Introduction
In Singapore and other Asian cities, there is an emerging concept where people can rent a retail shelf to sell their merchandise. In most cases, a consignment shop rents out lockers or glass display cabinets to anyone who wishes to sell licensed and authentic products. The products must not be illegal or banned in that country. The management of the consignment shop ensures products that need licensing from a particular authority are properly authorized before being accepted for display.
The most common products on display include stationary, simple watches, phone accessories, handicrafts, handmade ornaments, toys, and any other housewares. The consignment shops are best for small business owners and anyone in general with second-hand products that can be sold. An example of a successful consignment shop is Toy Outpost and Hako consignment shop in Singapore.
Toy Outpost and Hako
Toy Outpost and Hakon is a 100% consignment shop with several branches in Singapore and other parts of Asia. Toy Outpost rents out lockers to anyone who wishes to sell their merchandise, as long as the items sold are not banned in the country and are properly authorized. Some items commonly traded at Toy Outpost include phone accessories, ornaments, stationaries, and handcrafts. From as low as $50 a month (or $1.61 a day) a person can rent a display locker and start selling their products at Toy Outpost (Toy Outpost & Hako)
Industry analysis
The competitors of Toy Outpost are not only shops that rent out shelves, but also include all other consignment shops and thrift shops that sell similar products and services. These shops are strategically located in towns and joints with high traffic. They also use different techniques to reach people with second-hand wares that are in good condition.
Most consignment shops do not accept items that look old, stained, worn, or ripped. The label on the item is also important because famous labels sell fast and at good prices because people love style and class.
Charges and pricing of items
I will discuss three major consignment shops in Singapore:
- Toy Outpost: Toy Outpost rents out lockers to anyone who wishes to sell their items, as long as the items sold are not banned in that country, and are properly authorized. From as low as $50 a month or $1.61 a day, a person can rent a display locker and start selling their products.
- Attic Place: Attic Place is a consignment shop based in Singapore. The shop stocks variety of second-hand items, but which are in good working condition. The price of items depends on the model, color, purchase location, current demand, condition of item, as well as it’s brand (Attic Place)
- The VIC Collection: mainly sells different types of bags to their clients. The price depends on model, color, current demand, condition of the item, and brand (VIC Collection).
Market segment targeted
There are varieties of products displayed and sold at the consignment shops; these shops target all categories of consumers. The shops are commonly located in high-traffic areas. The items on display target children, students, working people, and non-working people. The following are variety of items commonly traded in consignment shops.
- Clothing consignments include jewelry and shoes. This targets all age groups. The shops often stock clothes for children, men, and women. The consignment shops do not stock only a particular type of clothing.
- Books: The consignment shops accept to display different types of books and stationeries for their clients. These include textbooks, cookbooks, journals, stationery supplies, and audiobooks. It is normal for consignment stores to carry large and varying types of books on their shelves.
- Music and movies: Both used and new DVDs are stocked in consignment shops. Other promotional tools like film scores (displayed on CD) and movie posters are common on displays to attract shoppers.
- Furniture: There are consignment shops that only deal with furniture. These especially target a niche within the furniture industry. These consignment shops stock used furniture, unsold furniture from other stores, or factory rejects.
SWOT analysis of the concept
Strengths
- The concept is more convenient to small business owners and starters due to the little cost involved in doing it. The seller does not have to go through the long procedural process required to open a retail shop. Other processes like, obtaining licenses, renting, and renovating premises are not there.
- The seller enjoys free advertisement and labor provided by the consignment shop. Consignment shops employ different methods of advertising at their own cost to attract more clients.
Weaknesses
- There are many other available options for selling and buying items, which are more convenient to both the seller and the buyer. The internet for instance has made it cheaper and more convenient to sell and buy anything online.
- An item found in a particular locker may not be found on the same cabinet the following day. In addition, pricing varies because most of these items are second-hand and the owner or seller sets the price. There is no standard measure that puts the price at a certain range in the industry. It also makes it hard for the shopper to plan or budget.
