The most Frequently asked questions we hear from resale business owners considering the use of one of the NextGen pricing tools are “How does NextGen arrive at the Prices suggested? Are they based on known retail prices and/or resale prices for like items (item type and brand)? Is demand considered? Is condition factored in? All good & logical questions and “All of the Above” is NextGen’s short and ready answer.
Most of NextGen’s “Right Price” suggestions are statistically based on the sales experience of resale stores from coast to coast participating in the pricing system’s development and continued operation.
Retail prices are principally used as a check on the “right” resale prices so derived. Retail prices serve as the basis for suggested resale prices only in the absence of reliable data on the category and brand in NextGen’s database. In so doing, NextGen applies resale/retail multipliers specific to the subject category and brand level. Some categories and brands hold their value better than others. The same holds true in the case of “vintage” apparel. While widely known, high-level brands tend to hold value, most do not.
Resale prices from online sources are used to derive “right” resale prices only in the absence of both online retail and resale prices.
As a rule, the range in prices found for categories with high-price designer labels are too wide to arrive at suggested prices. The only choice is to price the individual item in question based on the retail or resale price of that item or close match found online.
The online resale of children’s apparel continues to grow and draw business away from brick-and-mortar children’s resale shops. But here’s the good news: the online resale of children’s baby gear ( strollers, bassinets, pack n Plays…) and toy’s does not. Herein lies a key to the survival and growth of Children’s resale shops today: the reselling of toys and baby gear .
Unlike apparel and footwear, the packaging and shipping time and expense associated with the online sale of toys and gear is generally too high to manage profitably. While there are some local online options, (e.g. Craigslist and social media trading groups), the unknown-stranger dimension of Craigslist buying and selling is a fear for many mom’s, and the reach of the trading groups is limited.
And while gently worn apparel and footwear is certainly a draw to value-conscious mom’s and grandmom’s, add toys and equipment to the mix and expect to see more Dad’s, Granddads and children. Indeed, given that the demand for resale baby gear generally exceeds supply, a number of children’s stores supported by NextGen do well renting baby gear as well.
Starting or growing your offering of toys and baby gear is well worth considering to cement your place in the dynamic world of children’s resale.
The resale and consignment business has always been difficult, but the growing competition online is making it even tougher. In the final analysis, it’s meaning fewer customers and sales.
What’s the answer? While there is no one answer, one sure answer is to lower your operating costs, become more efficient. And one sure way to do that is to reduce the amount of time being spent pricing items for resale. The time spent buying or accepting items on consignment generally accounts for much if not most owner/staff time.
Navigating Google and other online shopping sites, piece by piece, is a voracious time and money eater. NextGen’s Suggested Pricing and quick online [Checkit] features quickly pay for themselves, grow your profits, and may just save your business.
A common feature of the more established point of sale systems geared for the consignment and resale industry are automatic price markdowns. Percentage markdowns can be set at pre-determined intervals (e.g. 30, 60, 90 days). Markdown Tags indicate both the date of the price reduction and the new price. Then, when an item sold, the sales clerk is not required to change the price at the register as any price markdown is recognized when the price tag is scanned. This means faster sales transactions and improved accuracy.
It also means slower inventory turnover and thus less sales revenue according to NextGen’s limited data to-date and related reports from NextGen clients having moved from automated markdowns to NextGen Pricing, This has been born out by studies in the retail sector.
Whether actively promoted or not, if markdowns are near-continuous, regular shoppers become accustomed to the process. This not only increases off-price demand, but also can decrease full-price sales. As some retailers assume ever more aggressive markdown strategies, the net effect is a serious erosion of price and more importantly margin much earlier in the product’s lifecycle. Promotions are one of the reasons commonly given for Kmart’s near demise. It has been estimated that some retailers actually sell less than ten percent of their products at full price – their customers have been trained well. White Paper: Managing Markdowns: Why Prevention Is Better Than The Optimization Cure
NextGen’s value proposition lies typically in the user’s ability to avoid the time and risk involved in setting prices based on retail and resale prices found online. However, in a few cases online price checking makes sense, and the NextGen System’s [Checkit] function is designed to expedite the process.
- Top Brand prices. Designer –brand Children’s and particularly Women’s apparel, footwear, jewelry and accessories sell for wide-ranging prices, e.g. a child’s fashion boot prices for a Burberry may range from just under $100 to over $600, a women’s handbag from around $200 to more than $2,500. These ranges are much too large to derive reliable suggested prices. Using the checkit button to view retail and resale prices for items in the same category, brand and like descriptors(key words ) supports a more well-founded pricing.
- The prices for selected equipment and large toys, online and off, can drop sharply for short periods of time—sometimes longer–as retailers use them to drive traffic. For this reason, even for categories where the system shows suggested prices, it can be worth a click of the checkit button before committing to a suggested price.
- In addition to brand, suggested prices for smaller toys are lumped into categories defined by size, what they are made of(cloth, metal, plastic, …, ), and whether they are electronic. These suggested prices are built for speed. Using the descriptors(key words) to name or describe a particular toy and the [CheckIt button] permits a more refined pricing referent… time permitting!
