Consignment best practices

[Garden Gives Me Joy]

I started my first consignment arrangement with a lady at the farmer's market on 1st March this year. Her stall specializes in candles (that she makes). I am trying to figure how to improve arrangements like this for the future, especially since there are some inherent risks with this model. Happy for your opinion on how I can improve.

I gave her 53 bars of soap and viewing access to this Google Sheets spreadsheet (below). (BTW, I quickly adjusted most of the data like prices and quickly re-typed to English. Excuse me if I missed anything).

So how our system has worked so far has been like this.

Every week (like the week that we 'ended on 20 July' because I go to the market on that day when I collect the commission), she sends me a WhatsApp message saying something like: "I sold 2 charcoal, 1 botanicals", etc. So, today, 25th July, I am about to enter her figures for what she sold last week. I plan on going on 27th July.

Inside some cells (like D7), notes give me more details, like how many bars I delivered on specific dates.

... and I enter formulas so I can keep track of all the deliveries amounts and sales.

At the bottom of the page, I show the total of all commission payments.

She seemed to have understood the spreadsheet without any guidance. In fact, she was very complimentary about it some months ago and often referred to it to see how much was due. I noticed that, before she had gotten a hang of the spreadsheet, she used a notebook with so many notes that she could barely figure where to find what she needed or what her notes said when she eventually found them. At least, we agreed on the delivery amounts and that agreement is still in WhatsApp. So every week, I have updated twice; first when she says what she has sold the week before (so we can see how much she owes) and then a second time a day or two after, ie after I go to the market when she pays me my commission. Then I alert her that I have updated the sheet.

Sales were going fine at first. Before I could ask the reason when sales got much lower, she explained that the market had become sluggish because of changes in the country's economy, etc.

... Then she started to complain about her 20-year old son being so young and irresponsible and how upset she was with him, etc, etc because he understated the sales when he did the selling. But she assured me she would pay for everything. She also suggested that I stop sending the spreadsheet to her son also.

... Then she started to complain that she is old school and has trouble understanding the spreadsheet. (Happy for any ways of improving its ease of use.) I also noticed that she would report that there were no sales for those weeks that if I could not make it to the market.

When I look at her social media posts of her table display and I physically go to the fair, I think her stock is far lower than what she has reported. I figure she is now panicking over having to pay to balance everything out. But I feel like she is paying me such small amounts that it is frustrating going to the market just for that amount . However, I also know that, if I do not go or try a cycle of 2 weeks, she will likely say that she had no sales for entire weeks. On 13th July, she claimed to have counted stock and knew the amount by which her son had understated the sales, that she had had no sales the previous and would therefore pay only what her son had understated. ... But I suspect the understatement is much much more than she says. When I was there recently, her son, likely unaware of his mother's concerns, blurted out that they were out of a soap X. I believe that he is telling the truth and that she has still not reported having sold all of that particular soap. One day, she went digging through some draws to find a soap that had gotten damaged and asked for me to deduct it from my deliveries amount. It feels so panicked and uncomfortable. Needless to say, quite some time before I had gotten a feel for the situation, I offered to bring more soaps because the spreadsheet said she was low. She refused, citing how overwhelmed she was and suggested that my system is hard, etc. At least, when I asked, she confirmed not feeling like I had somehow taken advantage of her.

... and then after a gruelling amt of time going through her weekly messages, etc, I also noticed an error that I made in forgetting to adjust one soap's formula for remaining stock for one week. So I suppose she is not actually checking the sheet as well as she should. Otherwise, she would have spotted it.

Happy for suggestions for improvements and new items to my preliminary list of things I could do to fix this situation .. and things to do differently in the future to avoid this from recurring.

Here are some things I thought of.

• Start with less bars, like 2 to 3 bars of each type of soap.
• Make a screen recorded instructional video on how to use the spreadsheet so no one can say they did not understand as an excuse. Perhaps I should remind the retailer to keep their own records so she can spot discrepancies and tell me right away.
• Let a sheet run for only a short period like 3 months before starting a new sheet that carries over the final figures. Maybe this would help both parties when it is necessary to check back figures.

 

[Blufuz]

That’s terrible!

I don’t have any experience with selling soap, but I had a thought:
Could you supply your soaps grouped in boxes (containing each type), and just ask to weigh the boxes at regular intervals? Like once a week? And the seller just has to pay you whatever the weight in soap is missing from that box at whatever point in time? You can put a label on each box indicating the price they should sell that soap at (and maybe the total worth of all the soaps in the box so it’s unambiguous how much they owe you if the entire box is empty/missing), and then the spreadsheet just needs to keep track of how much each box weighed every week, with a cell calculating how much money they owe you. You can have a column for each soap type, and every row is the weight of the box at the end of the week. For the market the vendors just have to unpack some of the soaps to put on display each day, and repack in the same boxes the ones that didn’t sell.
This way, it’s clear that the vendor just has to pay you the missing weight in the box, whether it’s because they “lost” the soap or sold it. Sometimes, keeping track of how many individual bars of soap got sold in a busy market can be just a little too much work in the moment, so reducing the mental workload during market hours could help avoid mistakes.

