How to Start Your Own Designer Luxury Resale / Consignment Business

By Luxe Du Jour
April 1, 2024

This article is written on behalf of Tammy Phan the CEO / Founder of Luxe Du Jour where we dive deep into how Tammy got started and all her key tips on how to start a luxury resale business. The second hand designer luxury industry is growing at a faster rate than the global luxury market and is set to be a 68 billion dollar industry by 2028 growing at a rate of 10% every year.

So if you ever wanted to start your own designer handbag resale company then continue reading! The key parts we will be breaking down in this guide are: The Passion, The Plan, The Supply, The Authentication, The Marketing, The Operations, The Customers, and Repeat.

1. The Passion

If you have a passion for luxury fashion or designer bags then you have already solved the first step which is to find your passion. The biggest mistake people make when starting a business is starting it with no genuine interest and only for the dollar signs behind it. The reason the passion behind any business is an important factor to success is because there will be ups and downs during business and times when you will need that fire in you to get through those hard times. That motivation and persistence can naturally come from having the passion for something. Just think about when you genuinely love someone you will do whatever it takes to make the relationship work, you’ll compromise, you’ll do things you never thought you might do, you’ll work harder at the relationship than someone who may not genuinely like. But in all businesses and building any company it requires careful planning and execution rather than just passion but passion is a great start!

I initially started collecting designer bags because of a desire for luxury since we didn’t have anything luxury growing up but when I needed to sell my designer bags, I couldn’t find a trusted platform at the time in Canada to sell my high end designer bags which is why I started Luxe Du Jour on instagram. My passion for designer luxury sparked even more when I discovered my Chanel bags I bought years ago could sell for more than what I originally got it for! This truly piqued my interest to learn more about these brands and their value. My passion for designer luxury and being able to solve a problem for other Canadians that didn’t have a go to platform to sell their designer items really got me through all the obstacles that came with being a high school drop out with no business degree.”

2. The Plan

There are many business plan templates and worksheets you can download for free on google which will help guide you in the right steps. There will be questions you’ll need to answer and do a little bit of market research. The reason this plan will vary with different luxury consignments is because every resale business model is also different. Things you’ll need to figure out are: What is your fee structure? What do you want your target audience to be? What brands would you like to sell? What platform do you want to use to sell and showcase your items? Who are your competitors? What will be your competitive advantage? Where will you set up your business? Will it be a store front or online only?

Other important things to cover which will have their own section to go further in depth are; What will your marketing strategy be? How will you authenticate?

Truthfully, when I started Luxe Du Jour I had no plan. I didn’t know anything about business and had no guidance or support because my parents expected me to go to school and be an engineer or doctor like my cousins. I just planned to sell my designer items and my friends items on instagram which was a free platform and try to deliver the best customer service. I didn’t even have a website for the first 5 years of running LDJ and I googled everything I needed to know from how to organically grow on instagram. My plan was to just try my best and google anything I didn’t know and make sure customers were happy but I do think if I had a mentor or a guide it would have helped me even more”

3. The Supply

Supply is a huge problem for those who want to start any retail business because without supply you have no business. There are many ways you can ensure you have supply for your consignment business:

– Establish relationships with individuals looking to consign their designer luxury items. This can be done through advertising, networking, or partnering with influencers in the fashion industry

– Find wholesalers or work with other companies that offer great pricing which gives you room for markup

– Build partnerships with other resellers or trusted companies that may allow you to cross list their items on a consignment basis if you are limited on finances

– Sign up with Luxe Du Jour’s B2B wholesale program where you can access all our inventory at a discounted wholesale price when you buy in bulk

Offer other services like personal shopping and privately sourcing that way you can get in the right products. You ideally want to bring in items that sell and turn over fast

You want to ensure you have a steady flow of supply constantly coming in because if you don’t have new arrivals to draw new customers or returning customers from coming back then you will slowly lose momentum. Imagine going into your favourite grocery store with only a few selections of fruits and vegetables and they are also the same fruits and vegetables you saw from 2 weeks ago. Surely, you do not want to go into any business that lacks supply and does not restock or have a variety of items you can browse through.

Luxe Du Jour focuses on quality over quantity and only accepts pre-loved items with a 8/10 condition rating or higher but initially we took in any condition which lead to a lot of issues and disappointed clients. We knew this was not the experience we wanted for our clients therefore leading us to narrow down what items we take in to provide an overall better customer experience.”

4. The Authentication

The core of any pre-owned designer luxury resale business is AUTHENTICITY. Authenticity should be your company’s core values and words to live by because your reputation is important. The livelihood of second hand designer goods business depends on reputation and trust. It is not easy convincing someone to swipe their credit card online for a designer item that can cost thousands of dollars if they aren’t 100% sure it will be authentic. Find reputable authenticators if you are not an expert authenticator yourself that you can authenticate the items you plan on taking in and selling. Offer a money back guarantee similar to Luxe Du Jour because as a trusted seller you must take responsibility for any items that may be proven not authentic by a client. There are some companies that don’t take authenticity seriously and clients lose trust in that company which will lead to a tarnished reputation and customers no longer purchasing from that company. Once you have determined how you will ensure authenticity for items, reassure clients that a certificate of authenticity will come with their purchase for peace of mind and ensure your authenticity guarantee is clearly stated on all your platforms.

When other companies, resellers and clients purchase from Luxe Du Jour they are aware of our lifetime guarantee of authenticity and have the option to add a certificate of authenticity with any of their items purchased from us. Other companies have confidence buying from Luxe Du Jour knowing we have a multi step process when it comes to authenticity; in-house inspection, review under microscopic level through Entrupy, third party authentication partner.

