The second hand resale space has emerged as one of the few enduring product categories during a recession or crisis.
Demand for the second hand apparel resale market—a $28 billion market—was growing well before the pandemic hit. Despite COVID-19, it is still expected to reach $64 billion in five years, according to online resale marketplace ThredUp.
Home-bound consumers feeling the pinch of the COVID-19 pandemic are cleaning out their closets for resale as bargain-hunters take advantage of bargain prices.
During times of recession, an online thrift store can be one of the best types of online store to own when consumers start looking at their budget to save money.
The crisis “accelerated what was already going to be true over the next few years,” said James Reinhart, ThredUp’s CEO, referring to the growth of the second hand market.
Lee Meier, founder of Listing to Freedom, a site that shares tips for online resellers starting their business, and reseller on Poshmark and eBay, agrees. “My state was shut down for nearly three months due to the pandemic. No thrift stores. No garage sales. I had to revamp my business plan and source some online,” says Meier.
founder of Listing to Freedom
Meier also owns two online stores—with her help, we’ll walk through 3 key steps to starting your online second hand store.
“The amazing part was—and continues to be—that online sales have skyrocketed. Shoppers are looking to save money and are looking at buying second hand more than ever before. I was able to make it through the three month shutdown without missing a day of sales,” she adds.
In this article, Meier shares tips about how she launched and grew a thriving online second hand business to make over $45,000 reselling used clothing and other items.
1. Choose the kind of inventory and store you want to build
If you are looking to get started, the best thing to do is to start with what you know.
Lee Meier, founder of Listing to Freedom
The first step to starting an online thrift store is to figure out what type of merchandise to sell. That decision could be based on a variety of factors, such as your overall knowledge of a product, availability of products, and ease of storage.
“The point is to run in your lane and branch out from there when you have gained confidence in that particular category,” advises Meier.
For example, if you’re a techie, consider starting with cell phones, GPS units, and laptops. Or if you’re a car or motorcycle fan, riding gear, helmets, and car parts are a good starting place for a thrift shop.
If you’re a sports fanatic, you’d have an idea of the types of sports memorabilia, trading cards, clothing, or sporting gear that are the most valuable to sports fans.
2. Build your inventory through thrift stores and garage sales
Build your inventory slowly. This will help you figure out what sells quickly and will help keep you from getting overwhelmed.
Lee Meier, founder of Listing to Freedom
Contrary to popular belief, you do not have to be based in a big city in order to have a thriving second hand online store.
Located in a small suburb in the Pacific Northwestern, Meier says she is still able to source plenty of profitable items to sell from shopping at other thrift stores like the Salvation Army, and Goodwill, neighborhood garage sales, and group sales.
“It is not a high income area, but I’m still able to find plenty of profitable items to sell. There is a misconception out there that you have to live in a big city or somewhere wealthy in order to be successful, and I’ve found it’s not true,” says Meier.
The majority of Meier’s inventory consists of clothing because it’s “small, easy to store, and ship […] and you can find it pretty much everywhere.”
Niche items can perform well in various product categories, says Meier. “For someone like me that doesn’t have access to high-end brands, I recommend anything vintage—the more unique the better; plus size—the bigger the better; bras—yes, you can sell used bras; and unique scrub tops, such as Disney or holiday prints.”
3. Set up your online second hand store
When it comes to setting up your online second hand store, there are three paths you can take.
An ecommerce platform
- Easy to set up and use for new sellers. Most ecommerce platforms give sellers the ability to select and customize templates without the knowledge of any technical skills.
- Dedicated customer support team on hand
- Depending on the platform you may have to pay transaction fees
- There may be limits in terms of how many items/product categories you can list
Meier’s advice: “When choosing whether to sell on a self-hosted platform like Shopify or through established marketplaces, [it’s important] to take into account how many items and how broad of categories you will be selling in.”
A self-hosted platform
- Total ownership and control of website
- Total customization of look and features of website if you have the technical abilities
- Depending on the platform, you’ll have to set up and pay for a domain name, web hosting, and security features separately
- Could take a longer time to set up
Meier’s advice: “If I had to pick a number of items, I would say you would need at least 2,000 items to make a self-hosted store worth it.”
- Easy and free to start selling
- Audience already has a buying mindset and are ready to spend
- Strong competition of sellers
- Depending on platform, may be charged seller fees for every purchase
Meier’s advice: “If you’re looking at getting started and you don’t want to worry about branding, advertising, promoting yourself through social media, building a website, or search engine optimization, you will want to choose an established marketplace like eBay or Poshmark.”
How to price items for an online second hand store
Getting the prices right for your resale business is a balancing act. You don’t want to price an item too high and put off prospective buyers, nor do you want to price an item too low to make a profit.
For a start, look at what others are selling similar items for as a benchmark and price yours just below theirs. “For someone just starting out, I recommend following a seller who sells similar items. What you want to look at are their sold items,” says Meier.
This is just one of many pricing strategies you can explore for your online second hand retail store.
PRO TIP: When it comes to measuring profit, you don’t want to view it from just percentages, but also what your return on investment is. Meier says:
“I could buy something for $0.25 and make $2.50, which is multiplying your money 10x. The flip side would be an item you paid $20 for, and are able to net $60. That’s only 3x your initial investment [but a more worthwhile effort.]”
How to store products for an online second hand store
When you’re first starting out, a spare cupboard or wardrobe might work. But as your business grows, it won’t be long before your storage is overrun with inventory, so it’s a good idea to have a more permanent place in mind.
PRO TIP: While a small closet space may be sufficient when you’re just starting your online business, it’s good to think about a more creative and permanent storage long term, depending on your budget. It’s also important to create an efficient system for storing and organizing your inventory. Meier says:
“I started out using a few unused dresser drawers. That worked well for about 100 items. Once I started to grow, I cleared a small place in my garage. I was inspired by Costco’s produce storage. I use their cardboard bushel-sized boxes and stack six boxes high.”
This video will help you identify the questions and problems you might face while executing your business idea for a second hand store and get prepared.
How software can help with your second hand online store
This article serves as a starting point in learning about key considerations to take prior to launching an online second hand store. Here are some next steps that can help kickstart your online second hand store.
- Research ecommerce systems by filtering by type of store (e.g. consignment, ecommerce), your budget and ratings.
- When speaking to a vendor, ask about how they can help your resale shop keep track of daily and weekly sales, inventory, and accounting management. As your online second hand store grows, these are critical features your store will need to run smoothly.