The deposit-sales and purchases-sales sector is constantly growing despite the tense economic environment. The overall turnover of the sector was 1.535 billion USD in 2010 with 14,876 companies listed. Prices are the main reason for this success, but the rapid aging of technological objects is accelerating the bargain effect. In addition, mentality changes add a fashion effect to second-hand shopping.
Because of its dynamism, this market attracts many stakeholders who face sales, sales and purchases. This is the case of classifieds, sale and also empty granaries. The competition is therefore vigorous. For example, in the second-hand retail sector, the 5-year survival rate is 37.7%. In 2010, the number of failures amounted to 132.
Finally, the sale on the Internet is growing vigorously and reaches 43% of the overall turnover of the sector. This segment, the favorite of individuals, has become the challenger of professionals who see their market share further diminish.
The organization of the used goods market in France
The second-hand market will continue to grow due to the difficult economic outlook for more and more households. Internet sales and network development are increasingly damaging to independent professionals. The market share of these is constantly shrinking. The sector is organized around 5 poles.
- Sales depots that are responsible for selling items deposited by individuals. The custodian, who owns the establishment, is paid only if the item is sold.
- The purchase-sales, in these establishments, the professional buys the objects to the private individuals in order to resell them.
- Antique dealers authenticate old objects and eventually restore them before reselling them.
- The junk shops sell used objects. They have no authentication obligation.
- E-commerce is increasingly used by both professionals and individuals. For these, the Internet is the preferred mode of transaction.
Some second-hand buying franchise networks are growing, we can mention the cash converters franchise, the cash express franchise or the easycash franchise.
The constraints related to this trade
No training is required to practice in this area. Given the growing competition, a good knowledge of the workings of the sector is a plus. The good professional must know how to identify the most sought after products.
Similarly, no specific rule concerns the opening of a retail sale of second-hand goods. It is subject to the common law of the retail trade as well as those relating to the safety of the places receiving from the public. Before opening, the establishment must be registered in the register of resale of movable objects.
The status of the professional selling second-hand goods
The professional has the status of merchant and is registered with the register of companies of the Group of Commerce and Industry.
As with most activities, it will be possible to practice as an individual entrepreneur. In this case Taxation follows the regime of industrial and commercial profits.
He also has the opportunity to create a company. The professional is therefore subject to corporate tax.
He can also be a self-entrepreneur and includes income from his business in his income tax return.
In this sector, most professionals work in the form of companies.
Only the VAT rate applies to 19,60%.
The characteristics of a point of sale of used products
In this sector the new installations are generally creations. The quality of the location is essential and depends on the category of items sold. Resales of cultural products, clothing and accessories are ideally located in the city center or in busy commercial areas. For resale of furniture, or equipment, for which the areas required for the premises are larger, the areas of choice are often on the outskirts of agglomerations.
Initial investments are very much dependent on areas and activities. For the best locations, the rents or the pas-de-porte are very expensive. This is an extremely heavy investment for professionals who need a large area for their business.
The management of a “sales warehouse”
Professionals who apply sound management closely monitor the evolution of their turnover. They break it down by type of product to better analyze the demand of their customers. It is indeed essential to stick to the demand to attract and retain customers.
In the case of a consignment, the item deposits must match the searches of the buying customers.
As part of the purchase-sale, the professional makes sure to buy at the best price to ensure a better margin for resale.
The second-hand market is stable all year round and allows you to make good numbers all the time. Margins are on average higher than 50% of the purchase price for purchase-sale establishments. For sales deposits, the commission that remunerates the custodian varies between 20 and 50% on sales made.
The pricing strategy must be rigorous in order to maintain profitability. As in any retail business, purchases are the largest expense item with approximately 50% of sales.
The staff costs are also high. For premises located in urban areas or in dynamic commercial areas, rent also represents a significant share of expenses.
To achieve good results, the professional must make good sales. But upstream it must above all ensure good purchases, that is to say, acquire salable objects, likely to be sought by customers.
For sales deposits remunerated by commission, this must be calculated in such a way as to guarantee profitability. Inventory must be closely monitored to avoid overstocking. A rapid turnover of products is essential to renew the offer frequently, and attract customers.
Certain supply channels allow for high margins: customs seizures, liquidations of companies, etc. The financial strength of the professional is essential. To avoid any debt, its own funds must reach at least 30% of turnover. The consignment and sale activity does not require working capital.
Get a professional loan for a second-hand sale / purchase sale
In this sector, only financially strong professionals with good knowledge of the market can survive. Thus banks are attentive to the amount of the contribution that must be greater than 30% but also to the experience of the project leader which must prove to be significant in the field of opportunity.
Finally, opening within a franchise network may be easier to finance.