Creating an online thrift store is easier and less costly than starting a traditional store
Thrift stores seem to lose popularity when the economy is booming, but they always come back whenever people start talking about a recession. As a result, these can be some of the best types of stores to own when consumers start looking at their budget to save money.
Starting a thrift store has changed as the market for online shopping has grown. It no longer costs tens of thousands to create a store, and you can have your online store up within an hour.
This isn’t your momma’s garage sale or the musty, poorly-lit store you visited as a kid. I have friends who do upwards of a million in sales yearly and make six-figure incomes from their online thrift stores.
Being successful with your store means changing what that traditional thrift store idea means and bringing it into the 21st century online!
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What is a Thrift Store?
A thrift store is just a place you sell used items, so it’s something you’re probably already familiar with and have probably shopped at a few yourself. There are different types of thrift stores, but the basic idea is the same.
- Organizations like the Salvation Army or Goodwill operate non-profit thrift stores to fund their missions.
- Consignment shops are thrift shops where people bring their used items to sell and then split the money with the store owner.
- A flea market is a single mall or area where lots of thrift shops come together to sell their items.
- Even a garage sale is a type of thrift store, just one on an informal and limited-time basis.
So you can see that the definition of a thrift store can include many different types of stores. For example, even selling on eBay could be considered a thrift store since most of the items are used.
This is where I see people miss out on what could be a hugely successful store. They think thrift stores are ONLY that rundown, second-hand flea market type of store your parents dragged you to on Saturdays. The 21st-century thrift store is virtual and can double your money, buying locally and selling globally!
Once you know how a thrift store can mean different things, you can start to see how you can create your store with some unique advantages over traditional thrift stores.
How Much Do Thrift Stores Make?
Thrift stores aren’t usually a fast track to riches, but they can make solid cash. I’ll go through the numbers on traditional thrift stores first before showing you how to make even more money with a unique business model and online thrift stores.
According to Dun & Bradstreet’s Business survey, 30,000 thrift stores across the country bring in over $17 billion a year, with Goodwill accounting for about a third of sales. Large non-profit chains account for most of sales, but small shops can still make significant cash. Breaking thrift store sales down per worker, the survey found an average of about $120,000 per employee working at the store.
The average profit of thrift stores is pretty low because of all the costs of having a physical location. Data shows that the general retail industry makes a profit of about 5% on sales, which would mean a net income of just $5,000 for every $100,000 in sales.
You can get around many of the costs of a thrift store, whether you start one online or otherwise. For example, for-profit thrift stores pay taxes of up to 30% on profits, and then owners pay taxes again on their income.
You can save much money by making your thrift store a limited liability corporation (LLC). This way, you only get taxed at your personal income rates and don’t have to worry about personal liability for your store.
I would recommend taking your thrift store online to boost profits. You’ll reach a larger market of customers and save on all the costs of a traditional store. Profit margins for online stores like Amazon FBA average 35% and higher, which means $35,000 on every $100,000 in sales.
Beyond the money, thrift stores are one of the most recession-proof retail businesses you can start and might make more money as people trade down to save money when the economy drops.
Even an online thrift store isn’t cheap to get started. You’ll need website hosting, an online store, and all your initial inventory. Depending on what you decide to sell and where you find your inventory, it can cost up to $3,500 to get your store started.
Without a history of business, it will be difficult to get a business loan for your thrift store, but you can use a personal loan to get started and buy your initial inventory. I recommend personalloans.com, an online lender I’ve used for consolidation loans and a home improvement project.
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Are all Thrift Stores Non-Profit?
All the big-name thrift stores are non-profit organizations, but that’s because the profit margin of a traditional store is so thin. About the only way to make a physical store location work is to become a charity organization and avoid those taxes. Non-profit carries the advantage of no federal taxes on profit but will still have to pay income taxes on your wages and show your non-profit intention.
But thrift stores can also be for-profit, and online thrift stores can be very profitable. So you can still accept donations as a for-profit thrift store though they won’t be tax deductible for the donor.
Besides the fact that many thrift stores are operated to make a profit, don’t think the charitable organizations running non-profit thrift stores are going broke either. The national average for thrift store revenue used to support a cause is just 31%… which means just $3 of every $10 collected by non-profits goes to the cause. The rest is used to pay for merchandise, operating expenses…and, yes, a salary for the workers. So sometimes it’s even more profitable to set your thrift store up as a non-profit because it will save you on taxes.
Advantages of Starting a Thrift Store Online
There are going to be a lot of advantages to selling online instead of trying to open a physical location for your store. First of these are just the costs you save and avoid some of the hassles of a retail store.
- You don’t need a local business license for an online thrift store.
- A traditional store will need liability insurance and other coverage. However, your inventory for an online thrift store can be covered by your homeowner’s policy if you store it at home.
