The popularity of second-hand stores arose in the nineties of the last century, when the main part of the population could not afford to buy new imported clothes. Since then, the level of prosperity of the population has increased, but many people still buy inexpensive things in second-hand, saving considerable money in the process.
Having such a wide customer base makes the second hand store business very promising, especially for aspiring entrepreneurs who do not have significant amounts of money to start their own business.
The principle of operation of a second-hand store is very simple. The store buys used clothes in bulk, in bales, sorts them, puts them in order and retails them at a large markup.
The success of such a business depends on the turnover.
Since the goods are purchased in bulk, the purchase price is very low. This allows you to set a relatively high markup percentage while keeping the final sales prices low. It is clear that you can get high income from the sale of inexpensive things only if there are large sales volumes.
Therefore, the success of a second-hand store can only be guaranteed by an entrepreneur who develops his business, having complete information about competitors, the level of demand for his product, and the needs of potential customers. This information is best obtained in advance by conducting market research . Opening a second hand store, like any other business, requires an initial investment. Therefore, it is necessary to act on a detailed and high-quality business plan from the very beginning.
It is very important to choose the right place for the store.
It is clear that such a store should not be located in the area of elite boutiques and shopping centers, but it will be appropriate in residential areas, close to clothing markets, in places of transport interchanges and large customer flows. Since the profitability of a second-hand store is highly dependent on turnover, a sufficient area of such a store plays an important role. The minimum selling space for a second-hand store is 40 square meters, but stores over 100 square meters seem to be more optimal. This is due to the fact that customers, before buying a product, often go through a large number of exhibited samples. It is impossible to lay out a large assortment of goods on a small area, thus reducing potential revenue. Besides, in a small trading area, it is difficult to control the security of the trading floor. Often this leads to theft and corresponding losses, since among the buyers of such a store there are often people of a certain behavior.
The initial investment in opening a second-hand store, if a separate room is used, can be several thousand dollars, since it is important to place a sufficient number of shelves in the rented space for product display. The initial costs will also include the cost of purchasing the first batch of goods from wholesalers. All received goods will need to be sorted by quality, models, degree of preservation, and so on. A product of very poor quality can later be sold as a rag.
The operating costs of a second-hand store will be made up of rent, utilities, staff salaries, repair and ironing costs for received goods, transportation costs, and the costs of purchasing lots of used clothes.
Additional revenue of a second-hand store may be the receipt of unsold goods from other stores in the city. Thus, a second-hand store can become a stock store, selling third-party goods on a commission basis.
Experience shows that the profitability of a second-hand store allows you to recoup the initial costs within the first year of operation. However, the actual timing of profit-making depends on the entrepreneur’s ability to plan his activities and make correct economic calculations.
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