is a 'resale' shop a viable business opportunity?

[jgold47]

I have been fascinated with the idea of opening a higher end thrift/consignment/resale shop. I have access to a large amount of traditional thrift stores with a good selection of higher end goods at charity thrift prices. I have a fairly good sense of what will sell and what wont, and I would open this in a fairly affluent area. Is it viable to buy and resell those items at a mark up in the guise of an upscale resale shop or is there just not enough money to be made to make it worth it (clear say 100K/yr in profit?)


Thanks

 

[curzon]

You plan to do this online or a physical location or both?

 

[Blackhood]

Carefully consider the demand for "high end second hand". In this forum there are 100,000 active members, about half of whom might shop on BS. Thats 50,000 in the world who want to buy good quality second hand stuff. How many people are there in your town who actually want this stuff?

This forum can warp your views on how popular clothing is.

 

[Birks and Grey Socks]

I think you're better off making it a home based on-line business. Tax write offs for your residence and utilities may make this a better option.

 

[jgold47]



You plan to do this online or a physical location or both?

My concept was a brick and mortar with an online presence. It would be located in a town with a 'cute' downtown, lots of other restraunts and shops, etc... I am fairly confident of the viability of the market to support a store, the question is how much.

Carefully consider the demand for "high end second hand". In this forum there are 100,000 active members, about half of whom might shop on BS. Thats 50,000 in the world who want to buy good quality second hand stuff. How many people are there in your town who actually want this stuff?
This forum can warp your views on how popular clothing is.

I think I should clairify high end second hand. I ment stuff normal people would buy (polo, levi's, etc...) not crazy SF approved goods. I just mean not going to your local thrift store with the suits from the 80's. A more cultivated selection, and therefor a higher pricepoint.

I think you're better off making it a home based on-line business. Tax write offs for your residence and utilities may make this a better option.

That may be, and portion of the business may utilize the home, but a physical presence is a big part of it. Plus, I would want to try consignment, so would need to have a store.

I was on vacation last week, granted in an international type market, but visited a resale shop selling primarily american mall brands at reasonable prices. I thought that with my access to the product, I could do something similar.

 

[MrG]

My uncle is doing this exact type of thing right now, although it's mostly goods other than clothing. From everything I've heard, he's doing well at it, but he's also the type who seems to be able to make just about anything work, at least in the short term.

The biggest challenge, I would think, is finding merchandise to resell. He's not doing his on consignment; he has a stream of inventory that he buys outright.

I don't know how much profit he's turning, but I think $100,000 a year is pretty optimistic, especially for the first few years. From my understanding of small businesses, you're lucky to turn a profit at all when you're just starting out.

 

[jgold47]

yeah - inventory would be a big concern. As I said, I would be able to have access to a number of stores in a variety of markets, but being highly selective it may be hit or miss. Plus I would be paying basically retail prices, then marking it up and my profit would come on the backs of that.

 

[MrG]



yeah - inventory would be a big concern. As I said, I would be able to have access to a number of stores in a variety of markets, but being highly selective it may be hit or miss. Plus I would be paying basically retail prices, then marking it up and my profit would come on the backs of that.

Wait. What? You're going to pay retail and then re-sell at a markup?

 

[Thomas]



Wait. What? You're going to pay retail and then re-sell at a markup?

Yeah, I read that and thought - no way. Unless you're talking retail at Goodwill or some such, and even then it's dicey.

Considering the fixed costs you'd be incurring (rent, utilities, wages, insurance), I'd think it essential that you spend as little as possible on your inventory. Half Price Books might be a good model to consider.

 

[sns23]



Yeah, I read that and thought - no way. Unless you're talking retail at Goodwill or some such, and even then it's dicey.

"I have access to a large amount of traditional thrift stores with a good selection of higher end goods at charity thrift prices."

People don't read much anymore.

 

[Thomas]



People don't read much anymore.

Plus I would be paying basically retail prices, then marking it up and my profit would come on the backs of that.

You are so right., sns23

 

[MrG]



Yeah, I read that and thought - no way. Unless you're talking retail at Goodwill or some such, and even then it's dicey.
Considering the fixed costs you'd be incurring (rent, utilities, wages, insurance), I'd think it essential that you spend as little as possible on your inventory. Half Price Books might be a good model to consider.

Agreed. Inventory has to be incredibly cheap for the model to work.

You are so right., sns23

 

[jgold47]

yeah - as said, I would buying items at your basic thrift prices. In some cases they are fixed to the type of item, in other cases they vary with the brand. some do discount days as well. That said, I think you can take an item out of thrift store, and mark it up at a higher price point. My supposition is that people would be more willing to spend money on a cultivated collection of higher end merch at a 'resale' shop vs going to a thrift store. Not outrageous, but if I could buy say a polo button down for 3-4 bucks and mark it up and sell it for 15 - 20 bucks, I think there may be something there. same with jeans, tops, etc... and thats without touching women's stuff, I haven't fully thought that through yet.

 

[curzon]

Wow. Golly. Gee. Wow.

You have a few issues here. Firstly, the fixed cost of your physical structure, whether owned or rented. Then you have the variable costs, such as utilities and labor - if you're looking for merchandise then someone has to mind the shop. What size is your local market? By keeping it solely a physical shop you've limited yourself to far fewer potential customers. I don't see how this is good.

I think you may better off developing an online business, such as selling here, other forums, or even on ebay. It will help you learn what the market is looking for and how much it's willing to pay. Certainly this will reduce your start up costs and allow you to spend time looking for merchandise. Having a physical structure with little inventory, or filled with items no one wants, is the death knell. You can hide these mistakes by selling online. Perhaps once you gain expertise and develop a viable business model you can branch out and get that shop you want.

 

[MrG]



yeah - as said, I would buying items at your basic thrift prices. In some cases they are fixed to the type of item, in other cases they vary with the brand. some do discount days as well. That said, I think you can take an item out of thrift store, and mark it up at a higher price point. My supposition is that people would be more willing to spend money on a cultivated collection of higher end merch at a 'resale' shop vs going to a thrift store. Not outrageous, but if I could buy say a polo button down for 3-4 bucks and mark it up and sell it for 15 - 20 bucks, I think there may be something there. same with jeans, tops, etc... and thats without touching women's stuff, I haven't fully thought that through yet.

I'm sorry, but this sounds completely outrageous from a business perspective.

First, you don't have a reliable inventory stream. What happens when you've bought up all the merchandise in the area? The supply to the stores you want to use as a supplier is finite, and, for you to make money, you're going to consume merchandise at a pretty good clip. You need high volume to make a profit, and you need a steady stream of product. The places you're buying from, on the other hand, don't necessarily have to turn a profit, and, even if they do, they're much more diverse in terms of selection.

Second, you're vastly overestimating the willingness of people to pay five or six times as much for an item simply for a bit of convenience or air of quality. They may be willing to pay a bit more, but you're talking about an enormous increase in terms of price. In order to maintain a large enough margin for you to be profitable, you'd have to charge more than people are willing to pay for the added convenience.

Third, a very similar model already exists, at least where I live. It's call Plato's Closet, and I believe there are similar businesses, as well. The difference is in the way they acquire inventory, and their way appears to be vastly superior.

I agree with others who have said - this might be something worth doing in an online format, but I just don't see how it's remotely viable in a brick-and-mortar, high-overhead setup.