A resale shop which buys outright (anything or everything) should make two offers that the seller can choose between: one the cash amount and second, the amount in trade credit.
Auntie Kate The Resale Expert 
We will be switching from manual system to a pos so we will be able to take a quicker look at the real percentage of cash vs. Credit (sure the majority takes cash) and see how much credit is spent right away vs kept into the customer account. I was thinking about the 50 instant trade credit for a short term: 1 or 2 weeks.
Or maybe do a week when we will offer every account an extra 5 dollars credit. We are increasing our advertising in September so we shall see what the consumers behavior response will be.
I was thinking about an idea to boost sales; please let me know what you think; do you think it is worth it?
-30% cash
-40% in store credit to go to their account and they can spend whenever they want.
-50% instant trade credit: they have to spend the credit that day.
Typically in my store when given the option of cash it is taken 85-90% of the time. These sellers typically do not buy from me. As I had them their cash or check, I remind them to tell their friends and coworkers to come in and see what we have. If they take the store credit they rarely go over it and will even take things off and be under their balance, because “they don” want to pay anything!”, even if its just the tax. This is very frustrating to me needless to say.
To Boost Sales I have been doing $1 bins with mixed season clearance clothes, $1 clearance toys and misc. items; Advertising on the back of grocery receipt tape with 2 coupons one for buy 4 items get the 5th free and the other is buy one clothing or shoe item and get one 50% off. And The Best Customer Service I can Muster up, even when I’m helping 2 or 3 customers at the same time. I know all my products and where they are located. I have on many numerous occasions looked at an item and said Hey i have xxxx and yyy and zzz to go with that and run and grab it for them.
My concern would be that you are asking the supplier to make a choice that is complicated and that requires a lot of thought… and that could lead to “seller’s remorse”… like “gee, I shoulda done A but I did B so I’m upset with THEM because THEY should have told me what to do”
It’s also easily confusing… especially if you’re also busy corralling the kids etc… and when people are confused, they are not happy.
And if your seller chooses the 3rd option, then doesn’t find what she wants or said kid has a nuclear meltdown and she has to leave… more complication, right?
KISS. Especially with what I imagine is your typical seller, a mother of small children with many things on her mind.
Hi Lisa – As you probably read in my post prior to yours – we do the sell option (30% cash upfront) and the consign option (40% after the sale). Since we are kids consignment, we get buckets of stuff at a time. I have put a max on my BO at $75. If there is really great stuff in those buckets and I don’t want to lose it, but can’t afford to buy it all, I will offer to consign the rest. So far I have never been turned down when giving that option.
Tracy, that max is a great idea. I may adopt your policy! Thanks so much for sharing.
Tracy, you mean you will only pay $75 to a given seller? Even if she has stuff you would die for, but it’s, oh, say $300 worth? Isn’t that self-defeating? We discussed this here: https://auntiekate.wordpress.com/2011/05/11/how-much-does-a-supplier-cost/
WOW – late in responding here- sorry, just realized that there was a reply… Anyway, so far not one person has balked at the $75 max & putting the rest on consignment. Remember we are talking about kids clothes – it would be an unbelievable amount of stuff (at about $3-$6 each selling price) to ad up to $300 worth to BO. It’s actually kind of rare for us to meet the $75 max. I would say one consignor every other week or every third week hits it. Maybe it’s because we are in a smaller town.
At my shop, I do just what was mentioned. I offer 25% if they want cash, and 40% if they choose store credit. I have been considering changing to a 25% cash, 40% consignment model…would love to hear input on anyone who does this.
Thanks Lisa. How do you KNOW what 25% or 40% actually IS? I will assume that you do not sell every item for the actual price you think it will sell at when you accept it. Example: markdowns for whatever reasons, end-of-season, damages, shop wear, missed problems (the sz 4 jeans have been altered, the coat has a shredded pocket lining, the table’s veneer pops up after a week…) Or do you build that into your model, so the 25-40% COG is just a guideline and your REAL COG might be more?
It is just a guideline, because yes, things do go on sale. It can be risky, but so far I’ve been pretty good about choosing things I know will sell for a certain price. I’m pretty picky. And honestly? MANY of my items I hunt for myself, so I’m my own best contributor. That way, I can still do my favorite part…treasure hunting!
Treasure hunting is, fersure, a great part of the fun!
Haha – it is a lot of choices, I know! We started out with just SELL or CONSIGN, but had so many requests for store credit that we added that option too. The DONATE option is listed on the contract, the website and the posters in the shop but not verbally given as an option every time. It doesn’t take long to go over the options, but if a new consignor seems a little confused, we just say something like, “You want cash right away, or can you wait for the items to sell first?” Then go from there. For returning consignors, we just verify the option they gave us last time and ask if they want to do the same this time. Usually they do. We do a drop and run system so after the first drop off (which obviously takes a little longer, but no more than 5 or 10 minutes), it takes about 30 seconds for them to bring stuff to us after that.
