Running a nonprofit thrift store allows charitable organizations like yours to generate sustainable revenue for their causes rather than relying solely on financial donations from supporters. Plus, it provides a fresh avenue to boost your mission’s visibility and encourage community members to engage with it.
However, running a thrift store presents obstacles that your nonprofit may not have encountered before, particularly inventory management. In this guide, we’ll discuss tips to simplify inventory management for your nonprofit thrift store.
Establish an inventory organization system
You likely know from going shopping yourself that a key part of the shopper experience is having a well-organized store layout that customers can easily navigate to find what they need. Although this frontend element is an important part of managing your inventory and ensuring it sells, your backend inventory organization system is just as important.
To keep things organized, try the following tips:
- Categorization: Organize your inventory into categories so you know where to find items to restock your shelves. For example, you might sort it into clothing, home goods, books, and media, so when one of these categories is understocked on the sales floor, it’s easy to find and replenish items. You can also break categories down into subcategories, such as sorting books by genre and clothing into sizes.
- Shelving: Add shelving units, racks, and bins to keep items organized and visible. This makes it easier for staff members and volunteers to locate items and sort new ones into their correct categories.
- Labels: Instead of relying on memory to remember where everything is, add labels to all your storage containers for easy organization. You can also create a small map of your storage space to help newer staff members or volunteers find what they’re looking for.
- Color-coding: Certain shops use color-coding as a way to facilitate discounting on their items—e.g., items with purple tags are 10% off and items with green tags are 30% off. However, you can also use it as an organizational tool. Some thrift stores use colors to signify the age of their stock, which they then discount accordingly to ensure older items are purchased.
On top of these practices, regularly audit your inventory to ensure items logged in your system matches your actual inventory. This helps you identify discrepancies like missing or damaged items more efficiently, increasing inventory management accuracy. You can schedule smaller checks on a monthly basis and do a large audit every quarter, or adjust this timeframe to fit your thrift store’s capacity.
Optimize your pricing strategy
Although it may not seem like it at first glance, your pricing strategy is essential to proper inventory management. If your items are overpriced, your sales will dwindle, leading to pileups and long inventory turnover metrics. On the other hand, if your items are overpriced, your sales may increase, but your thrift store may still not be profitable.
There are three common pricing approaches for thrift stores:
- Fixed pricing, where products have a set price.
- Variable pricing, where pricing for products changes based on demand.
- Discounting and sales, where products generally have a set price that can be reduced at opportune times.
In addition to these approaches, you can use psychological pricing techniques to encourage sales, such as:
- Charm pricing: Certain numbers make a product sell better. For example, pricing items at 99 cents often results in more sales than pricing items at a dollar.
- Bundling and package deals: When you bundle multiple items together for a small discount, customers are more likely to purchase, since they perceive the bundle as having a higher value than the sum of its parts.
- Limited-time offers and scarcity: Creating limited-time offers can create a scarcity mindset that drives customers to buy. However, use this technique sparingly, as it can also create resentment among customers.
- Pricing tiers and options: Offer items at a wide range of prices so customers can shop for items that are affordable for them.
These pricing approaches and techniques ensure that your items are appropriately priced for customers, helping you move inventory. If you find that any items won’t sell even after applying these strategies, consider if those offerings are suitable for your community’s needs and whether you should continue selling them at all.
Set up a system for handling incoming donations
One of the major benefits of running a nonprofit thrift store is that you don’t always have to purchase items to stock your store with. Instead, your nonprofit’s supporters are happy to make in-kind donations of items that you can sell in your store. However, to ensure that you’re not completely swamped with donations or given unsuitable donations, set up a system for handling these gifts.
Start with these three important aspects:
- Donation rules: Set clear guidelines about the types of donations your thrift store accepts. What types of items do you want? What conditions should those items be in? How do you want them delivered, or does your store offer pickup? Make sure these rules are clearly shown on your thrift store’s website so potential donors know exactly what items you’ll accept and your processes.
- Donation receipts: Once you’ve received a donation, issue a tax receipt for it. You may already be familiar with this process from receiving financial gifts from supporters. The difference is that you aren’t legally allowed to list a specific financial value for the donation—instead, provide space for donors to estimate the value of their items.
- Sorting and stocking: Once you’ve taken care of the processes above, you can determine your process for sorting and stocking donated items. Ideally, you want to organize these items as soon as possible to ensure your inventory management operations are based on the most current information about your stock. A nonprofit point of sale (POS) system may help with that—more on this in the next section!
Don’t forget to thank your donors for their support! After all, it’s only with their generosity that your store can keep running and providing revenue for your nonprofit’s mission. Along with including a quick thank-you on your donation receipt, send a follow-up email with a longer expression of gratitude.
Invest in inventory management solutions
When you’re dedicated to improving inventory management for your thrift store, the right tools will make it easier. According to ThriftCart, robust inventory management software is the key to staying organized and having up-to-date stock information.
Ideally, you should take a cue from the business software playbook and invest in a solution built specifically for your industry. After all, many thrift stores offer unique items of various types and conditions. Keeping a record of what you have and what’s been sold is more challenging than for the average small business. Thrift store inventory management software is built specifically for thrift store needs. The best solutions are bundled with POS systems, enabling you to:
- Track in-store and online inventory in real time
- Allow customers to schedule donation pickups and dropoffs
- Engage customers with rewards programs
- Pull accurate data for reporting purposes
- Create color-coded price tags
- Discount entire departments
- Print, send, and schedule receipts
Since you run a nonprofit thrift store, your store will likely be staffed by volunteers. Your solution should be intuitive and easy for them to use with minimal training so they can focus on checking out customers and providing a great store experience.
Managing a nonprofit thrift store requires you to learn strategies from businesses you may not be familiar with. With these best practices in mind, you’ll be better equipped to optimize your thrift store’s inventory, ensuring you always have the right stock that appeals to your community and inspires purchases.