Best Consignment Shop Software

[Steve Henning]

The whole concept of ‘consignment’ is purchasing at reduced prices. As an extension of that, consignment buyers have come to expect that as inventory in a consignment store remains unsold, it will be marked down in price to attract more buying interest.

Consignment store owners discount unsold items to keep inventory moving. It is important to have a flow of new items so as to encourage return visits of both buyers and sellers. Buyers like to see variety and sellers like to know that the shop is managed in a way that converts their unwanted items (quickly) into cash.

Use Discounting to Your Advantage

At first blush it might seem that the concept of discounting is disadvantageous to the store owner because buyers would naturally sit back and wait for the deepest discount before purchasing an item. This is one reason why it is important to only accept items that will sell quickly, even at the full original price, so waiting for discounts might more often work against procrastinators and opportunists – “Wait too long and the item won’t be here when you return.” Good salesmanship will make this suggestion in the spirit of ‘telling it like it is’ rather than appear to be using a situation (the practice of discounting) as a manipulative sales tactic.

The #1 rule in sales is ABC, Always Be Closing. Encourage the buyer to buy at the pont of peak interest. Help the buyer find reasons to buy, NOW. Your store might adopt the use of a Waiting List to help in this regard. Offer to notify interested procrastinators on the day the item of interest is to be discounted. Notify them a 2-3 day ahead of time – not too soon – they’ll forget; not too late – they might not be able to come ‘right away’ – 2-3 days. THEN when someone says they’ll wait for a discount, pull out your Waiting List and say (if it’s true) “Someone is on the waiting list for this item. We can only sell it to someone else at the current price.” If no one is on the waiting list: “You can reserve the right to purchase this item for the discounted price on the day it is discounted only if you pay the discounted price now and allow us to leave the item for sale at its current price until the discount date.”

Sample Discount Schedule

A ‘Discount Schedule’ sets the number of days an item will remain for sale at a stipulated price before being discounted and it sets the corresponding percent or dollar amounts of the discounts. The Discount Schedule is ‘store policy’ which is often included in the Consignment Agreement.

A common Discount Schedule for a $100 item entered into inventory on January 1st is:
· After 10 days, on January 11th, discount original price of $100 by 5% to $95
· After 20 days, on January 21st, discount original price of $100 by 10% to $90
· After 30 days, on January 31st, discount original price of $100 by 15% to $85
· After 40 days, on February 9th, discount original price of $100 by 20% to $80
· After 90 days, the item will a) donated to charity b) donated to the store c) returned to the consignor
Note that the discount percentage is applied to the original price and the number of days are counted from the ‘In Date’ or date the item was added to inventory.

Labeling Discounted Items

The disadvantage of discounting to the store owner is the extra accounting and price labeling that must be done. The ‘age’ of each item (the length of time it has been in inventory) must be tracked and when ‘aged’ by a certain number of days, the item’s price tag must be adjusted to reflect the discount. This means one of two things: printing or writing new price tags for discounted items or printing or writing one price tag with the discount dates and discount amounts on one tag.

Some stores use colored price tags to identify items that have been discounted. Different colors denote the amount of each discount so everyone can readily see at a glance how much each item has been discounted. A red tag might indicate that an item has been marked down 10%, a green tag – 20%, and so on. This method is advantageous to the buyer making it easy to determine which items are discounted most, but that convenience must be weighed against the cost of multiple tags per item.

The extra work and extra cost of discounting are goods reason to consider longer intervals of time between discounts. Discounting every 10 days creates a lot more work and expense, so is that worth the intent of frequent discounting which is to encourage shoppers to return more frequently?

Automating Aged Discounts

Upper-tier consignment software programs include the ability to manually or automatically discount aged inventory. Good programs will include both and give the user the option to select one mode or the other.

Either way, the Discount Schedule is entered into the program during Program Setup and will apply to all items discounted (unless values are changed for individual items during manual discounting). The Discount Schedule may be adjusted in Program Setup at any time but will only apply to discounts made after the adjustment. Items discounted prior to the adjustment may be adjusted individually.

If discounting is done manually, it is necessary to frequently (as in daily) ask the software program to present a list of items which qualify (have sat on the shelf long enough) for a discount. Some store operators like manual discounting because it gives them control over each item. There may be extenuating circumstances which preclude discounting an item or changing the amount or date of the discount – special considerations, exceptions to rules, etc.

If discounting is done automatically, the software begins each day by identifying and discounting eligible items. It presents a list of items that have been discounted. Any item’s discount may be changed or canceled. New price tags may be printed quickly and easily for any or all discounted items.
_________________
Steve Henning
877-669-0854
Best Consignment Shop Software
How to Start a Consignment Shop
Consignment Shops n Stores Directory