing strategy for your resale shop business, the first thing you need to do is to ensure that you choose a good location for your store. If your resale store is located in a good location, you would have successfully eliminated some challenges that you are likely going to be confronted with.

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These are some of the marketing ideas and strategies that you can adopt for your retailing business;

  • Direct Marketing
  • Introduce your business to people and organization in the community where your store is located
  • List your business in local directories/yellow pages
  • Sponsor TV and Radio Programs
  • Erect your Billboards in Strategic locations around the city
  • Making use of sales Agents and sales reps
  • Online Marketing (via your official website, social media platforms and blog et al)
  • Referral Marketing/word of mouth
  • Public relations during exhibitions and corporate events

18. Work Out a Reasonable Pricing for your Services & Products

One of the major factors that will help you get the right product pricing for your resale business is your bargaining power. The truth is that if you are good with bargaining, you will be able to get second hand goods at good prices, and then resale at prices that will guarantee you profits.

This is the reason why the average resale shop owner makes over 50 percent turnover rate. Another factor that can aid you to get the right pricing for your goods is to employ only key employees and outsource some roles that are not essential. With that, you will be able to cut cost of running the business.

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19. Develop Iron-clad Competitive Strategies to Help You Win

When it comes to competing favorably in the resale shop industry, you would have to explore ways of getting neatly used items at giveaway prices. One thing is certain, if you operate the biggest resale shop in your location and you deal in various secondhand items ranging from apparels to home appliance, to office equipment to electronics et al, you likely going to attract more customers than your competitions.

The idea is to rent a bigger shop and then run a one – stop resale shop; a shop where it is difficult for any customer to visit without getting the goods they want to buy. That is perhaps one of the key competitive strategies to adopt in this type of business.

20. Brainstorm Possible Ways to Retain Clients & Customers

One of the strategies that you would use to generate repeated sales from your customers is to ensure that the you sell neatly used second hand items at affordable prices and also ensure you adopt a win – win approach when it comes to purchasing used items from your customers.

You should also ensure that your customer service deliveries are always on point. The truth is that if your customers find it difficult to get quality used goods from your shop, you are likely going to struggle to get them to come back; people usually go to places where they are sure of getting value for their money.

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You can also make uses of promotional ideas such as loyalty schemes, direct marketing, door drops, and merchandising. Lastly, ensure that you offer your customers incentives if you want to retain them and of course continue to generate repeated sales from them, and also attract new customers.

21. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

Resale business just like any other business in the retailing industry requires steady promotion to get people to buy into the brand. In promoting your brand and corporate identity, you should leverage on both print and electronic media. Know that it is cost effective to use social media platforms to promote your brand, and it is quite effective.

Here are the platforms you can leverage on to create brand awareness of your resale shop and to promote your corporate identity in the market place;

  • Place adverts on national TV stations, Radio Stations and Newspapers / Magazines
  • Run your own special TV program
  • Sponsor relevant community programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook, YouTube, Twitter et al
  • Install your billboards in strategic locations
  • Engage in roadshows from time to time
  • Distribute your fliers and handbills in targeted areas from time to time
  • Send out introductory letters to households in and around your location
  • Encourage the use of word of mouth especially from loyal customers
  • Ensure that all your vehicles are branded with your company’s logo
  • Ensure that all your employees wear your branded shirts during work hours
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22. Create a Suppliers/Distribution Network

One of the first business strategies that you should put in place here is how to constantly get stocks of the items that you retail.

You can easily come across people who want to sell their used items, and you can as well place adverts on advertising platforms to inform people that you buy second hand items. In recent time, the internet has become the busiest place where people sell and buy second hand items, so you should make plans to leverage on the internet when it comes to stocking your shop.

Even if you run a brick and mortar kind of resale store, you can still go ahead to have an online resale store. It won’t cost you much to set up an online store except for the logistics of shipping et al. Besides if you have an online resale store, your target market won’t just be restricted to the location of your store.