By Michael Ting, Hyperwallet
There are currently more than 25,000 commercial and not-for-profit resale shops in the United States, not to mention the number of consignment marketplaces active online. There’s no shortage of choice for consignors looking to sell their wares, meaning the competition is stiff among brick-and-mortar and digital retailers fighting to attract and retain their seller community. So how does a resale shop or marketplace engage new sellers and create loyalty among existing consigners?
In today’s retail world, there are a few key things that matter to consumers: speed, choice and ease of use. They want to purchase their items quickly, pay for them in the method of their choosing and enjoy a simple process from start to finish. If they’re rewarded for their business and their loyalty to a brand or store, that’s the icing on the cake. The same is true for consignors.
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There are three key ways that resale shops and consignment marketplaces can improve seller loyalty and build a solid consignor base:
Pay Consignors Faster
The last thing consignors want to do after completing a sale is to wait weeks for a check to arrive. We conducted a survey of 1,500 e-Commerce marketplace sellers and found that 53% want to receive payments instantly each time they sell a product. And other than the number of buyers on a platform, the top reason sellers stay loyal to an e-Commerce marketplace (at 59%) is the speed of payments.
Providing consignors with the power to access and control how and when they get paid is a proven method of improving loyalty. The return on investment should be appealing to consignment shops as well: by continuing to improve the payments process and increase seller trust, marketplaces and resale shops will have the opportunity to process more transactions.
Offer Consignors Store Credit
While many businesses offer ‘credits’ as a method of payout to consignors who can then make purchases at a discount, the reality is that adoption tends to be low. One of the main reasons is the consignor is often only provided a binary option to either accept 100% of their monthly earnings as a site credit or in cash form (i.e., checks, bank deposits).
It’s highly likely that most consignors don’t see the value of making an upfront, irrevocable commitment to buy from a consignment shop or marketplace (even with incentives of topping up the value of the credits or offering a discount) unless they know what they want to buy and intend to make that purchase almost immediately. Otherwise, they run the risk of leaving value on the table when they could have otherwise had access to the cash. For most, the more pragmatic and safer bet is to withdraw the funds, return to the site or store at their leisure, and pay with a credit card. After all, it costs them nothing to do this, but it costs the consignment shop an opportunity to more quickly convert a consignor into a buyer.
So, what’s the fix?
Consignment shops can offer store credit using a split-payout functionality. This allows the consignment shop to momentarily engage in a dialogue with the consignor to offer a promotion using their store credit. Meanwhile, the consignor is given full discretion to consider what’s best for them. The split-payout functionality eliminates the psychological barrier for the consignor, so they’re able to buy items using store credit or transfer funds to any of the other payout methods, all from the same balance and on their own schedule.
Implement A Loyalty Program
While not the most groundbreaking tip, loyalty programs are one of the most effective ways to develop — you guessed it — loyalty. Rewarding frequent sellers generates great value for both the consignor and the shop. This could include referral incentives, creating loyalty tiers or taking a page out of Starbucks’ wildly popular mobile app that lets consumers accumulate stars for future purchases. Successful loyalty programs are those that see beyond the points and rewards, and instead focus on how they can create a base of loyal customers or sellers that advocate on behalf of the brand.
Ultimately, consignment shops can enjoy higher engagement and loyalty levels when they provide their sellers with flexibility to control the access and utility of the money they have earned. That flexibility stems from the ability for consignors to independently determine how, when and where each dollar of their earnings should be directed. By offering ‘consignor control,’ marketplaces can protect themselves from the inherent complexities associated with rolling out new loyalty options, scaling internationally and attracting new classes of consignors.
Michael Ting is the SVP of Digital Markets at Hyperwallet, a global payouts provider to independent workers, e-Commerce sellers and contractors.
