640: Get Paid to Sell Other People’s Stuff: Starting a Consignment Side Hustle

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1:14What's up? What's up, Nick? Loper here. Welcome to the Side Hustle Show because your nine to five may make you a living. Your five to nine makes you alive. And this is a show all about making extra money and doing it in a low risk way. And one method I keep coming back to is this idea of starting a consignment business. that is selling other people's stuff and just taking a percentage. They get money, you get money, and you've got no upfront inventory risk like you would if you were starting a traditional physical product business. Now, today's guest has been doing just that for the last 10 years, starting as a side hustle, earning over$10 ,000 from her first consignment event and continuing to grow from there.

1:48From StatementConsignment.com, Sarah McCaffrey, welcome to the Side Hustle Show. Thanks for having me. You bet. Stick around in this one. We're going to learn how Sarah got a critical mass of inventory for those first events, how she marketed them to get buyers in the door, and how you might start something similar in your own area, or maybe even online. So Sarah, my understanding is you're already an entrepreneur, you're running this photography business, you've got young kids, and then this idea gets in your head somehow. You're like, you know what, I'm already juggling a lot, but hey, what's one more ball?

2:18Let me see if I could pull this off. Yeah, that's exactly how it happened. So I did a kids consignment event selling my kids' used clothes. And I had no idea what I was doing. I just showed up, you know, priced the things, showed up to sell them. And when I went to pick up my check, it was for$800 and it blew my mind. This was you selling your kids' stuff through somebody else. Yes, it was. That's how I got the idea. And after I picked up that check for$800, I just thought, why doesn't this exist for adults? There are a lot of kids' consignment events out there and not very many at all for adults.

2:51And I just thought, I know so many people with closets It's full of clothes that are in great condition that people would buy. Why is nobody doing this? Yeah. Why is nobody doing this? Was there a reason that the people running the kids ones didn't do the same thing? That isn't because we've gone to those kid events. I don't know if we've ever sold anything there, but we've definitely gone as a customer for them locally. So yeah, you're totally right. That's a thing. Yeah. And it's funny because a lot of people think they're similar, but adult events are so different from kids. We're willing to buy whatever for our kids.

3:22They're going to be running around outside playing in it. It's fine. But when you're selling adult clothes, you have to find the right audience for it. We're a lot pickier. So the sell-through rate's different than kids consignment events. So they just have to be marketed differently. Okay. Okay. So as far as you could tell in the initial market research, nobody was doing an adult focused clothing event near you. I think our mutual friend, Megan, was maybe doing furniture consignment nearby who connected us. Yes, she was. But say, hey, there's an opportunity in the clothing space. And what was your first step in turning that from idea to reality?

3:56Yeah, well, first I tried to make the idea go away because it just felt crazy. You know, I have two young kids. I'm running a photography business. I was the breadwinner for my family. It felt crazy to, you know, divide my attention and try to start a whole other business. So I really tried to ignore it for a while, but I got to where I couldn't sleep. Like the idea would not leave me alone. And so a couple of months later, I just decided, you know what, I'm going to go for this. And that night I found our software that we could use. I had a friend who gave me the name that day who named it statement.

4:27And then I stayed up all night building a website on Squarespace. And I just thought, you know what, this idea will not leave me alone. I have to do it. Like I had no other choice. I love that line because I've had that similar feeling. Can't sleep. The idea won't leave me alone. And sometimes it's for a video that I want to make or some piece of content that needs to get out. And a lot of the times that ends up being a really well, not all the time, you know, I'm not going to pretend to have like a hundred percent batting average or a hundred percent hit rate, but because sometimes they're total duds, but a lot of the times, like when it's really driven from that deep place of interest and excitement and curiosity, like it tends to, it tends to, you know, launch with a bang, but now you got to go out and find inventory.

5:10I mean, there's a lot of moving parts here. I got to find a venue. I got to find inventory. I got to market at the thing. So walk me through some of these first steps. Yeah. Well, so, you know, when I started it, I thought this idea is great. People are going to love this. People are going to be, you know, beating down my door to be a part of this. I thought my goal for my first sale was to have a hundred sellers. And what I found is that it was a lot harder than I realized to find my first customers. And so it took a lot of work and it wasn't really complicated work, but it stretched me. So I decided that to find my people, I was going to call everybody I knew who had a closet full of good clothes and just ask them.

