The Compounding Closet

The idea of compounding is simple but fascinating. It can be summarized as starting with a set amount of something that grows with no further input.  I really like the “no further input” part – not sure about you, but I grow very weary of “inputting” all the time. Examples of compounding could be growing a sourdough starter, money invested in a dividend paying stock, or even interest accrued in a high yield savings account.  Sure, it will grow much faster if you keep adding to the starting amount, but even if you didn’t it would continue to increase over time.  In the case of clothing resale, it’s not true that there is no additional input required at any point in time. So sorry to have disappointed you at the outset of this post. The input will be equal to the time and effort of listing new items for sale, but don’t let that scare you away from the idea.  I want to apply the concept of compounding to your clothes closet because it is possible.  What if you could start with the right items at the right price and have your closet continue to pay out more money than what you put into it?  Many people have the idea of hoping to get back “at least something” when they sell to consignment stores, but it’s not an impossibility to have your closet pay you for wearing and enjoying it.  That is exactly what my closet does for me year round.  Let me show you how it’s done.  

First things first, you have to find the right artesian wells.  While I find second hand stores to be wonderful gems for this need, you can always check retail clearance racks and online sale sections – you want to find the best items at the highest discounts so you have the most room for reselling at a profit.  You aren’t just walking into a store and buying whatever you like anymore, learn to like whatever is the best price with the best resale potential and ignore everything else.  Of course this often means shopping off-season, so learn to love it.  Second hand stores are where the most value is in my experience, so educate yourself on the best ones in your area. From there, gather in the best brands and stick to those items as long as they meet all other criteria for resale.  Don’t expect it to be fast or easy, you will have to do some digging and be willing to shop multiple stores on a regular basis.  Most people that say they can’t find anything at second hand stores shop there infrequently and with little patience for all the junk you must necessarily push aside to unearth the worthwhile finds.  

Once you have located your ideal shopping sources, you absolutely must start with the right items at the right price – think of it like a math equation:

Right Brand + Right Style + Right Condition + Right Price =  Potential* compounded dollar output

(*I say “potential” because there are no guarantees in life, maybe the style is outdated by the time you’re ready to sell, maybe you get a blob of mustard on that pretty silk blouse, maybe a seam rips when you sit down…am I more embarrassed in that moment or annoyed because now I can’t sell these jeans…hmmm, not sure.)

See my article THE RIGHT ITEMS TO RESALE for much more detailed info on this.  For our purposes here, it’s sufficient to say it must be a well-known/quality brand, excellent condition, and it helps if it’s somewhat along the lines of classy and basic rather than ultra-trendy, unless you plan to wear once and flip the sale while the item is still on-trend.  Combine those three requisites with the right price and you are on the fast track to a closet that makes you money.  To know if the price is within flipping range, you must have a working knowledge of the resale market.  Look on the site you plan to list your items on even before you start buying things, see what brands and styles are selling for and create a buy:sell ratio in your mind.  The thinking for me might look like this, “I love this dress I’m holding, it’s priced at 7$ and I know from research (and in my case experience) that I could resell anywhere from 25-35$. Conservatively the ratio looks like 7$:25$, not bad.  I’ve oversimplified the math for purposes of this article, there is much more to the math of resale, discussed more in the above link to THE RIGHT ITEMS TO RESALE, but for simplicity’s sake, if the above numbers meet your personal turnaround for a clothing flip, then buy and enjoy that dress for awhile.  The HUGE caveat here is that you must, must, must (is that enough to convince you this is VASTLY important?)….drum roll… must keep the item in excellent condition.  Don’t say “duh”.  It will kill the resale value and lead to very grumpy buyers who quickly open a return request if you try to sell things that are pilled/faded or otherwise past their prime.  Yes, a portion of your clothing won’t make it through the gamut of personal use, and that’s OK, but I want to be very clear that you can’t wear things into the ground and then expect the turnarounds people get on new/excellent condition items.  You can’t buy super cheap value brands for nothing and then expect them to be worth something when you’re done with them, either.  

Now that we are clear on that, if you want to know more about HOW I KEEP MY CLOTHING IN EXCELLENT CONDITION FOR RESALE I wrote a whole post on that for you.  

In my personal closet, I add new finds usually weekly, and take things out and list for sale as soon as I identify I’m no longer leaning towards wearing them.  I also have a GREAT CLOSET CLEAN OUT (will be posting this soon!!) twice a year.  I use the change of seasons as an opportunity to do a thorough closet cleaning so I’m not keeping excessive quantities and missing out on the best window of opportunity for resale.  As a result, I am always spending far less on my clothing than what I am able to sell them for, all by changing my thinking at the starting point.  I make judicious choices up front, always considering the buy-in cost versus the resale value, and then I take proper care of my clothes until I’m ready to sell.  And it’s not just a win for me, it’s a fantastic win for my buyers because they find exactly what they were looking for, which (intentionally) happens to be the best quality, condition, and most desirable styles at a huge discount off buying new.   You get to wear a wide array of lovely clothes and actually sell for more than what you paid when you make the right choices at the outset, let the closet compounding commence!

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