Buying Outright: Is it time?

One of the buzz topics whenever resale shopkeepers get together is buying outright. Stories of incredible profits and urban legends, and the dream of reducing the cost of goods (COG) tempts many consignment shopkeepers.

No matter how hard you work in your consignment shop, your COG stays constant at the amount due your consignors. Buying outright allows you more flexibility.

Many of us manage to keep our total COG down by buying some resalable merchandise at places such as garage sales. Once you’ve experienced the thrill of finding a $1 item that you sell for $10, there’s no stopping you.

Or is there? Looking for these possible profit-builders can get expensive, once you tally time, effort, and gas. Not to mention unproductive expeditions. Wouldn’t it be lovely if that merchandise could come to you the way your consigned goods do?

And thus, buy-outright.

We’re all optimists, we small-business owners. If I can buy at 25% of what I’ll sell it for, that’s better than paying a consignor 50 or 40%, you think. And no bookkeeping and good-bye to all those phone calls and return-at-requests!

Oops. You forgot some crucial things: 

What if I have to sell it for less than I’d hoped? What if it goes missing or there’s a flaw I didn’t notice? And how was I to know that all of a sudden no one wants X anymore?

Follow this banner to see what HowToConsign.com tells consumers about choosing a shop:

When you consign, if an item doesn’t sell, you are not out hard cash. If a markdown is needed you and the consignor share in that reduction. If there’s an unforeseen problem, you simply rid yourself of the item. But when it’s yours, the loss of your investment is yours and yours alone, just as the profit would be. Are you equipped to deal with that? Do you have the money to risk? The self-discipline to keep detailed records that will show how your investment is doing? The fortitude to make offers low enough to make a profit? The guts to realize you were wrong on that piece you have $100 invested in?

If you’d like to try buying outright, I suggest you start small. Continue consigning, but buy outright a category or two and track how it goes.  Setting and tabulating an open-to-buy budget, tracking these goods through your shop, and calculating turnover, necessary markdowns, and profits is easier when you start small. And the inevitable mistakes will be less costly.

For more on Buying Outright, The BIG Book of Buying Outright will help your business thrive.
  

 Copyright 2010 Kate Holmes, TGtbT.com. All rights reserved and enforced.

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On Auntie Kate The Blog:
Afraid to pay too little?
Resalers sound off about public perception
Investing your own money means you'd better watch for The 10 Best Ways to Ruin a Resale Business

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