Box/Shelves rental

I been too busy to update this blog as I have trying to do some small business
I have working with a few box/shelves rental company. Let me share with you my experiences and maybe this will help people who are thinking whether to take the risk or join the fun. Let think about from merchants or sellers' perspective.


The companies I know are Cube sprout, Inbox, Hako, Toyoutpost, Box Boss, Box Societe, District 5, Ministry of Cube .. There should be more of them.

Let me do an analysis of renting a box or shelf.

1.  Different companies have different commission charged. It is usually between 8% to 10%. Most of the shelves rental still carry their own products which include toys or phone accessories. Therefore, do take note of the commission when marking the price of your items as for every $100 of sales, $10 is the profit.

2.  Different companies have different staff management. Some companies has a minimum of 2 or more staff daily. Some companies only 1 or 2 staff. The negative point of having 1 staff is not enough to serve the customers and the need to close for lunch break. People may just get tired of waiting and leave. 

However, the quality of staff is important. 

Some staff just sit behind the counter using their hp and chit chatting. They have no knowledge of the items in the shop and just use the excuse that they are just a consignment shop. Sometimes you are selling the item but the staff will just ask the customers to look for items themselves. People are turned off by the staff's attitude. I am not sure if the management does check on the service by the staff.

Some staff are always on their feet and helping out customers' questions. Some staff bothered to pack the shelf and some just tell you they are busy or it is too difficult. It is hard to have good sales in a messy shop

Some staff are just too preoccupied behind the counter to deter shoplifting. 

I will suggest dropping by the counter to double check on the quality of staff. Good staff will really help in the sales as they are friendly and willing to help. They also will help you pack your items and deter shoplifting by just being on their feet. On the other hand, do not expect the shelves to be always neat as priority is serving customers and not packing the shelf to pack .

3.  Price war. Most shops have a clause on not allowing price war. Not all shops actually take action when price war happens. They just say is competition. So someone can come along and sell something at a much lower price. Some will discourage the other sellers and inform you if this happens. If a price war starts, the only winners are the shelf rental shop and the customers. Having different promotion to entice customers is actually good, but having sellers price cutting each other will only results in sellers losing substantial income. Price cut is an irreversible process.  There is always the reasoning of the survival of the fittest or in other words, who have the most capital.

4. This kind of shop is attractive to a lot of people as it sells a variety of stuff. There are some shops that does not control the variety of items sold. It is getting boring. Nowadays, a lot of shops has not been controlling the items sold.  The main thing is handphone case and accessories, slime and kpop. 

5. There are some shops that allowed their staff to sell items in the shop. The advantage of that, it increase the variety of items sold. If you are doing well, they can always join in the game. They will know exactly what is selling well, how to display and more information than you or any new seller that is joining you. There are some rules and regulations to keep staff in check. 

Cost involved

If you are renting single shelf. The rent will be $150 to $200 plus. Let take the cost of $180. In order to cover the rent and commission, you will need a sales of $200. If your stock cost is around $100 for a month, then you will need around $300 for a single shelf and $500 for a double shelf to cover some of the operating cost.

There are other cost like buying racks and containers, damaged and stolen stock and also labour cost. If you put in 5 hours into the shelf, you should expect at least $50 for labour cost. Labour cost include travelling time, packing of items for sale and packing of shelf.  The remaining then is your actual profit. It is advisable to drop by once a week or fornightly, to restock and get comments on how to improve sales and display. The hours put in should be more than 5 hours.

A lot of people do not count in all the cost, especially their own labour cost so they think they are making a big profit. There are also cost like damaged goods and shoplifting. 

I heard of a lot of people commenting it is good profit because an item can make like $5 profit. In order to cover cost of $550, 110 of the items need to be sold which is like 4 items per day to cover cost. And this, we are only talking about covering cost and not making profit

If you stand around and watch, there are sales but not a lot of items are sold per shelf That are some people who believe making a $1 profit per item is already enough. We need to sell 550 items which is almost 20 pieces a day. If you are selling hair clips or phone case, you will realise very few shelfs sells 20 pieces a day. Maybe more than 50 phone cases are sold, but divide by the large number of shelves selling phone cases. It will be not as much. Selling what everyone is selling is not going to beneficial unless you have something different. The profit margin must be higher to cover rental, commission, labour, stock and theft. Do your accounts first, a lot of people just end up paying rent to the shop and not making profit. Or believing they are making a profit by ignoring some costs. 

Tips

1. Visit the shop a few times to not just check out the traffic flow. The quality of the staff which is are the staff packing the shelves, helping the customers and walking around.
2. Try to keep the same price as others. There is no point starting a price war as others will follow suit or reduce the price even more. and it will just benefit the customers. Decreasing price will not bring the same increase in sales. Unless you are intending to use a lot of money to kill off all competitors.
3. Count your cost and expenses properly. Sales is not the same as profit. Remember you are not free labour.
4. Look at how other vendor arrange their items. Learn how to present in a neat and orderly manner. It will be more attractive.
5. The rent of shelf is usually is higher at eye level. If you are selling small items, it is better to get an eye level shelf. If you are selling big items, it is better to save cost by getting lower but bigger shelf so more items can be put in.
6. Closed and open locker depends on the items you are selling. There are a lot of shoplifting nowadays. Some occurred when the staff are just too busy and some when they are too lazy. Open locker allowed easy access to the stuff you selling, even when the staff is busy. There are some people who walk away because the staff is busy. Open locker are have more damaged goods and shoplifting.

It is a good way to start small business, there are people who started at the shelf business and managed to start their own shop. There are people who worked at this shop and learn enough to use these shops to making their living. However, more people actually just pay rent to learn a lesson. Think carefully about the costs and how much sales you can expect.