5:47So it's a simple thing, but it was terrifying to call people I knew and put myself out there in that way. And so that's really how I ended up finding my first customers was just getting on the phone and asking the people I knew to be a part of it. Okay. Is there a reason it had to be a limited engagement, one-off weekend type of event versus, hey, you got a closet full of clothes, I'll help you sell them through Poshmark or whatever, and I'll take a fee, you can get paid, I'll get paid. Is there a reason it had to be a big event? It seems lower risk or maybe lower involvement to just do onesie-twosie sales.

6:24Yeah, maybe it seems that way, but I do believe that sense of urgency and that scarcity really drives sales for us. The fact that we are only open two times a year, total of 10 days a year. So I do think that's a huge part of our model. And also for our owners, for the sale that I started and then our franchise owners, for it to be a seasonal thing is just so powerful. That's what draws us to it. The fact that we can work really hard for a few months out of the year and then have some real downtime as moms, as business owners for other things that frees us up to do whatever else. Okay. Seasons of sprint versus seasons of rest versus just being always on all the time, like trying to move inventory and go to the post office.

7:06I could see some benefits plus the urgency and scarcity of it. So you're messaging, you're calling up all your friends saying, I'm thinking of putting on this thing. Like what's the opener? What's the pitch here? The pitch is, you know, all those clothes that are sitting in your closet that you don't wear. I would love to help you sell them. You know, people have all kinds of clothes that are still in great condition, practically new condition. A lot of things still are new with tags and they've spent a lot of money on that stuff. They don't want to just, you know, drop it off in a trash bag to donate.

7:33So, you know, I was like, let me give you a way to sell that. I'll help you do it. You'll walk away with a paycheck that you can turn around and go buy stuff that you actually will wear to put in your closet. Yeah, that makes sense. So it's kind of a win-win. Like it's collecting dust anyways. Why don't we turn that into some cash for you? Why don't we turn that into clothes you'll actually wear and go from there? So did you end up getting 100 people to say yes? No, no, I had 50. So that first event really did, it was still a lot of people, but it did feel a little bit like a letdown. You know, it didn't meet my expectations.

8:05It was harder than I thought it was going to be. But I think that's an important part of the story to share, you know, for people who are thinking about starting a side hustle, that it likely is going to be harder than you think. Even if it is this great idea that's going to, you know, just blow up down the road, it takes a lot of work, you know, on the front end to get it set up. For sure. Where did you host it? Yeah, I hosted it at an event, like banquet facility. Just right down the road, it was a small place. And I drained my savings account for that venue. I didn't have much in my savings account, but I really bet everything I had on this and believed that it was worth it.

8:42What did it cost? I'm trying to get a sense of, I've got risk-free inventory, but now I do have to put up front for this venue for several days. Yeah, I think it was about$3 ,500 for that first sale. Okay. So we're banking on, now we got to get people in the door and, you know, a multi-day. We've had somebody who was doing craft workshops recently on the show. And she was like, I go after these library community rooms or these like community center type of venues where they, you know, maybe charge 50 bucks an hour or less. You know, it's like really, really affordable to rent. And she's just coming in for a, you know, two hour evening engagement.

9:16This is a little bit different where it's like, I need a secure location where I can leave inventory here for several days. Yeah, absolutely. And I really thought, you know, we would have a lot of shoppers. So I thought we needed a lot of space to fill out the inventory, to give shoppers space to shop. And turns out I didn't need quite that much space for the first event because, you know, it was half the size that I thought it would be. But we did eventually grow into it. Yeah, it's something where it's very visual clothing. You know, you can't just have piles and piles. Like, you got to have it on hangers and displays and make it look like a retail experience.

9:49Okay. So we've got the facility locked in. We've got 50 sellers on board who give you their stuff. There's a tagging and tracking component to this to say, well, this item sold and that belonged to so-and-so and now I got to remember to pay her. You mentioned finding software to do that. Is that still what you're using today? Yeah, we still use the same third-party software. It's a great system and it makes it so simple for us to pay out our people. We never have errors in our reports. Yeah, so it's a great system. What software is that? My Consignment Manager. I'll link that up in the show notes for sure.

10:24Anything else on the tools and tech side that just make life easier? You mentioned Squarespace. We'll link that up as well. My Consignment Manager is great. Anything else? No, that's about it. It really doesn't take a lot. Yeah. Cool. All right. Now comes the marketing side of it. Getting people in the door to come and buy this stuff. Yeah. So to market our event, in the beginning, we're just using Facebook. Instagram was really new at that time. And we created a Facebook event and started promoting that. After a couple of years, we started doing Facebook ads. And the return on investment for Facebook ads, you just cannot deny.

