How to easily sell on consignment for handmade businesses

How to easily sell on consignment for handmade businesses. Learn the simple step by step strategy to get your products in retail shops! Click through to read the full post and download the bonus consignment checklist cheat sheet!

Selling on consignment is defined as a type of business agreement where the consignor (typically retail shops) pays the consignee for any merchandise sold through the retail shop during a specific period.

Common items accepted by consignors include:

  • Jewellery,
  • Clothing and shoes,
  • Home décor such as ceramics and candles,
  • Furniture,
  •  Toys,
  • Illustrations, prints and general paper goods and
  • Consumables such as tea to name a few.

What are the basics that should be included in the terms of the contract?

The official terms of the contract are determined by the retailer and includes details such as:

  • Specific space designated for your goods
  • Payment terms such as commission: splitting the RRP between the retailer and the maker (common splits include 60 (maker)/40 (retailer), 50/50, 70/30)
  • Retailer only receives rental monies for allocated retail space only – any monies made, goes back to the maker
  • Period of consignment e.g. 1 June to 30 June.

The maker is allocated or can choose a space within the retail shop to set up their goods and display. The maker would coordinate with the manager of the shop to find a suitable time to come in and set up. It’s also a good time to handover any extra stock (for your best sellers) but the amount depends on what you sell. If you sell something small like jewellery, this could be OK – but be mindful of the total retail value of your goods. If you sell larger or heavier items like cushions or furniture – there may be no space for your inventory. Depending on the agreement, the shop may require you to create an inventory list. This way, you’re sure of exactly how many pieces they have and can do a reconciliation at the end of your period to match what’s sold against the remaining inventory! Bring along any packaging you’d like your items to be sold in.

 

What about insurance? Do I need to take out cover

It’s a good idea to take out insurance that covers against theft, or damage. This type of loss is generally not covered under contract you have with the retailer and the risk lies on you in the case that bad luck strikes.

 


FREE SELLING ON CONSIGNMENT CHECKLIST!

Get your EPIC selling on consignment checklist straight into your inbox, so you’ll know the exact steps to take to get your handmade products into your favourite shops & boutiques!


 

Is selling on consignment a stepping stone to wholesale?

People often think selling on consignment is a stepping stone to wholesale, not the case. When in reality, they’re quite different. With consignment, depending on the way the contract is structured, most of the risk generally falls on the consignee. The consignor doesn’t invest money in your products like they would if they had a wholesale account with you – in the sense that, they do not partially or fully pay anything to have your products in their shop. Convincing the manager or buyer of a retail shop to spend their hard earned cash to stock your products in their shop is a whole other ball game, which will be covered another time.

Consignment isn’t completely hopeless and horrible, without any benefits whatsoever. For now, let’s analyse some of the pros and cons for the consignee (maker) to selling through this channel.

Pros:

  • Low risk: Relatively low barriers to entry (low costs, relatively easy to sell as a consignee) to try out consignment as a selling channel.
  • Brand exposure: You can add to your social media and website bragging rights such as: “Available at (Shop name)” “As seen in (shop name)” or “Stocked at (shop name)”. Likewise, you may be able to reach more of your target audience – especially those who like to try on things or see things in person before purchasing.
  • Test what sells in a retail shop
  • Test out new ways of merchandising your products

Cons:

  • Possible theft or damage and not receiving any compensation. I heard a story about a jewellery maker, who had many silver pieces stolen because they were not locked up and were sitting on a table display. People came in, pretending to try them and literally walked out with them on their body.
  • Your items may not be packaged exactly as you do it (casual sales assistants working in the shop)
  • If the contract states that the shop only earns money through your rental and no commission, there may be no incentive on the shop’s behalf to push your items to sell

 

How can I approach a shop or boutique for consignment?

  • Make a list of shops/boutiques where your ideal shopper would shop. This could involve looking at websites that curate the newest and upcoming events and checking out their shopping directories by suburb –and then physically visiting these shops to do some market research.
  • Ask to speak with the manager, if they’re not around, leave your details and card. You’re most likely not going to be contacted this way. The manager is probably time poor. Or the better alternative is, is that you could ask when they’re working next. Make a note of this and the manager’s name. It also doesn’t hurt to make a note of the sales person’s name that you spoke with.
  • Make the effort to come back into the shop and request to speak face to face with the manager. They may or may not appreciate this ‘unsolicited’ pitch, but may like it as well. Your effort shows you’re proactive, done your homework, helped them discover new talent and cool products to stock in their shop purely through not being scared to pound the pavement and have guts to show the world your magic!
  • Know exactly what you want to say – quick spiel about yourself, you’re your target market aligns, ask about consignment (or even wholesale opportunities!) During your spiel show off any knowledge you’ve gathered from your research to impress the manager.
  • Show off a selection of your best products!
  • Fingers and toes crossed – they say yes! If not, even though receiving a no can sting, you know you’re one step closer to the yes you’re looking for! Keep your chin up – you’ve also gained a bunch of experience in how to approach shops in stocking your products for consignment, so the next shop you approach, you’ll know exactly what to do, now you’ve got some experience under your belt!

FREE SELLING ON CONSIGNMENT CHECKLIST!

Get your EPIC selling on consignment checklist straight into your inbox, so you’ll know the exact steps to take to get your handmade products into your favourite shops & boutiques!


What indicators should I look out for when searching for prospective retail shops to consign with?

  • Foot traffic: Is the shop in an obscure location? Is it in a popular shopping area?
  • Location within the shop: Do you get a choice of where your products get placed? Is it highly visible?
  • What other advertising is there? During the consignment period, will the shop actively advertise you? Featured in their email blast? Social media channels? Do you pay extra to be featured? If so or if not, how often can you be featured?
  • When you’re accepted, make the packaging simple. This could mean deviating from your usual packaging. If you choose to have your items packaged in bags – you can pre-insert all your business cards/flyers inside etc so all the sales assistant needs to do, it maybe wrap it up in tissue paper, pop it into a box, into the bag and voila!

What should I do during the consignment period?

  • Are you promoting this opportunity? How actively are you promoting it? Through your email list? Social media channels? How often are you promoting it? E.g. “Available for sale at (shop name) for a limited time only!)
  • Be proactive and stay in contact with the manager and check in to see how sales are going. Get some on-going feedback e.g. what comments the staff have picked up on from customers, what’s selling, what’s not, what could be improved?
  • Pop into the shop – and tidy your space if need be, restock on inventory and packaging.

My consignment period is up, what do I do next?

  • Before your consignment period begins, set some goals. e.g. number of pieces you’re aiming to sell or exceeding a particular dollar value
  • At the end of the period, evaluate your goals. Did you miss, match or exceed your goals?
  • What went well? Not so well? What can you improve?
  • Based on your evaluation, is it worth hiring another spot for another period? Remember retail can be susceptible to cyclical turns – so maybe you need another period to get a more accurate gauge?

Good luck! Have you tried selling through consignment before? What were your experiences like? Share with the Nerd Burgers Community your consignment stories in the comments below!

 


FREE SELLING ON CONSIGNMENT CHECKLIST!

Get your EPIC selling on consignment checklist straight into your inbox, so you’ll know the exact steps to take to get your handmade products into your favourite shops & boutiques!


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Monica is a corporate cubical escape artist turned jewellery maker, designer and creative business infopreneur. She helps fellow artists, designers and makers launch and grow a handmade business they love.
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