How to run a profitable second-hand store

The downturn has hit businesses hard, and many are doing what they can to adapt. For a lot of stores that means exploring new opportunities when the old ways no longer work. We see more and more stores wanting to go into second-hand, so we have listed some common mistakes. Use them as tips for how you free up precious time.

Inefficient processes eat profitability – common mistakes stores make

1. Registering too much information

You do not need a detailed description of every single garment. Entering size, colour, brand and type is enormously time-consuming when the item can only be sold once. If customers can register their clothes digitally before they drop them off, the store can focus on what it does best – a good experience and more sales.

2. Follow-up

A store should always help its customers, whether they are shopping or dropping off clothes for consignment. But if staff spend time chasing submitted items and tracking what has sold instead of actually selling, revenue suffers.

3. The wrong assortment

Another time sink is having to turn away customers whose clothes do not fit the store’s assortment. Saying no may not seem to take long, but stores themselves experience it as both time-consuming and frustrating not to be able to accept a wider range.

4. Registering new customers

Registering new drop-off customers takes time and manual work – name, phone number and other necessary details. These steps are often done by hand, which feels outdated and hurts the experience for people who actually want to shop.

5. Cumbersome payouts

Paying customers whose items have sold on consignment is often a process. The customer must send or give their account number, the store logs into internet banking, and the customer waits for the money – in the worst case until the end of the month.

Stores spend precious resources on admin relative to what they actually earn. Some goods are worth the extra time: expensive luxury items. A detailed description of a Louis Vuitton bag can be justified when the margin is larger.

Unreasonable manual work

Many store systems demand a lot of data per product before a sale is possible. Heavy manual work for small margins is common.

For a second-hand store selling children’s clothes, where volumes are high and margins small, this is often hard to justify economically. It would be quicker to put a price tag on each pair of kids’ trousers than to type colour, size, condition, brand and wear into a system. With Serculate, your customers can register their items before they drop them off, so you do not have to.

More efficient labelling saves time

Just as registering goods takes time, so does labelling them.

The market standard is that the store registers every item separately each time a customer drops something off. That is enormously time-consuming, which is why Serculate has streamlined the process with two types of labelling.

Strategy labelling

The store registers the customer once. Once the customer is in the system, they can register their own items for future drop-offs. By saving time for staff, the store becomes more sustainable – you can focus on customer relationships that create lasting value.

Labelling by customer number

Labelling all items by customer number is very efficient when customers drop off many garments at once, because the clothes can go out on the floor almost immediately. The customer gets their commission on the account when an item sells, though they cannot see exactly which one.

Ask yourself: Who are you labelling for? Is it to generate reports on what sells best, or so the customer knows which garment they sold?

As we have already noted, systems demand a lot of data and resources. You have to know why the data matters – or whether it matters at all. Stores need to ask: Who needs this information?

Is it relevant to know whether red kids’ trousers from Lindex sell best, or is it enough to know that kids’ trousers sell well?

Design the process for the purpose

Take these perspectives into account and build a process that is efficient for the purpose. When choosing a strategy, the most important things are:

• The strategy is adapted to sales volume and margin per item.
• Time spent per garment is in direct relation to expected revenue given the store’s concept.

Whichever strategy you choose, Serculate supports consignment through smart configurations adapted to each store.

It should be easy to update customers on sales status

The two most common things people who have dropped off clothes for consignment want to know are:

1. Has my garment sold?
2. When do I get the money in my account?

To answer those questions, stores typically log into systems, look up the information, then contact the customer by phone or social media. With Serculate’s customer portal that is no longer necessary. Your customers can see the status of their clothes and request their money themselves – with no manual work or admin cost on your side.

Curious which strategy fits your store, or which questions are worth asking? We are happy to share our experience and industry trends. Get in touch.