I have been running my online thrift store business for a couple of years now. And over the years of doing so, I have earned and lost money along the way. I’d like to share with you tips on how to avoid losing money on your online thrift store business if ever you’re thinking of starting one.
I hope that you find this article useful and I hope that you avoid the pitfalls that I have been through in the past (and have been going through now as well).
To guide you in reading and understanding this article, the pitfalls subheadings are the reasons that cost me money and the solutions subheadings are, as the name implies, the steps I have taken (and will take) to address the issues.
Let’s start, shall we?
Pitfall #1: Deterioration of Leather Goods
Leather is a very sturdy material. It’s one of the most common materials in garments, bags, shoes, and accessories. However, if not taken care of properly, it will deteriorate and it will lose some or most of its selling value. Some of the problems of leather goods include:
- Becoming sticky
- Developing an odor
- Becoming hard and stiff
- Fading of color
Regardless of brands, leather will deteriorate. Even if it’s the most expensive bag ever, if not taken cared of properly, it will deteriorate and its value will diminish greatly.
No one wants to buy a deformed and smelly bag. And even if you get to sell them, the selling price will definitely be way lower than bags in better condition.
You’re also prone to negative feedback from customers if they receive a bag that has been damaged due to improper storage.
Solution #1: Clean, Condition, and Store Properly
Different kinds of leather require different kinds of solutions. I personally avoid buying and selling suede, vachetta, and other delicate leathers and even light-colored leathers because maintaining them will just cost me more money.
To maintain the best possible condition for your leather goods, you must:
- Clean Regularly: There are various leather cleaners available in the market everywhere. I usually buy just a regular leather cleaner. If the leather is not dirty at all, I just wipe them with vinegar and water solution and air them out. Be careful though in cleaning delicate leathers and light-colored leathers because the color might darken. Try to test the leather cleaner first at a small portion of the base of your bag to see its effect/reaction. If unsure, and if you’re dealing with a very expensive bag, then I suggest that you just bring it to a professional bag cleaner instead.
- Condition: Leather goods if stored for a long time will be hard and stiff and to avoid this from happening, you should apply a leather conditioner to your bags regularly. I usually do this monthly.
- Maintain the Shape: Do not pile up leather bags on top of each other. They might incur color transfer, dents and they might get deformed. I suggest that you store them properly on shelves and put stuffing inside the bags to keep them in shape. I put shoes in shoeboxes to prevent them from getting deformed and I also put stuffings on leather boots to maintain their shape. Bear in mind that this is also important aside from maintaining the cleanliness of your bag. No one wants to buy deformed bags unless of course, you’re going to sell for a very cheap price.
- Keep them Dry: To prevent the molding of leather goods and developing a very bad odor is high moisture. If you’re living in tropical countries like me then you probably have encountered this problem with your leather goods. Here’s what I do to ensure that the leather bags, shoes, and accessories are always dry.
- I installed Electric Dehumidifiers in my storage room: I use an electric dehumidifier that I bought in Shopee. regardless of where you are located, I think you will be able to buy one in your local electronic store or online. I use an electric dehumidifier and I let it run the whole day during the wet (rainy) season and only a few hours during the dry (summer) season. Dehumidifiers take moisture out of the air in your room/home. I have one dehumidifier for my storage room and I keep the room close during the wet season to minimize the entry of moisture.
- I put Silica Gels inside the bags: To keep the interiors of the bags and shoes dry, I put silica gels in them. Silica gels are reusable and can be reactivated once they have reached their maximum absorption capacity. I bought the color-changing ones so I’ll know when to replace them. To save money, I bought a lot of the regular white silica gels and I bought some blue silica gels and just mixed them together before I repacked them in organza pouches.
- I put the leather bags in Dust Bags: Each of the bags I sell is stored individually in eco-bags. I find eco-bags cheaper than cotton dust bags and still do the job.
- I keep the air flowing: As I have mentioned above, during the dry (summer) season, I keep the doors and windows open in my storage room to keep the air flowing. However, during the wet (rainy) season, I keep them close to minimize the entry of moisture. But sometimes, when it’s not raining, even if it’s the wet season, I open the windows and door of the storage room for a bit to keep the fresh air in (while running my dehumidifier of course).
- Invest in Shelves: Nowadays, you can find many affordable wooden/metal shelves in the market. I bought just the regular 5-layer wooden shelves with plastic pillars in Handyman (hardware store in malls). And to maximize the space of my storage room, I combined some of the units. Please bear in mind that it might be not as sturdy as metal shelves so be careful. What I do is I put the heavier bags at the bottom and the lighter bags on top.
