Consigning your products is a personal decision for each professional craftsman or artisan to consider. Personally, I tell folks to avoid it!
If you do consign, your generosity will often be abused. And you are entering the world of bookkeeping nightmares, with he-said, she-said, and “I have no idea what happened to your inventory”, when it comes to getting paid. Not to mention scuffed or otherwise un-marketable inventory that you are asked to take back.
Retailers will often ask you to consign merchandise, especially if he or she senses “NEWBIE”! This fills their store with products, and makes it look more robust or prosperous, without tying up cash.
Consignment is always good for the store owner, as you are paying for THEIR inventory. You could easily tie up thousands of dollars in slow-moving inventory if you use consignment as a primary market penetration strategy, to multiple stores.
And look at this from the store owner’s perspective.
They did not pay for your inventory. And even though your stuff looks nice, if it sells, they WILL need to then pay for your inventory. So if they sell your consignment booty, they really only get a fraction, in terms of cash flow.
On the other hand, most of the rest of the store inventory is PAID for, so their cash flow benefits to the tune of 100% when a sale is made.
In our experience, when you consign your line, you usually do not get a premium location… more likely, a narrow back aisle in a dark corner.
Developing a Consignment Agreement
If you do consign, you should require a signed agreement, with clauses regarding the percentage and frequency of payments to you, responsibility for breakage and “shrinkage” (shoplifting or employee theft), and how often you will update inventory.
Since the retailer exerts the only protections and control over your products while they are in the store, he or she should be responsible for losses of any kind, just like with other products in their store.
Of course, expect normal wear and tear (e.g. scuffed labels) and you may need to replace those periodically, on your dime. Of course, if your goods are in the store that long, then consignment in that store, or for that product, may not be a good idea.
When you consign, submit a complete list of inventory consigned, including the retail price per unit, and the allocated prices and percentages to both parties.
Keep a copy of the agreement and inventory list with the buyer’s signature, for your records. Of course, you need to update the inventory list (and get a signature) EVERY time you re-stock.
Just like any other payment system for your wares, be sure the store is a good fit… zero or minimal sales on a store shelf benefits no one in the long run.
CONSIGNMENT DONE RIGHT!: How to Consign Your Products to Shops, Protect Your Interests, and Get Paid!
In addition to the PDF instructional materials, I am also offering the three agreements in an editable Word document as well. Your download link will include the consignment ebook AND the editable bonus agreements.
Let’s take a peek at what else is in this eye-opening resource:
- Why consignment is usually a bad idea!
- The FOUR situations where consignment is almost always a good idea!
- How to protect your goods (and your pocketbook) while in the hands of a shop owner!
- Bookkeeping and inventory control!
- And much more!
Order your own copy today for $15 — instant download — including editable agreement forms.