Several years ago the number of brands appearing in the NextGen Women’s and Children’s Pricing Systems numbered just over 4,000 each. Today the number is double that. The growth in number reflects New brands being introduced continually as manufacturer’s, wholesaler’s and retailers create new labels for new products and to keep the identities of existing products fresh.
The growth also reflects obsolete brands–those associated with discontinued products and those replaced with fresh brand names. NextGen continues to show obsolete brands (connoted with a trailing X) to alert buyers and inform the buying/consigning decision. As a rule, obsolete brands should not be purchased or consigned for resale as they often mark apparel that is out-of-style or at least out-of-favor among brand-conscious customers. If the decision is made to purchase an item, the NextGen Buy/Consign and resale prices suggested in the NextGen Pricing System drop to the lowest level. Carrying too many obsolete brands can tarnish a Resale store’s reputation.
Since NextGen first built its Children’s Pricing System in 2011, the number of children’s off- brands and no-name brands has increased dramatically. So much so, that NextGen has had to add a “bottom” brand level and corresponding resale pricing specific to this group.
In 2011, we would never have imagined apparel being offered at such unforgivably low prices. Despite numerous media accounts of overseas factories employing children in 19-to-20-hour shifts, often for seven days a week, for wages as low as 6 ½ cents/hour to manufacture it, this clothing and footwear continues to find its way onto our sales floors in the U.S. and Canada.
“A Resale POS system without auto-pricing waddles like a duck on land,
with auto-pricing it streams like a duck in water” NextGen Knowledge Base
POS Auto-Pricing is a must-have tool for resale businesses today. It instantly suggests the right resale price of an item based on brand, condition, currency, features, composition, … . It dramatically cuts the time required to price. It assures that prices are correct and consistent. It adds considerably to a store’s bottom line. It frees owners and significant others to tend to sales, customer service and other areas important to the success of the business.
The challenges facing the buyer of resale merchandise, whether buying outright or on consignment, are far greater than those facing buyers of new. To arrive at an item’s selling price, the resale buyer must assess the currency, quality and condition of hundreds of types of merchandise (apparel, footwear, accessories, toys, equipment, each carrying one of thousands of possible brands / labels– numbers of a magnitude dwarfing those faced by even the largest retail buyers. What’s more the resale buyer must examine these items and determine the selling price one by one, each in a matter of seconds.
Little surprise that owners quickly find themselves and others in their employ spending an inordinate amount of time buying. It’s the black hole of many if not most resale operations.
It is no surprise that the POS system of virtually every resale franchise or chain has auto-pricing built-in. What is a surprise is that ResaleWorld’s Liberty 4 is the only POS system today with built-in auto-pricing available to independent Resale owners of women’s, juniors and Children’s Resale shops.
In the Retail industry, the gain in productivity realized with the move from cash registers to POS systems has been significant. In the Resale industry, the gain in productivity realized with the move to POS systems w/auto-pricing is proving no less significant.
In retail businesses, it’s safe to say that prices are invariably set by owners be they individuals or corporate, or by managers using pricing conventions provided by the ownership. This only makes sense as pricing is the revenue side of the bottom line.
When NextGen started working with resale stores, we expected to find the same. Much to our surprise, pricing in a number of children’s and women’s resale establishments is left largely to employees.
Prices set by employees are rarely optimum when compared to prices obtained by stores in comparable markets; they are most always on the low side. But as damaging as the profit loss commonly associated with employee under-pricing, is the price inconsistency that comes when employees are left to price largely on their own. The result is a loss of customer trust. With inconsistent pricing comes customer uncertainty that the tag price reflects value, and the consequent declination to pay the asking price ( i.e., buy) for items with unfamiliar labels. Translation > lost sales.
Owners need to own their pricing. While some employees who’ve been pricing welcome a company pricing system and the reduced anxiety that comes with it, others resist giving up this control. Indeed, NextGen has had a number of owners decide against the pricing system for fear of losing valued employees vested in the existing pricing—their pricing. Even with employee support, if customers are accustomed to employee under-prices, prices cannot be bumped abruptly. Prices must be adjusted incrementally in order not to sour longstanding customers. Fortunately, the mixed price/value association characteristic of most employee pricing practices, can effectively mask modest price changes.
The time is always right to take control of your pricing, … to take control of your business.
The prices charged by stores using NextGen’s pricing system vary significantly. Prices for the same brand and category of apparel, accessory or footwear at some stores can be as much as 2.5 times that of others. The primary reasons: 1) demographics or more specifically client disposable income, and 2) competition. Shops serving well-heeled customers with limited competition from large discounters and resale shops are able to charge higher prices than those located in lesser income markets with nearby competition.
The challenge is finding the right level. While pegging prices to a store’s historic sale prices by brand and category makes for consistency, there is no way of knowing whether these prices could and should be higher or lower, i.e. how much is being left on the table.
Herein lies the NextGen advantage. NextGen’s prices are informed by the pricing/sales experience of stores in high to low demographic and high to low competitive markets across North America. In the case of new stores with no sales history of their own, NextGen sets prices based on the new store’s market demographics and competition. In the case of stores with a pricing/sales history, NextGen analyzes their pricing/sales history relative to the histories of stores in like markets in order to identify pricing potentials. Owners generally opt to move to these prices immediately though sometimes gradually so as not to concern longstanding customers.