This age old credo is still true and retailers of all types are bound by this principle. For most retailers, it is a matter of locating and purchasing from wholesalers the appropriate stocking levels and keeping enough inventory ready-for-sale. But for the thrift industry, one must deal with a much different supply chain – donated goods. Donations are the wild card of every thrift operation and the quantities available will determine ultimate success or failure of the enterprise. In addressing the characteristics of the donation stream we evaluate four different components.
- Delivery (i.e., drop-off v pick-up)
The quantity of donations is the first consideration in determining if the donation stream is sufficient to reach targeted sales goals. Every donation stream will have seasonal fluctuations and should be tracked to determine the average donations made on a monthly basis. It should be well understood that the average of sellable merchandise will vary, but to expect anything above 60% of donated items are sellable is not realistic. Therefore, to strategically develop a budget or business plan without having a donation volume target would not be prudent.
The quality of any donation is subjective, but it stands to reason the donations originating from areas of high disposable income will be greater than those mid-to-lower income areas. This factor will have a significant determination into the average cost per piece that will be priced for sale, and this in turn will determine the average transaction value which directly determines a stores sales capacity. Again, it is imperative to consider the resources of the donors when locating stores and donation centers.
The mix of goods in the donation stream is again a critical element in the evaluation process. Textiles will always represent the largest part of donated items, but a balanced product offering is required for the store to reach maximum performance. Household items, appliances, jewelry, furniture, tools, and toys will all play a significant role in a successful thrift store sales make up. If these items are not available, maximum potential will not be realized.
This component represents how the donation occurs. If 100% of the donation stream is dropped off versus being picked up, your donations will not maximize value for your customers or your bottom line. Picking up donated items, specifically furniture, will provide the highest priced items for sale and will drive sales volumes many times to profitable levels.
In the next post, we’ll explore ways to confront any issues related to these four components of your donation stream and make sure your wagon stays full.