The reason Luxe Du Jour invests so much resources and time into our authentication process is because we are offering a lifetime guarantee of authenticity on all our items. We would never want any of our clients to have a doubt in their mind when it comes to authenticity and we do not participate in selling anything counterfeit as it is illegal”

5. The Marketing

Marketing is multifaceted and involves how you manage branding, advertising and sales. There is a lot more to marketing than what we can cover here in this guide but to break down the most important parts required for a designer luxury consignment company you will need to focus on where you will promote and advertise your preloved items and what social media platforms you will focus on to build your brand.

Develop a strong brand identity that resonates with your target market and sets you apart from the competition. You can showcase your branding on your website or on your social channels. We recommend Instagram, Facebook and Tiktok.

Advertising, running ads, paying for public relations requires capital investment and if you are looking for a cost effective way to start consider doing everything organic through social media which is a free platform.

Luxe Du Jour didn’t spend a single dollar on paid ads for 5 years while I was running the company in my parents basement because I didn’t know how and didn’t have a marketing background. I focused on adding value to our bag community and building a community of bag enthusiasts that shared the same interests which eventually converted to clients! I made a lot of friends along the way that started as clients and focused on nurturing those relationships. Those friendships turned into word of mouth and clients started trusting us because we were getting clients on a referral basis”

Another cost effective way to market your business is to offer incentives, exclusive promotions, discounts, freebies with purchase or something to create buzz around your business. A popular trend in 2023 was live streaming your products and engaging with potential buyers through live shopping events such as WhatNot, Shopshops, Instagram or Facebook lives. There are so many other platforms you can live stream from! Pick a platform you want to focus on building your community on and eventually you can expand your presence.

6. The Operations

Starting off, you may want to save some overhead expenses and reselling items digitally in the comfort of your own home is the best way to save on labour and rent. However, with every business you’ll need start-up costs to get your business started like; professional lighting, a setup to take photos, a mannequin, shipping supplies and a computer are the essentials for a designer luxury consignment. Most importantly, you will need capital to buy in potential inventory depending on how you plan to structure your consignment business. If you choose not to own any inventory this is the best way to start your consignment business with minimal startup costs and less risk.

As you grow your business, you will start to delegate tasks to an assistant which will then eventually move into a full time role. The roles you’ll need to fill eventually when you’re a full on operating business are a shipper and receiver, customer service, authenticator, photographer and an administrative assistant. These are the key roles to operating a smooth running consignment business.

When I was starting off I was in every role and I was working 12 hours a day but boy, was it ever fulfilling. I loved all the interactions I got with the clients, I was so hands on and loved that I had control over everything to ensure client satisfaction. When we started growing it became very hard to delegate and move away from roles I loved so much but I knew it had to be done in order to grow and scale the company. I had the vision and I had to train everything down and trust my team.”

7. The Customers

Customers are one of the most important things when it comes to any B2C (business to consumer) companies. If you forget about your customers your customers will forget about you. Remember, you aren’t selling something for $20 so these clients deserve extra attention and care. Focus on getting those 5 star reviews and asking your customers for feedback and making sure your clients are happy from start to finish. This means following up with your clients after they receive their first order, offering them an incentive to come back or write a review. Your customers are your reputation and when your customers are happy they will be your walking advertisement and spread the word about your business. Vice versa if your customers are not happy they will always spread the bad word about your business so take care of your customers!

Even though I may be the CEO of the company and have a team that runs the daily operations I always still want to feel connected to the customers. The customers are our core right up there with authenticity. I need to know our customers well in order to constantly improve the company and address our customers needs. This was a huge thing I thought the luxury giants missed the mark on – it was focussing on the customers and how to make a better customer experience when it comes to shopping pre-owned luxury. I always want LDJ to be inclusive because I remember what it was like walking into a Chanel or Hermes boutique wearing no makeup and sweats…No one wanted to help me I felt like I didn’t belong. There were many things the luxury boutiques lacked that I thought I could solve and make shopping luxury a better experience so I focussed on the customers. I constantly did surveys with our customers, I reached out personally, I asked for feedback and I did all that I could to implement change to disrupt the pre-owned designer luxury industry. It was always the customer first.”

8. Repeat (aka Expansion)

Once you have a good foundation built and operations are running smoothly you want to put your efforts towards expanding and being the visionary for your company because no one can be the visionary for your business better than you especially if you still have that passion for what you’re doing. You can start or continue hiring and make sure the key roles are still repeating what needs to be done so that you can identify areas for improvement and growth opportunities. Consider expanding your business by adding new product categories, launching additional locations, or expanding your online presence. Stay updated on industry trends and fashion cycles to adapt your inventory and marketing strategies accordingly. A great business becomes a great company when it’s repeatable.

Remember that starting a designer luxury consignment resale company requires dedication, attention to detail, and a deep understanding of the luxury fashion market. It’s essential to stay flexible and continuously adapt your strategies based on market feedback and changing trends.

I may not have a business degree or any fancy degree for that matter but I believe in the free resources online and the great books that I’ve read along the way that helped me and guided me when no one else believed in me. There are many great business books out there that you can read to further guide you. Here are a few of my book recommendations that I have personally read and found helpful: The great game of business, the lean startup, building a storybrand, the 1-page marketing plan, The E-myth revisited, Traction; get a grip on your business, Grit. You are not alone in this journey of building up your business and if there is someone that can relate to you feeling alone it would be me as someone who didn’t even have their own parents to believe in me. I want to encourage women across the world that you can absolutely do what you love, sometimes you need that little push, sometimes you just need a guide so I hope this article helps and inspires you”

Follow me on my social media:

LinkedIn: Tammy Phan

Instagram: Luxedujour.Tammy

Youtube: Bag Buzz

TikTok: @TheTammyPhan