Yes, we have had a couple people want to change the option from Store Credit to Consign so they can get the money and that’s not a problem. We just deduct 10% from the total we owe them in SC and write ’em a check. Other than that, we haven’t had any problems with it! It seems to work fine!
We offer 4 options to our consignors. Sell (BOR), where we will pay them 30% of what we price the items at; Consign, 40/60 split; Store Credit, 50/50 split (but under consignment terms – items have to sell first); and Donate, where 60% of the sale of their items goes to the charity of their choice (they choose from our list of current charity consignors).
I have toyed with the idea of offering a higher percentage for Store Credit BOR, but the majority of our BOR consignors are not really customers, like Emilie mentioned. They just want a little return on the investment they make in their kids clothes.
Wow Tracy, that’s a LOT of choices. Do they have to choose with each batch they bring in? How long does it take the intake person to explain all this… and how long does it take the supplier to make a choice? Does anyone ever get stymied, choose an option, and then later either regret it, or ask you to alter their choice?
Thanks for showing us all the options you have!
Emile, I BOR as well and offer cash or 15% more store credit. When seller’s ask me if they can use half credit/half cash. I just tell them that our policy is one or the other. Usually, they will then buy a few items taken from the cash total and then we pay them the remaining cash. If they question it, I politely say that our computer system is unable to break it down that way -but really, we could figure out a way, but it would be more difficult and in children’s resale we have to keep it as simple as possible.
We do offer both offer cash or credit – different percentages – some people don’t like to shop resale but love money – cash… Some wants to dress their kids for almost free: credit. Retail is a service industry – we are here to find the solutions for our suppliers and customers. If we met their needs then they will come back and recommend us to their friends. We cannot unfortunately convert everyone to shop resale. The ones that sell for cash are the high end mall shoppers, that means that they will bring us always the high end quality, and they know that they will get cash outright without waiting for the clothes to sell – so they can gosplurging 10 minutes later at the mall. Credits work fine for us too: some mums use them directly that day, some accumulate them. Where we are having issues is that when we make the offer some mums don’t understand: they say “I’ll take part in credit to purchase some clothes here and I want the remaining in cash” which we do not do > solution?
When a seller wants a few things but mostly cash, I explain that it is a bonus, typically 15-30% more depending on the demand for the item(s), for keeping the money in the store. I have had a lady selling to me for years and she just asked me a couple weeks ago, why the store credit offer was always more.So when I explained it to her that it was a Bonus for keeping the money in store, she thought that was a neat idea….but took the cash offer..
BCSS did have an issue with buy outs, it was giving the credit at the time of intake and then again when the item sold, however they fixed this last February. I only do BOR a couple of times a year as a promotion and when I do, I offer credit only. However, my shop does offer new products such as sunglasses, pocketbooks, jewelry, scarves, greeting cards and gift items so the customer feels good about the credit only. .
Thanks Diane, so you disagree with the statement that you should offer the seller her choice? But then again, your BOR is just a promotion (to kickstart a new season, perhaps?) rather than a perpetual way to receive inventory, right?
When I BOR, I take into consideration current inventory, and condition of item (s). If it is a fast seller, I would definitely offer the cash but if it something that sells but slowly or I have more than 3 of (think toys, or an over abundance of 0-3month clothes) I may only offer store credit.
So, Vickie, you do not offer each seller a choice… you offer one or the other, and you choose which depending on the business situation at the moment?
I typically do offer the seller a choice in most cases. That being said if I do have multiple items of the exact same thing for example, I currently have 5 of the Playskool push n ride toys, and 4 leap frog learning drums, and 62 pairs of boys size 4 pants. These items I will only take IF they take Store credit. These are very common and I can get multiple very easily. The same with infant bathtubs. For some items, I do tell the seller that if they want to hold on to it and wait until I sell the item down, they can then bring it back in a given time frame(2weeks-1month depending on what it is) for an $xx potential cash offer. 99% of the time sellers are perfectly fine with it especially after seeing my inventory level. Typically the other 1% is in the I NEED MONEY today, NOT tomorrow frame Very rarely are they upset because they have to wait.
In order for me to continue taking in inventory even when sales are down, I will offer store credit only, which in my area ALOT of people enjoy the extra % for in store credit. I typically give an estimated time frame for how long it will last. It could be a week to a month depending on the time of year. Primarily for the kids clothes.
This may depend upon the capabilities of the store computer software. Some programs may not be able to create a credit that can’t be “cashed out.” I’m not sure about mine. I do recall it being an issue years ago, but perhaps my vendor has corrected the problems. The problems I recall were that the “credit” only portion was affecting the “payable” portion of consignor payouts. So for that reason, I have been afraid to try it. Do any consignment software vendors out there have something to say?
I’d like to leave just one thought here, but it’s a big one.
Never let the limitations/quirks/ parameters of computer software alter any, any, any aspect of how you run your business.
Some BOR do offer only credit, some do offer only cash and some do both.
Thank you emilie…So, do you agree?, disagree?, explain!