Related Post: How to Clean Mold from Leather Bags and Shoes
Pitfall #2: Deterioration of Garments
In my experience, maintaining most garments is way easier than maintaining leather goods. However, when I was just starting this business and due to lack of experience, I have damaged some of my items due to mishandling and improper storage. The damaged items, of course, became unsellable and thus I considered lost profit.
Solution #2: Clean and Store Properly
- Wash and Steam: I wash and steam all the garments that I sell. No one knows how long they have been stuck from wherever they came from. And given the fact that they are used clothing, I just want to make sure that they are cleaned and disinfected prior to being stored.
- Dry Clean for Delicate Materials: I don’t buy that many silk garments because I know that the upkeep will cost me money. However, if I find a silk vintage designer item, I will buy it because I know that I will be able to profit really nice from that item. But having said that, I also know that I will have to spend extra more money on cleaning them and storing them.
- Pack Individually: I’m a bit paranoid with color transfers on garments because it had happened to me numerous times already. To prevent that from happening again, I pack each garment individually in thin plastic bags before storing them in their storage bins. Blazer and jackets are also hanged individually and stored inside plastic garment bags.
Pitfall #3: Slow Turnover
To maximize my profit, my initial strategy is to sell high. Selling high for me means, selling the item to its maximum potential while keeping it still very affordable to my customers. What I do is I always compare prices online and monitor my competitors’ prices and I priced my items just a bit below the highest price I see online.
Prior to the pandemic, it’s working well for me. Most of my long time customers still find my price point competitive and affordable. However, during the pandemic, the situation changes… a lot!!! Lately, I have observed that:
- People are mostly buying essential items only: Due to the current situation, most people are buying only the essentials such as food and disinfecting products. And since I sell clothes, bags, and accessories, the sales are very slow. There were even a few months wherein I wasn’t earning even a single cent. Fortunately, starting in September, income is slowly coming back.
- People are keen on saving money on shipping costs: I only ship using the most establish couriers in the Philippines because I have lost packages with smaller couriers in the past. However, I should find a way on how to address this concern because the market is now demanding a cheaper way of receiving their products. Prior to the pandemic, most customers will not bat an eyelash on this because, to be frank, sellers don’t earn money from the shipping cost. It goes directly to the couriers. In my case, I always spend more because transportation going to the nearest courier is a bit expensive.
- Competition Exploded: Due to the fact that most of us are now spending more time at home due to the pandemic, the competition in online selling suddenly exploded. This is coupled with the fact that there have been many layoffs in the past few months and people started finding ways in earning more. This is natural in any industry. Business is indeed competitive and regardless of what your business is, we should always be ready to compete in order to stay afloat.
Slow turnover of goods from my online thrift store business perspective means:
- Money is Stuck in my Storage Room: I used my money to purchase my inventories (garments, bags, shoes, and accessories). And since the turnover of sales is very slow, my money (in the form of my inventories) is stuck in my storage room.
- Deterioration of Products: Because sales are very slow, most of my inventories are staying longer in my storage room longer than usual. And prolonged storage especially if the inventories are not kept properly will cause deterioration and possibly some damage to your items. That’s why, in the interim, I’m investing money and time in keeping my inventories (including my storage room) in their best possible condition.
- Slow Growth: Because income flows slowly nowadays, it’s also a bit harder for me to spend money on new inventories. It wasn’t really an issue prior to the pandemic, but things have changed and I know that I have to adapt fast or this business will die soon.
Solution #3: Sell, Sell and Sell Fast Strategically
With or without the pandemic, the solution to the problem of slow turnover is to sell fast strategically. What do I mean by this? In my case what I have done to improve my sales include:
- Market Segmentation: I used to have only one online shop entity (but with accounts in three online selling platforms – eBay, Carousell, and Instagram). Although I have more online exposure than my other competitors, I knew something needs to be improved. All items that I buy are posted in one account and I find that I was targeting too many markets using just one online shopping entity.
What do I mean by this? I started as an online shop focusing on selling bags only and then I added shoes and accessories and then I added clothes. Most of my followers who are only following my shop probably got put off because they’re not in the market for used clothes. They’re only following my shop for the bags. And now, they can’t probably find the bags in my shop anymore because it’s full of clothes.
When I started with clothes, I only stock avant-garde-ish clothes and then I added menswear, designer clothes, and everything else under the sun. I realized that even though the online selling app has a filter option, it became a shop that lost what it has become known for.
So, what I did was I created two additional online shops that will focus on specific markets. I created one that will only carry designer and vintage clothing and accessories. I also created another account that will only sell menswear. And next year I’m planning to create additional online shops that will target specific womenswear niche markets.
