Selling your stock through online shops
See Self Trading.co.uk for an interesting Consignment based online business-model.
Self Trading clears stock from shops, department stores, wholesalers, manufacturers and liquidated stock. Advertise your stock on their website. Also see
UK Drop Shop.com for work from home ideas.
See here for a description of drop-shipping and consignment shops.
What is consignment
According to Word.Net, consignment is the delivery of goods for sale or disposal.
Goods are consigned from one person to another using a consignment agreement.
The definition of consign is to give or to entrust and to deliver for the custody or sale.
Consignment may imply a permanent transfer of goods from the maker to the seller - although this appears to be ambiguous in many definitions.
Consignment allows a shopkeeper to stock his or her shop without paying up-front for the items.
Please Note: Whenever contracts are drawn or deals are made between parties, legal advice should be sought at all times.
In a consignment relationship, the designer sends their products to the retailer. The retailer then puts the products up for sale. When a product sells, the retailer pays the designer a portion of the selling price.
- In a consignment relationship, the designer gets 60% of the retail price and the retailer gets 40%. Occasionally, you will find shops operating under a 70%/30% split, but this is rare as it isn't sufficient to cover a shop's overhead.
- The designer pays to ship the products to the retailer and the retailer pays for all shipping and handling charges associated with mailing sold merchandise to the customer.
- The retailer is responsible for advertising, credit card & PayPal processing fees, web hosting & shop upkeep, product photography, copy writing, packaging, shipping & handling, and customer service.
The important aspect of consignment is that the shopkeeper pays for the item only after the sale of the product. The designer receives money only on the sale of the goods, unless otherwise stated and agreed to in the consignment agreement.
What is the difference between consignment and drop-shipping
Drop Shipping is an arrangement by which the retailer sells a designer's products through an online shop. However, unlike consignment, the merchandise is never sent to the retailer. Instead, when a product sells, the retailer contacts the designer and the designer is responsible for shipping the merchandise to the customer.
What is the difference between consignment and buying wholesale
Wholesale is a means by which a retailer purchases products from a designer in bulk at a discounted rate (commonly 50% of the retail price). The retailer is then free to sell the merchandise for profit.
Advantages to Manufacturer
The following are the advantages of selling to a boutique/shop on consignment:
- Manufacturer gains wider marketing footprint for the product
- Manufacturer gains possibility of increased sales
- Higher turnover of stock
- Frees up the designers time to do design rather than worry about sales and marketing
- The commission structure for consignment is usually higher than for wholesale
- Consignment is easier for the designer as the designer doesn't have to sell in bulk (requiring large numbers of products) in order to achieve sales
- Consignment is great for one of a kind products
Disadvantages to Manufacturer
The following are the disadvantages of selling on consignment:
- Theft of product a possibility whilst in shop
- Product not sold and not returned by consignee if not sold. It is important to research your consignee company if you are a designer.
- Breakage of product whilst in shop
- No guarantee that item will be sold
- No money up front
- Selling of product within the shop less important to consignee due to lack of pressure to sell to recover costs
- Transportation costs carried by manufacturer may be lost if item is not sold
An agreement can be agreed to and signed by the consignee that mitigates the disadvantages to make the consignment a more profitable venture for both parties.
If the shopkeeper is interested in entering into a consignment agreement then please contact Boot Kidz using the enquiry form or sending an email or telephoning. See contact links.