11:00So we really went all in on Facebook ads. And that's become our primary marketing strategy. What's the ad say? Or paint a picture of the visual here. Yeah, our ads generally start with the location. So now we have 23 locations. But originally, it was just the Knoxville sale. And so the ad starts with, hey, Knoxville, come shop up to 400 closets in one place. So we like to promote how many sellers we have. Generally, we have about 450 at our original location. And that is a massive variety of clothes that shoppers can't find anywhere else. So it's a really great, unique shopping experience for them.

11:36And that's what draws them in. Yeah, that's great. Is this in conjunction with the Facebook event? 10 years ago, we were doing Facebook events. That's less of a thing now? No, we still do Facebook events. We still, you know, a lot of our audience is on Facebook. We're now doing probably equal Instagram ads as well. But we get a lot of return from those Facebook events. Okay. I mean, is there a way to track? Like, is there people showing up? You know, they click on an ad, I guess that results in foot traffic. It seems harder to track than like, oh, they made an online purchase. And I could see that entire click journey.

12:08Yeah, it's true that it is hard to, you know, know exactly where they come from. But at checkout, we like to ask people and they tell us how they heard about it. and it's always Facebook or Instagram. We're really active during our sale week and all of our sellers and shoppers are out there promoting too. We incentivize them to market with us and that really makes a big difference. How do you do that? We do giveaways. So we give them five ways that they can help us market. So they can share our event page, they can tag a friend in the comments, they can post in their Instagram stories or leave us a Facebook or Google review.

12:41And then when they do that, they get entered into a giveaway. and so we would draw a winner after our sale for that. What are you giving away? Usually$100 to a small business of their choice, like a local small business and they get to choose what it's to, yeah. Okay, cool. I like that angle of tapping into the crowd here where it's like, hey, it's in your interest to help fill the store as well, fill the event because if nobody comes, it's that your stuff isn't selling. More with Sarah in just a moment, including pricing the items, the revenue split between her and the sellers and more about her marketing blitz right after this.

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15:38So when they drop off their items, they are ready to go. The price tags are on them and it's ready to be put on display. And we give them a guide in advance so they know how to price their items. And we generally recommend between 50 and 80 % off retail price. So that gives them a good guide. And that helps our shoppers know what to expect when they come up, come to shop too. Yeah, that's Hey Knoxville, come shop up to 400 closets in one place, 50 to 80 % off retail. That's the ad. That's it. All right. What's the revenue split for you as the consignment host versus what gets passed along to the sellers?

16:10Yes. So the sellers keep 60 % and the consignment owner keeps 40%. It's one of the best splits that you can find. I actually did an online consignment recently just to test and see, you know, what's our competition doing out there. And on a pair of jeans that I paid$200 for, I made$5 at this online reseller. Wow. And so that just showed me the power of what we're doing with Statement. Our sellers are earning a much higher percentage than they'll find anywhere else. Got it. Got it. Is there an online component where it's like, I mean, the e-commerce store where people could browse inventory and place an order?

16:49There's really not. No, we really believe in the power of the in-person sale. And so much of what we do at Statement is building our community. So we want those people in the building. We want them shopping. We want them becoming sellers at our next event. Then they show up and help work the sale too. So yeah, we really find that the power of the statement business model is in people showing up in person. So we do not offer online sales at all. That makes sense. Okay. So we're getting people in the door through the Facebook event, marketing, friends and family. The sellers are helping out. Hey, spread the word.

17:21We're doing Facebook and Instagram ads. Anything else to get people in the door? Even going back to event number one. Yeah. So we do. We always do local media. So we go on the news to talk about it. We do an ad in the local newspaper. We put out yard signs. We take flyers to local businesses. I mean, we really max out our marketing. That's really what the job is with Statement. It's getting more shoppers in the door. So that's the bulk of my time is spent marketing the event. I believe it. It's limited time only. It's got to happen now or it's not going to happen. Yes. What's the pitch to the local news channel or local news station to say, you know, it seems very self-serving to be like, would you run my story?

