Starting a Consignment Store Part 1: Choosing the Right Business Model

Starting a Consignment Store

Where do you start when starting a consignment store? The first step is determining what kind of resale store you are going to run—everything flows downstream from this decision.

There are a few basics to know: the difference between consignment and resale, and the standard types of resale stores. We'll describe the basic pros and cons of running these different types of stores. This could potentially be review for you, so you may want to skip ahead to blogs further in the series (as we release them).

Consignment and Resale

You probably already know the difference between consignment and resale, but here's a reminder. In simple terms, your business model is how and where you sell secondhand goods. It’s also important to understand consignment vs. resale.

• In consignment, you sell items on behalf of others and split the profits. It requires a lower up-front cost but requires tracking consignors and payouts.

• In a resale model (like a thrift or buy-outright shop), you purchase items upfront and keep all the profit when they sell. Buying inventory outright gives you full control at a higher initial cost.

Consignment has lower upfront cost and risk but requires tracking consignors and payouts, while buying inventory outright gives you full control at a higher initial cost. If you want to review the pros and cons to these different kinds of resale in greater detail, check out this blog (we also cover the thrift-style donation store, which is a peripheral kind of resale). Keeping this in mind, let’s explore the main store models you can choose from.

Have you decided on how to price your inventory? Check out our guide on pricing consignment and resale inventory.

Quick Comparison of Consignment Store Models (Startup Cost, Time, Complexity)

• Brick-and-Mortar Store: High startup costs (lease, utilities, store setup); significant time commitment (fixed open hours, need to staff the shop); moderate complexity (managing a physical storefront and on-site inventory).

• Online-Only Store: Low startup costs (no rent, just website or marketplace fees); flexible time commitment (you can list and ship items on your own schedule); moderate complexity (handling item listings, shipping, and online customer service).

• Hybrid (Physical + Online): Medium to high startup costs (expenses of a store plus an e-commerce setup); high time commitment (running in-person sales and maintaining online listings); high complexity (two sales channels to manage, needing good systems to sync inventory).

• Pop-Up Store: Low to medium startup costs (short-term retail space or event fees instead of a long lease); part-time commitment (occasional or seasonal selling periods); moderate complexity (simpler day-to-day, but you must manage inventory and logistics for each event).

Brick-and-Mortar Consignment Store

A brick-and-mortar consignment store is a traditional physical shop in your community.

Pros: It offers in-person customer experiences. Shoppers can see, touch, and try items before buying. You can build trust and loyalty through face-to-face service, and a local shop can benefit from foot traffic and word-of-mouth.

Cons: This model comes with higher upfront expenses (renting or buying a retail space, store fixtures, utilities, insurance) and ongoing overhead. You’ll also need to keep regular store hours (often requiring you to be there or hire help), which means a big time commitment and less flexibility. For many first-timers without much capital or free time, jumping straight to a physical store can be challenging.

If someone wants to run a successful Brick-and-Mortar, they should be willing to spend a significant amount of time, money, and effort.

Want to get more foot traffic during the holidays? Maximize sales and foot traffic with these best practices.

Online-Only Consignment Store

An online consignment store lets you sell through a website or marketplace without a physical location.

Pros: The startup costs are minimal, often just a website plan or seller fees, and you don’t pay for a storefront. This model is easier to start on a tight budget and can be run from home. It’s also very flexible; you can work on your own schedule and reach customers far beyond your local area.

Cons: Without a shop, you lose the foot traffic and personal interaction that can build on-the-spot trust. Earning credibility with customers and consignors may take more effort when everything is remote. Also, running an online store means photographing each item, writing descriptions, and handling shipping and returns, which is time-consuming. You’ll need space at home to store inventory, and some items (like large furniture) are tricky to sell online due to shipping issues.

An online-only consignment store is more flexible in its time, money, and effort needed. Because it can be done remotely and there are no required staffing hours, an online store can exist with little investment, but a lot of investment is required for successful growth.

Hybrid Consignment Store (Physical + Online)

A hybrid model combines a brick-and-mortar shop with an online store to get the best of both worlds.

Pros: You can serve local walk-in customers while also reaching online shoppers nationwide. This broader reach diversifies your income and gives consignors more ways to sell their items.

Cons: Managing a hybrid store is like running two businesses at once. It requires more investment of money and time. You must keep inventory synced across in-store and online sales to avoid confusion or double-selling, and you’ll need solid organization (and possibly extra hands) to handle both channels. With good planning – and the right tools – a hybrid model can succeed when you’re ready for the complexity.

Obviously, this style of a store requires the highest commitment.

Use ConsignCloud's Shopify integration to take your entire store online, or you can check out the best Shopify integrations for consignment stores.

Pop-Up Consignment Store

A pop-up consignment store is a temporary shop or sales event, such as a booth at a market or a short-term storefront for a weekend or season.

Pros: Pop-ups involve very low commitment. They let you test different locations or product niches without the expense of a long lease. Overhead stays low, which is great for a part-time venture or side gig.

Cons: Since a pop-up isn’t permanent, you won’t have a steady weekly income or a consistent place for customers to find you. Each event requires fresh planning, permits, and marketing to draw a crowd. You also have to move and store your inventory between events. It can be harder to build a loyal customer base when you’re not open year-round.

Pop-up consignment stores are a terrific way for those who want to enter the consignment business at a slower pace or for hobbyists who simply love the lifestyle.

Check out Alexandria at My Girlfriend's Wardrobe, who moved from a pop-up store to a successful luxury brick-and-mortar store downtown.

ConsignCloud Supports Every Model

Whichever model you choose, managing inventory and consignor accounts efficiently is crucial. Many people start with spreadsheets, but keeping track gets harder as you grow, so software like ConsignCloud helps by keeping your inventory and consignor accounts organized in one place. It also syncs your in-store and online sales to prevent double-selling, making multi-channel management much easier. By letting ConsignCloud handle day-to-day tracking (inventory, pricing, consignor payouts, etc.), you free up time to focus on growing your store.

Part 2 coming soon: we'll explore paperwork and legal setup (don't worry, it's not that intimidating). We’ll cover how to register your business, obtain any required licenses or permits, and set up your basic consignor agreement and store policies.