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5 Rules to Start a Thrift Store Online

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. 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 start 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 that do upwards of a million in sales every year and make six-figure incomes from their online thrift stores.

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 they basic idea is the same.

  • Non-profit thrift stores are operated by charity organizations like the Salvation Army or Goodwill 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.
  • 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 a lot of different types of stores. Even something like selling on eBay could be considered something like a thrift store since most of the items are used.

Once you know how a thrift store can mean different things, you can start to see how you can start your own 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 the majority of sales but small shops can still make major 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 on thrift stores is pretty low because of all the costs to having a physical location. Data shows that the general retail industry makes a profit of about 5% on sales, which would mean income of just $5,000 for every $100,000 in sales.

You can get around a lot of the costs of a thrift store, whether you start one online or otherwise. For-profit thrift stores pay taxes of up to 30% on profits and then owners pay taxes again on their income.

You can save a lot of this 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 really boost profits. You’ll reach a larger market of customers and save on all the costs of a traditional store. In fact, 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 actually 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’s going to be difficult getting a business loan for your thrift store but you can use a personal loan to get started and buy your initial inventory. I recommend, 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 on 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 advantage of no federal taxes on profit but will still have to pay income taxes on your wages and will have to show your non-profit intention.

But thrift stores can be for-profit as well and online thrift stores can be very profitable. You can still accept donations as a for-profit thrift store though they won’t be tax deductible for the donor.

Advantages of Starting a Thrift Store Online

start a profitable thrift storeThere 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 is just the costs you save and avoiding 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. Your inventory for an online thrift store can be covered by your homeowner’s policy if you store it at home.
  • The biggest 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 to have someone there everyday even if you have customers or not. An online store just 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. 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 important for planning and running your store even if you don’t plan on raising money. Most of your business plan will apply to any type of 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 make sure you don’t run out of things to sell. Part of the success of an online store is repeat customers. Find interesting and inexpensive items to sell and people will come back to your website every week. 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.

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Your marketing plan is another important part of your online thrift store business plan. Since you won’t have people driving by your store, you’ll needs 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 bring 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 will include how you define your target audience and how you price your items.

Running a Successful Thrift Store from Home

Running an online store is easy compared to a shop at a physical location but running a successful store is something else entirely. 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. There are six rules you need to remember to make your store a success.

how to start an online thrift store

Rules to Start an Online Thrift Store

Starting an online thrift store can be easy and much more profitable than a traditional store. It might take a few days to find and buy your initial inventory but you can start your store in minutes. Running a website costs a fraction of what you’ll pay for a physical storefront and online stores can be very profitable.

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