Are you planning on moving to a new place, and don’t want to take some valuable items along with you? Or perhaps feel overwhelmed by goods you no longer want but are still of value?
Item owners have very limited solutions to these which may be recycling or donating these items to charity. But a consignment store is a smart way to get rid of these items and get paid.
Shortly, we will take a look at everything you should know about consignment stores. It cuts across what makes it different from thrift stores, consignment fees, and taxes, to mention a few. Before we get to the nuts and bolts, what do we mean by consignment store?
What Does Consignment Store Mean?
A consignment store is an outlet that sells items for the owner. Here, the owner has all the rights to these items until sale. After the sale, the owner will pay a percentage to the consignor as a commission for the item sold.
This arrangement can be on an item like artwork, books, clothing, jewellery, and others. Before a consignment store agrees to sell an item, it has to be in good shape and meet the requirements of the store. Most times, the condition of the item determines the price value.
What Is the Difference Between a Consignment Store and a Thrift Store?
Consignment stores and thrift stores sell used items for a discount price. Still, they are not the same. In a moment, we will look at factors that distinguish the two.
Motive: Both the owner of an item and a consignment store are profit-oriented. In this arrangement, the owner and a consignment store agree to the owner’s desired price. Not just that, they call all the shots. Until the sale of the item, the owner retains the full right of the item. Unlike a consignment store, a thrift store operates as a non-profit and gets a variety of items from donors. Simply put, a thrift store is not obliged to compensate the donors.
Pricing: Items in a consignment store are more expensive than those in a thrift store. The pricing factor boils down to the sources of the item. As mentioned above, the owner of an item displayed in a consignment store intends to make money. On the other hand, owners who donate to a thrift store are doing it for a cause.
Apart from that, taking time to sell unwanted items and getting rid of an item are two different things. In a consignment store, people only intend to sell items that are of high quality and in good condition. Often, some of the items donated are of low quality. Nobody in their right mind will put so much on them.
What Do Consignment Shops Pay?
The owner of an item pays a commission to a consignment shop when an item makes sales. But before then, both the consignor and the owner reach a consensus on the item price value. They also decide how the money is shared. The share between the parties is often in the percentage of the sales price paid to both parties.
Which brings us to: What do consignment shops pay to the owners?
A lot of consignment shops have a standard rate for all kinds of sales. Other shops give room for negotiation, especially items with much revenue like paintings and artworks. With that said, the consignment charged between 20% to 60% commission.
Do I Need to Pay Taxes on Consignment Sales?
One of the perks of selling your item in a consignment store is you are not required to pay taxes on consignment sales.
A consignment store does not purchase items they put for sale. As stated earlier, the owner retains the rights to these items till sales are final. Therefore, the stores do not pay taxes on consignment sales. Neither is the owner obliged to pay or collect sales taxes.
When items are sold, the buyer will pay tax to the consignment store during the sales. After that, the store will send the tax on a consignment sale to the state Department of Revenue.
What are the Tips and Tricks of Consignment?
Know what sells before you consider selling any item in a consignment store. A Consignment store is more likely to okay items that sell fast. A neatly worn pair of designer shoes? That sells fast. Old overused piece of furniture? I don’t think so.
Other items that sell fast are:
- Shoes
- Clothes
- Toys
- Baby Accessories
- Furniture and many more
The best way to figure out what sells and what doesn’t is to ask yourself if you’d buy the item yourself. You can also research online or consult your friends.
Now that you know what sells and whatnot. It is ideal to find specialty consignment stores as this will increase your chances of selling your item fast and making more money from the sales. The truth is, a specialty store will know the worth of an item more than the ones that sell a variety of stuff.
Ensure that the item you are selling is in good shape. Sometimes, all an item needs is good cleaning and some minor fixes. Determine what the item requires to be in good condition.
Finally, always read through the contract when you are dealing with a consignment store. Apart from being on the safer side, reading through contracts will keep you informed on:
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- The price tag
- The percentage for sharing revenues
- How long your item will be in the consignment store.
Conclusion – Is Consignment a Good Idea?
With everything said here, you will agree that consignment is a good idea. Is it the way it saves inventory costs? Or the retention of rights of owners till an item is sold? Don’t even get me started on the hassle-free sales and payment process!
Donating your valuables to charity is indeed a noble gesture. But when you need money, donating might not be a good idea. A lot of people have fast-selling items they could monetise lying in their closets.
Thinking of kickstarting your e-commerce journey? Get in touch with Daalder! We’ll guide you every step of the way.
