A consignment clothing shop can be a profitable business for people who are savvy about fashion and retail. Your consignment shop can be local, online or both. Finding quality inventory is important, but you also can choose to carry inventory that has broad appeal or caters to a niche market.

What a Consignment Shop Is

A consignment business is a type of retail business that sells goods legally owned by someone else. The business, known as the "consignor," sells on behalf of the owner of the goods, known as the "consignee." When a sale is made, the consignor loses ownership of an item, and the consignor and consignee both profit. A typical consignment shop obtains items from multiple consignors. Many consignment shops will pay cash to consignors on the spot for preselected items that have a high chance of being sold.

Starting a Consignment Clothing Shop

Fashion-savvy and cost-conscious individuals may want to start a consignment clothing shop, as the cost of starting a consignment shop is typically less than opening a regular retail store. Before starting, you will need to do market research to find out how profitable your shop might be, who you're selling to and where you'll be located. You may decide to set up a brick-and-mortar store or to sell items through online stores. Whichever type of store you choose, you will need to set up a consignment agreement that clearly spells out the terms for the consignment.

Finding Inventory

To get inventory for your new consignment shop, you can start by selling your own clothing or the clothing of your family and friends. You can join the Association of Resale Professionals to find suppliers. You can purchase clothing items directly from yard sales, thrift stores or flea markets, and you can advertise in print, radio or online to encourage potential consignors to bring items to your shop. You can purchase items online for resale in your store. If you're sourcing for an online shop or want to find consignors outside of your local area, you could offer prepaid shipping for consignment items.

Niche Consignment Shops

Consignment clothing shops come in many types, from those selling to a young, urban crowd -- like Buffalo Exchange -- to those selling high-end designer brands -- like Rodeo Drive Resale. Some consignment shops carry only men's clothes, women's clothes or children's clothes. Some shops offer vintage items, while others offer a trendier selection. The type of inventory you carry is up to you, but your choice will affect your pricing. Your profitability will depend on your ability to find quality items that will sell and price them appropriately.