July 26, 2011

What You Need to Know About Consignment

Consignment is a good start or alternative to developing wholesale accounts with brick and mortar stores. For me it was the next logical step for my shop to find stores that would represent and market my merchandise outside of Etsy since I cannot afford to lease a space of my own. From my research, I've compiled a few helpful questions to ask yourself when considering consignment.

How to choose the best shop:

  1. Where is the shop located? Start local as out of town consignment can get tricky with shipping & delivery of goods, etc.
  2. Make sure you pick a store that has or has the potential to attract a huge number of customers. The more traffic the store attracts the better potential you have to make sales. If you are working with a newly opened store observe their surroundings. Are there other retail stores, coffee shops or restaurants that are attracting customers to the area?
  3. Does the shop carry what you are in the market for? Make sure your products will fit in well with the other merchandise including your price range.
  4. Visit the store. What is the atmosphere like? Are the products displayed well represented? Would you shop there?
  5. Check out the other artists. Do you know anyone that sells there? You can even go as far as contacting some of the artists to get a better feeling of the store's representation and its potential.
  6. How is the service in the store? Do you feel welcome and well represented?
  7. How well does the shop market/advertise? Make sure that they are actively working to attract customers to the store.
Things to ask/know about your contract:
  1. Who sets the product prices and what is your percentage or rate? A 60/40 split is pretty standard in consigning but each shop varies and can range from 30/70 to 50/50.
  2. Are there any additional fees such as administration fees, rental fees, credit card fees, holiday rate increases, etc.?
  3. How are you paid and how often?
  4. How is sales tax handled?
  5. How long is the term for your contract? A 30, 60 or 90 day contract is typical.
  6. How are your goods handled? Does their insurance cover possible breakage or theft of your goods?
  7. How and where will your items be displayed? How much space do you have? Are you required to provide any displays?
  8. Will the owner contact you to restock or is it your responsibility to periodically check?
  9. How/when will you receive back any unsold goods once your contract is up?
  10. How is your inventory managed at the store? Do you get an itemized list of inventory sold with your paychecks or at the end of your contract?
(1) "The Handmade Marketplace: How to Sell Your Crafts Locally, Globally and Online", by Kari Chapin, Storey Publishing 2010
(2) "11 Tips When Selling Through Consignment", http://www.powerhomebiz.com/vol58/consignment.htm
(3) "Everything You Wanted to Know About Consignment Shops but Were Afraid to Ask", http://www.handmadenews.org/article/index.php?id=1034
(4) "How to Consign", http://howtoconsign.com/index.html

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