Have you always wanted to have your products on sale in a physical shop? Well don't be a chicken, approach a store and see if they accept consignments.When you place your products for sale in a bricks and mortar shop yet retain the legal ownership it is known as consignment. This is a precursor for setting up a wholesale account with a retailer. The shop acts as the sales representative but takes a commission on any sales. The commission could be anything between 25% and 50% but there is usually room for flexibility so barter for a rate you are happy with.
Some shops have a limited buying budget and therefore taking on consignments allows them to try out a range of goods and test the salability before offering to buy outright with a wholesale deal.
It can be really exciting to think that you will be getting your items into a real life shop but you will need to be cautious at first, extra cautious if the store is quite a distance away that you are unable to visit too often in person.
It is extremely important to have a consignment agreement with the shop. At minimum this will include the details of how, and how frequently you will be paid (i.e. monthly or quarterly) and who will cover the postage costs if this applies. More often that not a shop offering consignment will expect you to absorb the postage costs. When you do receive payment, make sure you are given a detailed list as to what has sold, this will ensure that you have been paid correctly but it will also be necessary for your records. If you have any concerns or reservations with a shop, start off with a small quantity until they have gained your trust.
Here are some further points to consider:
- Is the shop well established and been in business for long? If it is new you will need to be extra careful,
- Are most of the goods on sale in the shop bought outright/wholesale? If so encourage the owner to do the same with your pieces,
- Contact other designers/artisans who have pieces for sale in the shop for their feedback on the shop and business practices,
- Ask if the insurance documents cover consignment items,
- Find out what will happen if your items are stolen or damaged - will the shop pay you?
- How long will a product be on the shelf? If they are not sold within the set timeframe how will they be returned to you? It isnt ideal to have items sitting on the shelf for long periods of time as they may become damaged and you will be unable to sell them.
Do any of you do consignment? Have any tips you would like to share?
On the next Business Tips blog: Wholesale Part 1
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