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Are you thinking of selling your products via consignment? Here are tips to consider to successfully sell your products through consignment.
If you are looking for another sales outlet for your products, consider selling through consignment shops. Many retailers are accepting consigned goods, as this arrangement allows them to get inventory without shelling out their own cash.
Consignment allows you to sell your products without having to pay for rents, overhead, or salaries of people to staff the store. It also allows you to reach different locations and markets and enables you to strengthen the quality of your brand.
It’s possible to make quite a bit of money consigning, particularly if you are selling more high-end pieces. By selling to individuals outright (through ads in papers, out of your trunk at work, etc.), you may be able to do better, but the work and expense involved often are not worth it.
Table of Contents
The Essence of Consignment Selling
In consigning your products, you are basically lending your products to the retail store owner. The retailer displays your wares and includes them in their line of products. If the merchandise sells, the store owner pays you less the agreed percentage and other costs. The percentage share of the retailer ranges from 25 to 50 percent, depending on the store and the type of merchandise.
At the heart of consignment selling lies a simple agreement. The client, often referred to as the consignor, provides goods to another party, the consignee or seller. The consignee then takes on the responsibility of selling these goods. Once a sale occurs, the consignee receives a predetermined commission from the sale price.
Consignment selling is a powerful tool for sellers who source inventory at competitive rates. It eliminates the need for extensive product processing, listing, storing, and shipping, allowing the consignor to focus on their core competencies while reaping financial benefits.
Moreover, this model offers an effective solution for surplus inventory that might otherwise be discarded or donated. If you have products that aren’t moving, consignment can be the ideal route to rejuvenate stagnant sales.
However, before you go into consignment, you should take note of the following:
11 Tips to Successful Consignment Selling
1. Check the consignment shop out.
Nowadays, you have two options for choosing the consignment shop: do it in a traditional store, or consign your items online.
Whether you choose to consign online or in a brick and mortar store, visit the retail store and take the time to look around the store before consigning. Understand the store’s reputation and clientele. It is important to select a shop that aligns with the type of items you’re selling.
Evaluate its look, feel, and appearance. Is this the kind of store that you yourself would frequent? If not, then maybe other people feel the same too, and hence your chances of selling your items are slim at best. Also check merchandise condition, how merchandise is displayed, and the prices of comparable items.
2. Determine the store’s match with your products.
To improve your chances for sales, look for consignment shops that sell the same general type of merchandise you are offering. For instance, if you produce clothing that is western in style, a shop that focuses on hip-hop clothing is not going to bring you any sales. Similarly, if you are offering antiques, don’t offer your wares to a contemporary home furnishings store.
3. Choose a retail store that gets adequate traffic.
You stand a better chance of selling your products faster if you choose a store that attracts a huge number of customers. The store must be able to attract enough buyers, first of all. Many consignment stores go in and out of business quickly, so only consign with a store that has proven itself and has been in business for less at least three years.
Keep in mind that your products are basically tied up until it’s sold or you retrieve it from consignment shops. If the store is located in an out-of-the-way place and doesn’t actively market itself, your products may simply gather dust and your earning potential may be severely compromised. I have heard of a number of consignees who complained about not getting any sales for a year! Be smart and select only retail stores where you know your products stand a greater chance of being sold.
Some choose to consign with “boutiques,” which are pricier and can be found in richer towns. The cost may be higher, but it often pays off.
4. Make sure your products are prominently displayed.
Ensure items are clean, in good condition, and well-presented to increase the likelihood of sale.
Even within the store, you need to be sure that your products are right in the line of customer traffic. Your products stand a lesser chance of getting purchased if it is tucked in the furthermost corner of the store where customers hardly ever go. If you can arrange to have your products included in the store window display, so much the better.
5. Set a timetable.
Give the consignment store a period of time to sell your items. If they are unable to sell your goods, arrange to have your items pulled out. If an item isn’t selling, consider removing it after a certain period and replacing it with a different item.
Maybe you made the wrong choice in terms of the store, or their location is not working for you. Whatever the reason, keep in mind that unsold inventory means that your money is “sleeping.” Read more about inventory turnover rates here.
6. Be sure to get the terms in writing.
Regardless of your relationship with the reseller, it’s paramount to have a formalized consignment contract. Spell out the agreement with the retail store in a written contract. Get the owner or buyer to sign and agree to your terms regarding the payment schedule, responsibility for lost or stolen goods, and display and upkeep of the merchandise. Familiarize yourself with the consignment agreement, including fees, pricing, and payment terms.