- Sell in Multiple Price Points: In my opinion, the key is not always selling low. If I sell low to the point of losing profit, then what is the point of doing this business? If I don’t profit, then I will not be able to cover my living and business expenses and it would probably be better for me to go back instead to employment. If I don’t profit well enough, I won’t also be able to grow this business.
The key I think is to sell low strategically or to sell at multiple price points. Selling low strategically for me means prioritizing value for money. I know that I’m not the cheapest online seller out there but at the same time, I also know that I’m not the most expensive online seller. I monitor my competitors closely and I always observe their price points.
This is in alignment also with market segmentation.
- Use a Variety of Marketing and Selling Techniques: This is something that has been in my mind since the start of the year (even before the pandemic hit). My style of selling is really lazy and I know that. All I do is post my items on various selling platforms and wait for somebody to buy my item. I was just lucky that it worked well for me in the past couple of years but it’s not working well now mainly because of the pandemic situation and also because of the sudden boom in competition.
Some of the marketing and selling techniques that I’m thinking of for 2021 onwards include:
- Online Bidding: This is common on eBay and Instagram and this is one of the ideas that I’m excited to implement next year. There are a variety of ways of doing this. I’m thinking of doing a combination of Low Start Bid with Floor Price and a No Failed Bid. I will write a separate post once I have experienced doing this myself.
- Consistent Social Media Promotion: Again, as I have said earlier, I have never done any form of social media marketing over the years. I’m just so lucky that customers found their way to my online shop. Things have changed and I have to change and adapt to the current situation. This is something that I should be doing actively online in order to help my online thrift store business improve its sales.
- Live Online Selling: This has suddenly become very popular in the Philippines. I only knew about it this year but I guess some people may have been doing this already last year.
- Increase Online Exposure: My online shops are only available on eBay, Carousell, and Instagram. I’m thinking of creating an account in Shopee and other international websites so I can increase my online exposure. Shopee has now become probably the largest online selling platform in the Philippines due to a variety of incentives it gives to online buyers. There’s a lot of discount vouchers and free shipping vouchers being given away on a daily basis. I know this because I buy a lot from Shopee and I have saved a lot of money in doing so.
Pitfall #4: Trying to Do Everything on your Own
I have been doing this alone and it’s fine when it was still a hobby. But now that it’s a growing business, I should accept the fact that I can’t do this alone. It’s not even physically possible to do all the tasks for one person anymore.
This week alone, I spent three whole days cleaning and re-arranging my storage room. I could have used that time instead of doing something else like focusing on buying inventories or selling my inventories.
And yet, my time was eaten up with cleaning my storage room. Yes, I know that it’s a very important aspect of my business, but it’s a task that can easily be delegated to someone else.
Solution #4: Hire Staff
I’m planning to hire a helper by mid-2021 to help me with physical tasks such as cleaning and maintaining my inventories.
By end of 2021, I’m thinking of hiring an admin staff that will help me with selling tasks (taking pictures, posting inventories online, responding to queries, and shipping items).
I’d like to focus on buying inventories and ensuring the high-quality of inventories. I’d also like to give myself space and time to focus on growing my online thrift store business and creating additional sources of income.
Pitfall #5: Not Saving Money
Since my mindset in the past couple of years was to grow the business, I have reinvested almost all the money I have earned back to the business.
I used the income to buy more inventories, supplies, and equipment that would help me grow the business. I think what I missed was maintaining the balance between growing my business and growing my savings account for tough times such as the pandemic that we’re currently experiencing right now which affected almost all businesses and livelihoods.
Solution #5: Set a Budget and Open Multiple Savings Account
I only have CIMB as my primary savings account. But recently, I have opened two new additional savings accounts with DiskarTech and Komo (digital banks).
My reason for doing so is to train myself to save more money. I’m planning to transfer a portion of my income to both accounts.
All of my active bank accounts are with digital banks that earn higher than usual interest rates. I hope that this move helps me save more in the next few months/years.
I’m thankful for the universe that even without any marketing effort, I was able to consistently sell in the past couple of years.
However, the time has changed and I have to adapt to the changing environment, or else this business will not last. I love this business and I enjoy doing this a lot. And I hope that I can continually do this for a bit more time.How to Avoid Losing Money on Your Online Thrift Store Business Click To Tweet
I hope that this article helped you in one way or another. If you also have an online thrift store, I’d love to hear your thoughts and suggestions. Feel free to comment below for any tips and recommendations regarding this topic. Thanks!