Opportunities
- This concept has not reached all the places in Asia. It is a great opportunity for an entrepreneur who will set up this type of business in such places.
- Many people do not have adequate information on how this concept works. There are many people with items they do not need, but which are in good working condition. With proper approach and awareness campaigns, both parties can benefit from this type of business.
Threats
Technology is advancing and people are becoming more sophisticated. People need a more convenient way of selling and buying. The internet provides a much more convenient way of connecting the buyer and seller without including any intermediaries. Most sites on the internet do not charge to post an ad. Besides, people can easily post an ad using the internet in the comfort of their homes without necessarily moving and carrying items they are selling (“Using APA,” 2008).
Starting a Consignment Shop- Renting Retail Shelves
A consignment shop can be a good investment with very attractive returns for an investor. Before starting one, there needs to be a strategic business plan that will act as a roadmap towards particular goals. A good business plan should have the following: the marketing strategy, Personnel plan, Financial Plan, and company summary (which outlines the vision, mission, business objectives, business registration requirements, and business registered office i.e. location).
Company Summary
The first section of the business plan should describe the vision and mission of the proposed company. It should also include the long-term and short-term objectives of the company. In addition, the processes and registration requirements should be outlined in this section.
Another important factor is the location of the registered place of business. For a consignment shop, business location is an important component that will determine how profitable the business will be. Areas with high traffic are the best place to put up a consignment shop (Barrow & Barrow, 2012)
Products and services
A detailed description of the products and services that will be provided by the proposed business must be included in the business plan. This will help in identifying the target market and drawing the marketing strategy. The common items traded in most consignment shops include phone accessories, ornaments, stationaries, and handcrafts. Other consignment shops specialize in particular products, for instance, selling furniture. The investor will evaluate and determine the products he/she wants to sell.
Marketing strategy
It is crucial to evaluate the state of the economy before choosing the appropriate marketing strategy. There is competition in Singapore due to other existing consignment shops, most of which sell similar products. However, the consumption is still high and the market large. When drafting a strategic plan, it is crucial to outline the competitive advance the company will have over its competitors.
For a consignment shop in Europe, the best strategy can be pricing. Most consignment shops in Europe charge exorbitant prices whereas they can reduce prices without compromising quality and still make a profit. Reducing the price of a product is likely to increase sales because sales are inversely proportional to price.
Social media is another very effective means of marketing. This may include using Facebook, Twitter, YouTube, and LinkedIn to market products.
Personnel Plan
Outline the personnel required in the business plan. This will include the number and salaries of employees who will run the business. Include their respective salaries or any other expected staff costs. Salaries and wages should be in line with market rates.
Financial Plan
It may be necessary to seek the assistance of a financial expert in preparing a financial plan especially if the investment is considerably big. Without finances or proper planning of finances, the business is bound to fail. A financial plan should include the following:
- Start-up costs: these are the initial costs used in buying motor vehicles, paying legal fees, paying for licenses, building renovations, buying buildings, buying furniture, used in research and development, and promotional costs.
- Projected income and expenditure accounts: the projected profit and loss statement of a consignment shop should describe the various income streams. It should also list respective expenditures including advertising costs, electricity, payroll, payment to consignees, website expenses, and any other expense expected to be incurred in the course of normal operations.
- Projected balance sheet: this will show all the assets, liabilities, and retained earnings and reserves. The long-term and short-term loans used to start or develop the business should be included in the liabilities section.
- Projected cash flow statement: shows the cash movement. A good liquidity level will ensure the business is a going concern and can easily meet its obligations without strain.
References
Barrow, C., & Barrow, P. (2012). The business plan workbook (7th ed.). London: Kogan Page.
SWOT analysis: a tool for making better business decisions.. (2008). Washington, D.C.: U.S. Dept. of Agriculture, Risk Management Agency.
The Attic Place. (n.d.). The Attic Place. Web.
VIC Collection. (n.d.). VIC Collection. Web.
Welcome to Toy Outpost & Hako. (n.d.). Welcome to Toy Outpost & Hako. Web.