This contract should comprehensively cover:
- Names of involved parties
- Duration of the consignment term
- Fee breakdowns, including shipping and selling fees
- Payment frequency and method
- Product pricing guidelines
- Conditions for unsold product returns
- E-commerce fraud disclaimers
- A detailed inventory list
- Signatures for legal validity
Contracts are vital in safeguarding interests and preventing future misunderstandings.
7. Know what the exact fees are.
Do market research to determine a competitive price for your items. Remember, the consignment shop will take a percentage of the sale. Make sure you know how much you will be getting, i.e., 25%, 33% or 50% of the sale. Also find out if it is a 30, 60 or 90-day consignment.
Aside from the sales percentage, inquire if other costs will be charged to you. Some shops charge an “administration fee” in addition to the percentage cut, sometimes without informing the consignee.
Beware of the shops that do not give you the prices they are going to charge for your items. If you are not satisfied with the price that you are offered, find another place.
8. Retrieving your goods.
Not selling anything is bad enough; never getting back your merchandise is worse. And believe it or not, these things happen. There are cases when unscrupulous store owners refuse to give back a consignee’s products. You particularly need to give this due consideration if the shop is located at a distance from you, which can make getting your merchandise that doesn’t sell costly or impossible.
9. Check the back-end systems.
Keep a list of items you’ve consigned, their condition, and their agreed-upon price. But make sure to ask how your inventory is tracked and when goods are paid for. Shops that are computerized keep more accurate records. Moreover, make sure to receive a receipt for the items brought in, as well as a statement at the time of payment showing what sold.
10. Determine how carefully the goods are treated and protected.
Ensure the consignment shop has measures in place to prevent theft or damage to consigned goods.
Ask what type of insurance they have particularly if you are selling valuable items like jewelry, antiques or artwork. If the store owner has no theft or fire insurance, think twice about placing your products with that store. Check if the store has fire alarms and water sprinklers to protect the items in case of fire. Choose a store owner who is willing to protect your items, even to the extent of providing locked cases for valuable products.
11. Know your products well.
Lastly, be sure that you know every little bit about your product. Inspect the quality of your merchandise, making sure that there are no stains or tears if you are selling clothes or cracks for porcelain items. When you hand over your merchandise to the store owner point out that your items are in pristine condition. This way, he or she cannot tell you later on, “Opps, sorry. We won’t pay for that item since it has stains in it” especially if the product has remained unsold on their shelves for six months.
If you’re a small business owner in need of a financial plan, our friends at EP Wealth have some helpful resources for you.
Conclusion
Consignment selling has redefined the dynamics of sellers, including e-commerce retailers. Its unique model, combined with strategic planning and execution, can unlock unprecedented revenue streams for sellers. Whether you’re a seasoned seller or a newbie, understanding the nuances of consignment can significantly elevate your business journey.
Recommended Books on How to Sell Consignment:
- The Ultimate Consignment & Thrift Store Guide
- The Trading Assistant’s Assistant: How to start a part-time job or full-time consignment drop-off business on eBay
- Cash In The Closet! Your Guide to Consignment Shop Ownership
- Consignment Shop Confidential: Short Stories from a Ladies Consignment shop
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It’s important for sellers to determine if the price cut store owners take from their sales will translate to substantial profits for them in the long run. Consignments are also great for giving your brand visibility.
Yes! Finally someone writes about consignments!
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Where are the 11 tips? I don’t see them?
Thank you for raising about the disappearance of the 11 tips. An erroneous code was put on the page and cut off the 11 tips. We’ve removed the wrong code and the whole article is visible again. Your comments are much appreciated.
Good article, thanks.
Great Article. I am agree with your point of view, it is important to match your products with store.Goods are always treated and protected by owner.
Awesome article. Great tips for retailers they have to maintain products before their consignment.
Some really great content on this internet site , thankyou for contribution.
I’m glad that you talked about the tips about selling through consignment, I’ve been wanting to sell some of my furniture since we’ve been planning to move, my appliances and pieces of furniture are at their best quality that’s why we’ve decided to sell them. I agree that we should choose a retail store that has a great chance of selling our products, that’s why it’s important to choose a retail store that’s been in the business for years and has a huge number of customers. It’s also essential that our products are displayed prominently or at least customers can easily spot them it’s much better if the products got window displays or maybe near the entrance to make sure that the products can get a lot of attention.
I’m glad that you explained what consignment is. Knowing that it’s being able to sell without having to worry about paying for overhead costs and more is great. My wife has been talking about selling some of our old furniture through consignment, and I had no idea what she meant. Now that I understand what it is, I think it would be a great idea!
My brother has been thinking about selling some clothes to a consignment shop. I’ll be sure to pass on your tips on selling through consignment. He would really like to be able to work with a professional.