Resale on Consignment: Worth It or Waste of Time?
If you’re a reseller who is anything like me, you’ve probably had those innocent but stress-inducing questions from friends and family: “Hey, can you help me sell some of my old clothes?”. It sounds like an easy and kind favor with an opportunity for a bit of profit. But, as I have experienced all too often, turning a friend’s closet purge into cash can be a lot harder and more frustrating than it might seem. Worse, it can sour relationships and introduce conflict. Between standard resale expenses, fees, packaging, hours going back and forth between customers and your friends, that quick favor starts to feel a lot like unpaid overtime. In this article, we’ll explore what selling on consignment means, how to determine when it makes sense, and how to say no when it doesn’t.
What does Selling on Consignment Mean?
When you sell secondhand apparel on consignment, it means you’re taking on inventory that someone else provided (so acquiring it for the purpose of resale at no cost), selling it to a third party, and then sharing the proceeds of the sale between yourself and the owner of the item. As an example, I sometimes sell vintage clothing for my sister. When I do so, I calculate the net profit (what I earned from the sale minus expenses) and give my sister 75% of that amount and keep 25% for my efforts. For other people, it might be a 50/50 split; we each keep half of the net profit.
Invariably, however, what happens is that a friend or family member will give me a large bag of clothing to go through. Much of the clothing will be damaged or something that won’t sell for much money, so I have to arrange to donate those items (which alone can cause tension if the original owner disagrees with my choices). Of the remainder, many of the items might only sell for $20 or $30. I have to spend time photographing the item, writing a listing, cross-posting it, negotiating with prospective buyers, shipping the item, providing after-sale support, etc. So that $20 item might end up costing me half an hour of my time, and if I’m only keeping 25%, this ends up being a very low amount of compensation. It ends up being a favour that loses me money, since doing the work takes time away from my normal resale business, which generates a higher hourly rate.
It’s always nice to help people, and to get new inventory without having to source it, but how can you make it work without it hurting your resale business?
Start with Clear Boundaries
Before you even consider a consignment relationship with a family member or friend, plan and communicate clear expectations. Here are some common points you’ll want to cover:
- Your commission rate
- Realistic timeframes for listing and selling items
- Your authority for setting prices and accepting offers (there’s nothing more frustrating than getting an urgent offer from a prospective customer and needing your friend to agree to it—and then not being able to reach them; it’s better to have full control over selling decisions)
- How to handle items that fail to sell
- How they will be paid and when
- Your authority in deciding what you are willing to sell and donate
The more you can define up front, the smoother the process will go and the better your relationship will be. It’s the surprises and deviations from expectations that cause conflict and disappointment. You must also ask yourself if that risk is worth your relationship.
Evaluating Consignment Inventory
Once terms are set out and expectations agreed to by both parties, you need to decide what you’re welling to sell—and more importantly, what you aren’t comfortable selling. My recommendation is that you keep this to a numbers game, where if you won’t net at least a certain amount per item, you won’t take it. You might calculate this number by looking at what you normally earn for resale activities (consider how much you net in a month and dividing that by the number of hours you worked). If your commission rate is 50%, maybe you set the expectation that you won’t take or list anything that won’t sell for at least $40 (if your expected time per consignment item is 20 minutes, expected fees/costs are $5 and you want to earn at least $50 per hour).
This largely excludes time evaluating consignment inventory, and you will need to make that process as efficient as possible. If you do a lot of consignment work, consider checklists both for you and your partner. For partners, this might include brands you accept, what you’re looking for in items you sell, recommendations for what people can do with items you aren’t able to accept, etc. This type of aid will also help reduce hard feelings and help people understand that the work you’re doing for them is a business.
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Choosing Consignment Partners
I’m very selective about who I choose to work with, especially when it comes to friends and friends of friends. If someone knows I do some work on consignment but after a quick discussion I don’t expect to receive many items at a reasonable resale price, I might just say that I’m not able to take on a new consignment partner right now.
I have one resale partner from whom I will accept anything, as she usually has high-end items for resale that make it worth my time. She’s also easy to work with and responsive, and regularly has new items for sale. This kind of partner is ideal, and if you go down this road, try to seek these people out.
If a relationship isn’t working out or someone’s goods aren’t selling, it’s okay to say no and to exit the relationship. Just be clear, truthful, and firm. Suggest alternatives and try to be helpful, but explain that you won’t be able to help further and will return their unsold inventory (or donate it).
Tracking Consignment Sales
Once you have productive consignment relationships in place, you need a way to track commissions and payouts to those partners. For that I recommend my Reseller Toolkit, which automatically calculates all commissions owed, payments to partners, and provides reporting tools to assess partner performance. This can be invaluable as you assess which partners to grow relationships with and which agreements to exit.
Here’s a brief video explaining how it works:
Conclusion
Selling secondhand clothing for your friends and family comes down to balancing your generosity with your sanity—and your bottom line. There’s not always a right answer about when to do it and when avoid it, but by setting clear boundaries, profit expectations, and having transparent conversations, there are ways to make it work without it consuming all of your time and energy. Whatever you decide, your friends and family will understand—and if they don’t, you can politely offer to help them donate the items instead.
