Tips for starting a second-hand goods store
- Henk Herkink
- How to
- 12 Sept 2021
- Edited 16 Nov 2022
- 7 min
Vintage is in: increasingly more products get a second chance. Selling second-hand products appeals to you. But how do you come by pre-owned goods? And what do you need to keep in mind? Learn how to start your second-hand goods store.
More and more, people are aware that the consumer society we live in burdens the environment. New professions are coming up, such as the second-hand clothing designer, who makes new clothes from used items. Not just clothing gets a second life: so do furniture, smartphones, jewellery, and all manner of other products. Second-hand clothing is hip, now that larger companies have noticed and included them in their own brands and lines. Vintage clothing and retro furniture are all the rage. So to what should you pay attention when starting your own second-hand goods shop?
The number of second-hand products shops is growing. In 2022, 4,014 businesses were registered in the Netherlands Chamber of Commerce KVK Business Register as second-hand goods stores.
Conduct market research to find out if there is a demand for your product. It will help you map out your market by taking into account who your competitors and potential customers are. Market research is part of your business plan.
Describe trends and developments in your business sector to support your plans. Sector organisations can supply you with this information. In the Netherlands, INretail is the sector organisation for all non-food retailers, online and offline, including second-hand shops.
Dennis Heijnen runs second-hand clothing and accessories store Il Secondo in Malden. The store sells upmarket branded clothing. When he was looking for a suitable location for his shop, he conducted market research. He looked at the places where people live who can supply him with clothing, as well as the people who might become his customers. “For example, elderly people go for quality, and like to visit a brick-and-mortar shop. Younger people prefer shopping online, looking for environmentally friendly and sustainable goods.”
Tip! Take the KVK ‘Locatiescan’ (in Dutch). This tool shows you who your target audience and your competitors are per municipality and per neighbourhood. Or, count how many second-hand shops (‘Winkels in tweedehands goederen’) there are in your area using the KVK Company Counter.
Are you an entrepreneur?
According to the law, you have a business if you provide services or goods to others with a view to making a profit as an independent operator. In practice, it can be hard to determine exactly when you have a business or not. Do you sell the occasional T-shirt through Vinted or Marktplaats? That does not necessarily qualify you as an entrepreneur. Check whether or not your activities meet the criteria for a business.
Purchase and sales
Before you can start selling second-hand products, you need to establish a supply. There are several possible sources:
- Private individuals
- Thrift shops (‘kringloopwinkels’)
- Used goods wholesalers
At first, Marieke Lichtenberg of second-hand clothing store Sam & Zo in Hengelo worried about finding enough clothing items. “But in no time, I was overloaded with second-hand clothing. I decided early on to go for high-end branded clothing, because it is of better quality, so it lasts longer, and is easier to sell.”
Heijnen also receives boxes full of clothes. “My aim is to lift second-hand clothing to a higher level. Second-hand is nothing to be ashamed of. Good items deserve a second chance. I have a lot of experience with and knowledge of fabrics, and I choose to work with high-quality items.”
One option is not to buy the items yourself, but to sell them on behalf of the seller. This is called selling on consignment. The goods remain the owner’s property. You try to sell their products, and in return receive a percentage of the sales price. If you are going to be working this way, draw up a clear agreement, including:
- How you want the products to be delivered.
- For how long the products will be on display in your shop.
- What you do if the product does not sell.
- What you do if the unsold products are not collected.
- The percentage you get as a seller.
- Liability for the product, if damages occur.
Renting or buying business premises
When looking for business premises, ask yourself:
- Will I be renting or buying?
- How much can I pay?
- Who is my target audience, and where can I find them?
- Who are my competitors, and where are they located?
- How large must the building be?
- What kind of atmosphere do I want the building to have?
- Is the municipal zoning plan okay with me starting a shop there?
- What does the rental or sales agreement say about the activities allowed?
- Can I negotiate the price?
- How much will it cost to renovate and decorate?
An online shop can support your physical shop, and help you promote your activities. It shows your target audience who you are and what you do. You can also choose to only sell your products online. Lichtenberg wanted to start a shop from home. “But the municipality would not give me a permit for a physical store.” Now she runs her online shop from home. “Running the shop from home is easy, but I have had to rent storage space, because the supply of clothes became too large.”
If you start an online shop, it has to comply with several rules. For example, you need to state certain matters clearly on your website. The Netherlands Authority for Consumers and Markets ACM checks that these rules are followed in the Netherlands.
