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How does consignment work? (Your guide to starting a used-clothes side hustle)

If you’re looking for ways to make extra money on the side, then look no further than your own closet.

Without even knowing it, you could have a gold mine of items that can be sold on consignment. Most areas have consignment shops, a retailer that will take on consigned goods for a piece of the proceeds if they are able to sell the merchandise.

From the winter coat that you only wore once to those must-have shoes that are unbearable to wear, you have the makings of a used-clothes side hustle. And as you build your  consignment inventory for resale, keep in mind that there’s specific demand for women’s clothing, children’s clothing, and special use products like maternity wear.

In this post, I’ll share exactly how consignment works and how you can start earning extra cash from selling your used clothes.

How does consignment work?

In simple terms, consigning is the practice of allowing someone else to hold and sell your items for you. This is done with the agreement that once the items are sold, you will be paid a percentage of the profits or some set amount upfront.

If you are looking to consign your items, you have two options.

The first option is to sell through a consignment shop.

Consignment shops are brick-and-mortar businesses that you can sell through at any time. (Many will also list some items online). These stores are typically independently owned; however, there are some established chain consignment stores.

When working with a consignment store, you’ll likely receive an upfront payment that will be significantly less than the price that the item is sold for. This is to compensate for holding and marketing the items, as well as the risk of the item not selling.

The benefit of working with a shop is that you will immediately get cash for your items. It’s a great option for when you have a few items that you would like to get rid of and want to make extra cash quickly.

How consignment sales events work

The second option for consigning is through consignment sales events. Consignment sales are limited-time, often seasonal, events that are open to the public. These sales are typically organized by independent businesses and target a specific age group or item type.

For example, each year a local business in my area hosts a children’s consignment sale. This event provides the opportunity to sell and purchase used children’s clothes and toys. As a seller, you can register to participate in an event and contribute any of the host’s approved items to the sale.

Consignment sales work very similarly to the way that selling through a consignment shop would. You provide items to be sold and you will receive a portion of the profits. However, unlike consignment shops, you are required to organize, hang, and tag your own items for a consignment sale. If your items don’t sell, you can simply retrieve them after the event is over or have the organizer donate them to charity.

Those who consign are typically attracted to these events because they are able to sell their items much faster and in larger quantities than they could through a shop. Consignment sales also offer more traffic and those who attend are usually bargain shoppers looking for deals.

How to participate in a consignment sale

A quick Google search will provide you with a list of upcoming consignment sales in your area that you can participate in. You must register for these events in order to become a seller and there is typically a non-refundable registration fee required.

Before registering, you will need to determine if the items that you would like to sell will be accepted for the event. The organizer will have a list of these items on their website or within their seller’s handbook.

More established event organizers will have an online portal where you can register, list your items, and access additional information.

Each event will have its own payout percentage for items that are sold, although you can expect upwards of 65%.

Once the event is over, you may pick up your unsold items and the event organizer will issue your payout within an established timeframe.

How to prepare for a consignment event

When registering to participate in an event as a consignor, you will be given a seller’s handbook. In fact, you can usually access this on the event website without registering. This seller’s guide is an example of what you can expect.

Your handbook will detail all of the information that you need to know in order to prepare for the event. In general, preparation for a consignment event is the same. Read over the handbook and familiarize yourself with the guidelines for the sale. (You will have agreed to these guidelines upon registration).

  • Determine which items you will sell based on the list of accepted items and what will likely earn you the most money.
  • Prep your items by cleaning and ironing (or dry cleaning) them.
  • Put your items on hangers as instructed in your handbook.
  • Decide on the price for each item that you will be selling.
  • Tag the items using tags provided by the event host. These can be generated within the seller’s portal and printed. If not, create your own tag to track your items.

Once your items are prepped for the event, they should be dropped off to the designated drop off location.  Your organizer will provide a drop off time window in which items must be brought in.

How to price consignment items

In order to make the sale profitable for both parties, you not only have to sell items that people want to buy, but you’ll also need to price them appropriately. Setting your price can be challenging, but most events will provide a pricing guideline for you to follow.

If you don’t have a guideline to follow, then go by the general rule of thumb: sell your items for 25-40% of what you originally paid for them.

Where you fall within that range is solely up to your discretion, but consider the condition of the item, the demand for it, and how eager you are to get rid of it.

Keep in mind that when participating in a sale, there will be a lot of other sellers vying for customers. Don’t put yourself so out of range that you lose a sale to another seller.

Pros and cons of selling on consignment

Selling on consignment has its pros and cons. It’s important that you understand both before deciding to consign.

The pros of selling on consignment

The advantage of consignment selling is that you are able to get rid of unused items while also making extra money. This is a great option when you have clothing or household items that no longer fit or that you don’t use. When selling on consignment, you don’t have to worry about handling the sale. You simply provide the items and the shop or event organizer will provide the exposure to customers and handle the selling.

The alternative to this would be you organizing your own yard sale or selling the items independently online on sites like eBay, Facebook Marketplace, or Craigslist. Those are all reasonable and ready options, but they’ll require more work and time on your part.

The cons of selling on consignment

The disadvantage of selling on consignment is that if the items don’t sell, you don’t get paid. That means that there is potential for you to do the upfront work of preparing your items and possibly paying to register for a sale and still not make a profit. Not all items will sell. So set your expectations before you decide to consign.

The other downside is that you have to share your profits. The consignment shop gets a cut of the proceeds.

Lastly, there is no guarantee that your items will even be accepted by a shop or for a sale. So although you may think your items are suitable to sell, there’s a chance that it may be rejected. Don’t be offended if your items are denied. This may simply mean that it likely won’t sell to that particular clientele.

Best items to sell on consignment

To be successful with selling on consignment, you’ll need to be abreast of what items sell best. The best way to know what will sell well at a specific shop or event is to ask the owner or organizer. They have the best information on what will sell to prospective customers, particularly if they have been in business for a while.

In general, though, you can expect designer clothing items to sell well. This is true for both adult and children’s clothing. You can ask if there are specific brands to try to sell.

You’ll notice in your search for consignment sales in your area that there are significantly more opportunities to sell children’s clothing and toys. It’s an ideal window for both buyers and sellers — kids often grow out of clothes before they are able to do much damage, so the goods for sale are often in good condition. And buyers don’t necessarily want to pay a lot for clothes they know are only going to be wearable for a short period.

Other items that typically draw a more niche bargain crowd include books and home furnishings and goods.

A local consignment sale in my area gives a rather exhaustive list of children, home, and adult items that will sell well at their event.

What items are hard to sell on consignment?

You can expect for items that are in poor condition to not sell — if they aren’t rejected outright by the shop or sale. The expectation is that items are used, but they should be in wearable or functional conditions. If they aren’t, the items should either be donated or simply disposed of. The exception to this may be less than perfect furniture. In this case, thrifters may be on a hunt for items that can be refurbished and ultimately resold.

Starting your used-clothes side hustle

As you can see, there are a lot of opportunities for you to make money by consigning your used clothes.  Not only can you stand to make some extra money, but you can also use it as an opportunity to declutter. While you’re at it, considering selling your kid’s clothes that they grow out of so rapidly. Don’t let the money you spent go to waste. Earn some back by selling on consignment.

So next time, don’t toss out those old, gently used clothes or even donate them without first exploring consignment as an option.

 — By Fo Alexander

SmartCents Mom