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How to Make Money Selling on Consignment – Tips, Pros & Cons


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Sure, the recession has brought back the era of bargain hunting and thrift store shopping, but it’s also welcomed back the return of consignment stores. Consignment shops work in several ways, and each allows you to earn money or store credit for your old, outdated gear. From maternity clothes, to shoes, to sports equipment, to purses, there are consignment stores for just about any of your stuff that is still in good condition.

While donating all of your old clothes, furniture, books, or other items to charity is definitely a noble route, if you’re strapped for cash, it simply might not be the best option. Learn how consignment stores work and whether they present a viable money making opportunity for you.

Using Consignment Shops

What do you think of when you hear the word “consignment?” I’ll admit, it’s kind of an outdated idea. But when funds are low, most people have to get creative about making money and shopping for new stuff, so the idea of buying and selling used goods doesn’t sound so bad.

Recently, I was cleaning out my closet and I realized that I had a pile of outdated clothes that had rarely been worn and that were mostly high-quality and name-brand. In any other case, I would have simply dropped a bag of old clothes to our nearest charity, but I started thinking about a new consignment shop that opened near me. I wanted to give it a shot to see if I could have any success selling on consignment, so I loaded up my bag of clothes and headed over.

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Upfront Payments

Consignment stores typically work in two ways: upfront payments or profit sharing. There are pros and cons to each method, and not every consignment store offers both options.

When you’re offered an upfront payment for your gear, a store employee will go through your offerings to see what would be able to be resold in the shop. Generally, there is a set price for each item, such as $10 for a pair of shoes or $5 for a shirt. Once all the items have been selected for consignment, the remainder can be taken home or donated to charity. Then, the prices of all the clothes and goods are added up, and you’re offered an amount in cash or in store credit on the spot.

Often, the store credit amount is higher because it entices you to keep the money in-house. But if your bank account is hungry, it might be a good idea to accept the cash. Keep in mind that you don’t have to take the offer – if you feel that it’s too low, you can respectfully decline and head somewhere else.

Profit Sharing

If your consignment store operates by profit sharing, you won’t see any money or credit upfront. Instead, you’re assigned an account number and all of the items that are salable are tagged with that number. The consignment store employee prices all your items according to what he or she feels is a fair price, and then agrees to put your items out on the shelves and racks.

As the items are sold in the shop, you and the store split the profits at a rate agreed upon beforehand. You then collect your earnings via cash or store credit.

Profit Sharing Consignment

Pros and Cons

There are definitely pros and cons to each method. When you receive an upfront payment, you get your money immediately; however, you might not receive the best price. The person buying your gear obviously offers a price significantly lower than what the items will sell for in the store – that’s how the shop makes a profit. Still, it’s instant, and probably best if you need money now.

Profit-sharing can help you get a better price, but the problem is that you can’t guarantee that all of your items will sell right away – or at all. Money filters in at a slow trickle, even if it’s a higher amount overall.

Tips and Tricks

Think consignment selling sounds perfect for your closets filled with old and outdated clothes and accessories? Here are some tips to get started:

  1. Find a Specialty Store. You’ll make more money if you zone in on a specialty store for your goods. For instance, a sports equipment store will pay more for your used football pads than a general consignment shop. When I wanted to sell my stuff, I focused on a store specifically for women’s clothing and accessories to help me score a better price on my leftovers. General shops are better for knick-knacks and stuff that can’t be categorized in specialty shops.
  2. Know What Sells. Consignment shops specifically look for stuff that sells quickly and easily. A nearly unworn pair of designer jeans or clean baby toys? Perfect. Your old Little League trophy? Not so much. Before you take your stuff over, consider whether you’d buy the same item used or not.
  3. Clean Your Items. You’ll get more money for each of your items if they’re in good shape and freshly washed and ironed. I just hung up the stuff I was going to sell and went over it with a steamer before folding it neatly into a paper bag. If you’re missing buttons, parts, laces and pieces, it’s best to just donate the gear instead. Check over your items for stains and other marks, since consignment shops will probably decline marked and worn-looking items.
  4. Read the Contract. If you decide to sell using the profit-sharing method, you’ll receive a contract. The contract gives you information about the percentage for sharing, how the items are priced, how long your items will sit on store shelves, and when you can arrive to collect your money. It’s important to know the details so you aren’t disappointed by the outcome.
  5. Don’t Always Go for the Instant Money. Sometimes a consignment store will split up the way that you sell your items. If you want instant money for an old shirt you don’t care about, take the cash. But if a store owner offers you a paltry amount for a baby crib you know is worth more, ask to go a profit-sharing route and you’ll probably score bigger bucks in the long run.

Final Word

Of course, no one is going to get rich by selling old stuff to consignment stores. As of now, I’ve earned about $75 for a couple hundred dollars worth of clothing and accessories – and I’m taking store credit. But if you’re strapped for cash or you want to do some shopping yourself, consignment stores can help feed your habit on the cheap.

Have you used consignment stores for selling or buying? What tips can you offer for others to have a successful experience?

Jacqueline Curtis writes about edtech, finance, marketing, and small business strategy. With over 14 years of copywriting experience, she's created content and scripting for organizations such as GE, Walgreens, Overstock, and MasterCard. She lives in Utah with her husband, three kids, and an overzealous springer spaniel named Penelope.