Best Small Business to Start: Online Consignment

Online Consignment

Online consignment is E-commerce meets yard sale. Tech-savvy entrepreneurs who know how to sell an item are taking it to the next level by opening up shops specifically to help customers sell their stuff online for a slice of the profits in return. Many use an eBay store as their base and sell packing, printing, and mailing materials in their brick-and-mortar shop. Especially in a slumping market, selling belongings you no longer need is popular, and easy, online. Davis Kiyonaga, co-owner of Drop and Ship in Bethesda, Md., says, "If people have a full-time job and they still need money, their first inclination is usually to sell the valuables they don't want or use. We do that for them." His cut is from 20 to 30 percent of the sale price. Not all his customers are selling their things. Some just want help moving. One demanding job he has had was shipping a car and the entire contents of someone's house.

What does it pay?
Online consignment is a highly specific (and new) field that lacks specific wage statistics. But, according to the Bureau of Labor Statistics, the mean annual wage for wholesale or retail buyers of commodities other than farm products was $53,580 in May 2007. (Kiyonaga pays himself $52,000 a year, plus health insurance coverage.)

What kind of background do you need?
A firm grasp of how to sell things online is required: for example, extensive experience with using eBay, as is knowledge of digital photography. Each item requires research and a detailed written description, often including historical and cultural information.

How do you get started?
To start bringing customers to you, sign up your shop with the directories at Consignmentshops.com. You should also be prepared to deal with a few headaches. A big challenge is dealing with online bidders who fail to pay for items they've ordered. Kiyonaga says these account for about 5 percent of all bids made on items sold by his eBay store. EBay protocol requires a report to be filed when payment isn't received within a seven-day period, and the company will reimburse the fee the store paid to post the item. "It doesn't cost the seller any extra money, but it delays the sale," Kiyonaga says.

Learn more

• Tips for running an eBay consignment business