- The most significant costs for a traditional store are rent and staffing, none of which you’ll need with an online store.
Working hours are a lot more flexible with an online store. Traditional thrift stores need someone there every day, whether they have customers or not. An online store needs to be set up and changed whenever you have new items to sell.
The only additional costs to running an online store will be hosting for your website, less than $5 a month with Blue Host, and registering your domain each year. After that, most of your costs are payment processing, usually 2% plus $0.30 per item and shipping costs.
You can run your online store for less than $25 a month, including all the plugins and other services that make starting a blog easy. You’ll only owe payment processing and shipping costs when you sell something, and you can still book a profit of 35% or more.
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Thrift Store Sample Business Plan
Creating a business plan is essential for planning and running your store, even if you don’t plan on raising money. Most of your business plan will apply to any business, but there are a few sections you’ll need to focus on to make your online thrift store a success.
You’ll need a way to track your inventory and ensure you don’t run out of things to sell. Part of the success of an online store is repeat customers. Find exciting and inexpensive items to sell, and people will return to your website weekly. Run out of your inventory, though, and it will be a ghost town.
You can use simple spreadsheet software like Excel to track your inventory, but I use professional business management software from QuickBooks. The software is all online, so I never have to worry about losing my accounting, and it helps me run my entire business, not just inventory. QuickBooks makes taxes easier also by integrating with online tax software.
Your marketing plan is another essential part of your online thrift store business plan. Since you won’t have people driving by your store, you’ll need ways to bring them to the website. There are a few ways you can do this cheaply and effectively.
- Publish articles once a week on your blog to bring people to your store
- Use some simple SEO strategies to get thousands of people to your store from Google
- Write articles for other blogs that appeal to your target market
- Use Google Adwords and Bing to advertise your store
Finally, you’ll want to detail and overall strategy within your thrift store business plan. This strategy will include how you define your target audience and how you price your items.
How to Start an Online Thrift Store
Running an online store is easy compared to a shop at a physical location but running a successful store is entirely different. It’s still a business, and you’ll need to learn the tricks to make your store profitable without going bust first.
I’ve created online stores and helped others run their stores. However, you need to remember six rules to make your store successful.
- Make finding inventory a fun family outing. Plan on each Saturday, taking the family to flea markets and other places to find inexpensive stuff to resell. This way, even if you don’t make millions with your thrift store, you’ll have spent quality family time with those you love.
- Find inventory from EVERYWHERE! This includes flea markets, garage sales, estate sales, and thrift stores. Sourcing locally means getting the best deals because there are fewer customers, while selling to a global market means getting the best prices.
- Stick to a niche of products like collectibles, clothes, or antiques. This niche focus will not only help you better understand how much you can get for items, but you’ll spend less time running around town to find them. You’ll also build a stronger community from your blog, which will mean more customers for the store.
- When in doubt, check to see how much others are getting for an item on eBay and Amazon.
Starting an online thrift store can be easier and more profitable than a traditional one. Finding and buying your initial inventory might take a few days, but you can start your store in minutes. In addition, running a website costs a fraction of what you’ll pay for a physical storefront, and online stores can be very profitable.
Ways to Gain Immediate Traction on Social Media
Once you’ve opened your online thrift store, you want to ensure that it’s getting some good traction for early conversions. The best way to do this in 2022 is to harness the powers of social media. The top 3 social media platforms that will allow you to grow your business fast include the following:
TikTok is a relatively new platform but has become one of the most powerful advertising platforms to this day due to the algorithm it provides. Unlike other social media applications, TikTok allows anyone and everyone to view your video, not just the people who follow you. Of course, how many people view your video depends on how well it performs in terms of likes, comments, and shares in the first 30 minutes after posting.
Now that Instagram has adopted its “shopping” feature, it is effortless for companies to post photos of their products and, from there, quickly direct a customer to their site for purchase. If you utilize optimal growth strategies on Instagram, including a hashtag strategy, the correct branding, and high-quality content, you can grow fast! You can also investigate influencer marketing. Influencer marketing is a great way to grow your business, as many people rely on influencers for their fashion opinions. An influencer is generally anyone who has at least 50,000 social media followers.
As of 2020, Facebook has had just over 2.7 billion monthly users from across the globe. So not only does Facebook have an enormous number of users for you to take advantage of when marketing your products, but it is also one of the best platforms for targeted digital advertising. So get comfortable with creating digital advertisements via Facebook, and you will surely draw in some leads!
Read the Entire Online Business Series
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- The Scariest Online Business Idea You Need to Start NOW!
- Why I Started An Online Business [and why you should too]
- How to Make 100 Dollars a Day Online [5 Proven Business Ideas]
- $50,000+ Passive Income Creating Online Courses [Step-by-Step]