Running an online shop in second-hand clothing is very labour-intensive, says Lichtenberg. “All products are unique. You have to photograph them and put them online one piece at a time. I spend a lot of time on that each week.”
Selling through an online marketplace
You can also decide to sell your products through an online marketplace. It will save you the costs and trouble of finding business premises, building a large stock, or building an online shop. Online marketplaces offer goods from several online shops. Examples are: Vinted, Bol.com, Marktplaats, and Zalando.
An important part of your business administration is made up by the goods you purchase from your suppliers. Who supplies what, on which date, and for what price. If you sell on consignment, you need to keep communicating: when an article is sold, to tell them how much money you owe the owner, or when they have to collect an unsold item. If customers buy products via your online shop, you need to take care of the administrative process and shipping. And customers who are dissatisfied and send back the product need to be reimbursed.
You can do all this manually, but you can also use business administration software and save time.
Entrepreneurs need to keep records for the Tax Administration. You can do this yourself, or outsource it to an accountant or tax consultant. They will set up your bookkeeping accounts, give you advice, and inform you of several tax schemes.
You do not have to open a business bank account, but it may be handy to separate your private financial records from your business expenses.
Remember to observe the GDPR privacy act if you use customers’ details. Answer the questions in our GDPR article to find out what you need to do to comply with the law.
If you are a trader in used or unregulated goods that are prone to theft, such as gold, precious stones, or watches, you need to keep a digital buyer’s register. This also applies to goods you buy online. This legal requirement aims at preventing illegal sales, also known as fencing. To set up a buyer’s register, contact your municipality. Your municipality determines in what shape or format you must keep the register, and will check if you have kept the contents in order. Record in the register what you buy, on what date, at what price, and what the seller’s personal details are.
Tip: you can use the buyer’s register to keep track of your stock.
From the moment you register as an entrepreneur, you will have to deal with business taxes.
Income tax or corporate income tax
Once a year, you file a tax return for your income or corporate income. In it, you declare the profits you have made in the preceding year. The Tax Administration will assess how much tax you have to pay. Be sure to set aside money for this.
At the end of each quarter, you file a VAT return. You declare the VAT you have charged to customers, and offset it with the VAT you have paid to suppliers. The remainder you have to pay – or receive, if your costs were higher than your sales.
The margin scheme allows you to calculate VAT over your sales margin, instead of your sales price. To do this, you need to keep track of purchases and sales. You can do so in 1 of 2 ways (in Dutch): the globalisation method, or the individual method. In both cases specific administrative requirements apply, such as drawing up a purchasing declaration (in Dutch) when you buy goods without VAT for over €500 from 1 supplier.
You cannot use the margin scheme in every situation. There are exceptions (in Dutch), for example trading precious metals and stones, or selling your own used goods.
The margin scheme exists in all EU countries. You can purchase goods inside the EU and receive an invoice without VAT. Would you prefer an invoice with VAT, so you can deduct it on your VAT return? Ask your supplier for a VAT invoice.
Small businesses scheme KOR
If the Tax Administration views you as an entrepreneur for VAT purposes, but your annual turnover does not exceed €20,000, you may profit from the small businesses scheme (KOR). KOR exempts you from VAT, which means you do not have to file VAT returns, and do not need to keep extensive VAT records. You have to apply for KOR to use it. Watch our KOR checklist video.
Register with KVK
When you start a business, you must choose a legal structure that suits you. Most starting entrepreneurs choose the sole proprietorship (‘eenmanszaak’). Are you starting a business with other entrepreneurs under a common name? Then you may opt for a general partnership (‘vennootschap onder firma’, vof).
Neither the sole proprietorship nor the general partnership requires starting capital. One disadvantage is that you are personally liable for any debts the business has.
You also need a trade name when you register. Of course, you want to choose a name that is recognisable and has the right feel. There are also some rules you must follow when choosing a business name.
To officially register your business with KVK, you need to make an appointment at one of the KVK offices. You make this appointment online. Be sure to fill out the registration form as fully as possible before you come to the appointment, and bring valid ID. You pay a one-time registration fee. Are you under 18? You will need a written permission from your parents or guardian.
Once you have registered your business, you will receive your KVK number. KVK will forward your details to the Dutch Tax Administration, and they will send you your VAT number and VAT-ID number by mail. They usually do so within 2 weeks.