18:06So I have to imagine there's a better PR angle than that. Yes. Well, their audience is looking for a good story, something exciting that's happening, and people love to shop. So, yeah, we find that our local news stations are really excited about having us on, and we also sometimes incentivize them and give them a pre-sale shopping pass so they get to shop before everybody else. And then they become fans of Statement, too, and a lot of our local news reporters are now sellers at our sale, and they come shop every time. Oh, okay. Makes sense. All right. So let's say it is opening day. You have done your best to spread the word to make this a thing.

18:44If you're, if you happen to be in town and in the market, you know about it. And then the doors open and talk to me about staffing and logistics and kind of the, the day of, or the, or the week of the event. Yeah. So the week of the event can be overwhelming. It takes a lot of energy. It's a lot of hours to put in, you know, during that week of the sale. And we have developed all the systems and processes since that first sale 10 years ago. And it's been a growing process. There are plenty of mistakes along the way, but we've put together systems to try to make that predictable for our shoppers and for our sellers.

19:19We try to keep the room really organized. At the Knoxville sale, we now have over 50 ,000 items that show up within three days that we have to get on the display floor and sell within five days. So it really is a time crunch and it does take a pretty big workforce. The beauty of that is that our statement sellers also become our workers. So we usually have about 150 of our sellers who will show up and work shifts. They get paid hourly and they are the ones who really make the event happen the week of the sale. We really depend a lot on them and they have a sense of ownership of the sale because they're selling their items too and they want shoppers in there buying their stuff.

19:58So that really helps go a long way with our workforce. Okay, that's helpful to know. Like, no, this is just not with 50 ,000 items of inventory. This is not just you at the cash register taking payments. This is, it takes a village. It does. It takes a village. Yeah. So we started at that first sale with one cash register and now we're up to five. It takes a lot of staffing to get shoppers in and out the door to try to reduce lines. We don't want them waiting in lines for a long time. So yeah, it does take a lot of people to make it work. Is this just like I'm picturing like a square credit card reader or something like that?

20:33Point of sale? Yes, similar to that. Okay. What happens to the stuff that doesn't sell? Or I mean, I guess I'm curious in the mark of a good event, a 50 ,000 item event, like how much is left over at the end of that? We still have a lot left over. You know, we sell a lot of stuff, but the difference with adult consignment is it's a lower sell-through rate than kids consignment because adults are just pickier about the way things fit and the brand and the color. So it is a harder sell. So we do have a lot left over still at the end, but our sellers can come pick up what doesn't sell. That's up to them.

21:05And whatever does not get picked up is immediately donated. And we fill a massive trailer full of donations every time that really makes an impact to those donations go to a good place. Yeah, I got it. Okay. If you want it back, if you want to try and sell it on your own, if you want to try and sell it at the next event, you're welcome to do so. And if you just want it out of your closet. Hey, we'll donate it for you. We'll take it off your hands. Yes. All right. So five days done. The dust settles after event number one. You've sold as much stuff as you could sell. You've recouped your investment in terms of the venue, in terms of the advertising.

21:37And now you're like, I guess we just keep doing that every six months. Like what happens? What happens next? Yeah. So after the first couple of events, it's interesting. Everyone in my life who loved me, encouraged me to not keep doing it because it was such an investment of my time and my energy. And in the beginning, it was a very small return. I didn't go in the hole, but in terms of profit, it was minimal. In terms of the effective hourly rate that it took to create that. Yes. Yeah. Is this really worth it? Are you sure you want to keep doing this? And it just took a lot out of me because it's a lot of interacting with people and I'm naturally more of an introvert.

22:15So, you know, it was just demanding of me to make it through that week. But that's something that I decided is worth it. I have this vision. I see where this is going. I believe in it. And I'm going to keep doing it despite what the other people are, you know, telling me I should do. Yeah, people are telling you maybe not. And maybe the math, it worked. It wasn't a money loser. But in terms of the hourly investment and just like the effort and energy that went into it, like, ah, you know, should I have just, you know, gotten another job or booked more photography gigs, whatever it could have been.

22:45Exactly. But you see this path forward to be like, well, you know, I think there's a, I think there's a way to turn this in to something else. And so you do dust off and say, okay, we're going to do this again. And then it's a matter of, I guess, re-engaging the same sellers, expanding the network of sellers to try and make the next event bigger, better, faster, more profitable. Yeah, absolutely. And the primary way we did that is as shoppers were checking out, we connected with them individually and said, we would love for you to sell at our next event. You know, at that time, it was just a pencil and paper.