What is resale?
Resale is the sale of previously sold goods. It's a broad term that covers the resale industry as a whole or any business model built around buying, accepting, and selling secondhand items.
How does resale work?
There are several different resale models, each with their own specific practices. What they all have in common is inventory that has already been sold previously. Below, we’ll break down the various subcategories and models within the resale industry.
Consignment
Consignment stores sell goods on behalf of their consignors and then split the profits. This keeps inventory costs low, variety high, and creates a unique and appealing dynamic for both consignors and shoppers. Not all consignment stores are technically resale stores. Some, like art galleries, sell primarily new goods. However, since most consignment stores sell second-hand goods like clothing, furniture, etc., and since consignment stores make up a large percentage of the resale industry, they’re worth tackling first.
Thrift Stores
Most thrift stores (including non-profit thrift stores) operate by selling donated inventory at very low prices. Since their goods come almost exclusively from individuals wishing to get rid of unused items, thrift stores fall squarely into the “resale” category.
Buy Outright
Stores operating on a “buy outright” model purchase goods from individuals or, occasionally, from wholesalers with excess inventory, and resale those goods at a markup. What differentiates buy outright stores from retail stores is the fact that they have no single wholesale source or brand affiliation, often purchase goods from individual sellers, and usually sell second-hand goods.
Best Practices for Resale
Whether you plan to operate under a buy outright store or a consignment model, here are some best practices to succeed in the resale industry.
Choose a genre/category. Your store doesn’t have to be hyper-niche (although it could be!), but you should set clear expectations for your customers. Being known for something is much better than being known for nothing.
Have a reliable intake process. Resale stores live and die by the quality of their inventory. Have procedures and tools in place that filter for quality goods and a frictionless process.
Keep your finger on the pulse. Resale stores can’t rely on brand recognition or novelty in the way that retail stores can. Use sales data and research to know what’s likely to sell and be nimble enough to adapt.
Provide unique value. Many shoppers who buy resale are in it for more than just the stuff. Find ways to provide an experience that can’t be had anywhere else.
Use good tools. Find software that will make running your store and juggling everything that comes with small business not only easier but significantly more rewarding.
FAQs
Does resale always mean “used?”
Not always. Some resold items may still be in the original packaging, and some resale stores regularly but lots of overstocked or unsold inventory from retailers or wholesalers.
What’s the difference between “resale” and “second-hand?”
“Resale” is a broader category that covers any goods being resold after an initial purchase. Most resold goods are also second-hand, or “used,” but not all. Another way to look at it: In the Venn diagram of commerce, “resale” is a bigger circle than “second-hand.”
How do resale stores make money?
Resale stores make a profit by either marking up an item from the price they paid (in the “buy outright” or donation models) or by splitting the sale price with a consignor. Although resale prices are typically lower than retail, resale stores can still be quite profitable given that inventory costs are also much lower.