I understand to start with it might be good to just provide a small amount, but then I would pick your most popular soap and provide a good amount of bars of just that one kind. As someone who shops in markets, when I see just a tiny set of things, I’m a little reluctant to buy them, because I think they are either the last stock (so who knows how old), weren’t popular enough to make more of, or not the main expertise of the vendor so maybe not as good quality. But maybe others have different experiences. It’s also less eye-catching.

 

[Ephemerella]

Wow. This relationship seems to have deteriorated rather quickly into something stressful for both of you.

I agree with @Blufuz, and I think your spreadsheet, while nicely laid out for you, is a bit too much to ask a retailer to do. While she may have initially been ok with it, the hassles of running a market booth may have increased for her, and she's finding it all too much to do.

I also find the comments about the relationship between the son and mother and the lack of communication troubling. While you can't judge what stock she has by what she reports based on social media photos (who's to say she's putting all of your inventory out), it is concerning that you feel that she's underreporting her sales.

If I found myself in your position, personally, I would settle up, collect my unsold product, and end the relationship on as friendly terms as possible. From the lack of communication to the family stress, the confusing bookkeeping, and suspicious feelings, I don't see this relationship being anything other than stressful in the future. There are too many red flags.

You can use this experience as a valuable lesson, however: identify when things took a turn for the worse, and then ask yourself what you could have done to prevent or fix the situation before it got out of hand. You'll never have control over how retailers conduct their business and behave, but you will always have control over how you handle situations and address red flags when they appear — and the school of hard knocks is the best teacher.

In terms of using your spreadsheet for relationships going forward, if you need to provide someone with an instructional video of how to use your system, then it is WAY too complicated.

Your retailers will love you if you make a product that a) sells quickly, b) gets repeat buyers, c) offers a good markup/profit for the retailer, d) and is EASY to add to their business.

All small business people have to wear many hats, all of them are stressed and pressed for time. Anything that you do that ADDS to that stress, like a detailed spreadsheet, will become an issue in the future. Anything that you do that SUBTRACTS stress from their lives will make you a valued and loved supplier and put you in demand with other retailers.

My suggestion is to rethink how you are going about this and find a way to make plan that makes your retailer's lives EASY even if it makes your life more difficult.

 

[TheGecko]

What's happened is that she sold your soap, but can't pay you because she spent all the money. I would never sell any of my products on consignment for this very reason. If someone wants to sell my soap in their shop then they need to purchase the soap upfront...no if, ands or butts. And I would NOT include a buyback/exchange option if something doesn't sell.

 

[Ephemerella]

What @TheGecko mentions is entirely plausible too, sadly. It may be that this individual isn't trustworthy and it just took a while to see it.

Consignment is a relationship that has a lot of opportunities to go wrong. You really need to have a clear plan in mind that makes consignment worthwhile to you and then have a spectacularly open and transparent communication system with your retailer. A simple lack of two-way communication is a breeding ground for issues like what you're facing.

For me, however, consignment works for the moment.

I'm a new product in my market, and I want to curry the favor of as many retailers as possible to get my name out and get a buzz going. I align myself with non-profits, who wouldn't ordinarily have the budget to purchase more than a few items at a time. By providing products on consignment, I can:

• share my entire line with a retailer,
• command a large presence in their stores,
• expose my full line to my potential customers,
• keep customers lingering by my product by offering so many varieties to sniff,
• keep the retailers happy with having a large volume of exciting products magically appear,
• see buying patterns and trends in different locations,
• keep control of pricing -- my worst nightmare would be for a retailer to put my product "on-sale" because it didn't move, I will happily buy-back
• can freely rotate products to keep fast-moving items in stock and cycle out slow-moving ones
• keep my products physically available to potential customers 5-6 days a week at a brick-and-mortar location, rather than on weekends seasonally like farmers markets.

BUT, I started out with an extremely good relationship with my retailers. Most of my retailers are businesses I've patronized for years and already know personally. I have open communication. I have good record keeping and make it easy for them to keep track of inventory.

I have full-time day job. I am not focused on sales to support the business. Right now I'm doing this purely as a passion project with the hope that it will one day be a viable business.

For me, personally, consignment works because I get to put my product on the shelves of the places my target market shops at, giving my brand exposure. I get to see how my product moves, get feedback, and make improvements to the line, all without the hassle of retailing myself (filling online orders, going to farmers' markets, etc.).

 

[melinda48]

I started my first consignment arrangement with a lady at the farmer's market on 1st March this year. Her stall specializes in candles (that she makes). I am trying to figure how to improve arrangements like this for the future, especially since there are some inherent risks with this model. Happy for your opinion on how I can improve.

I gave her 53 bars of soap and viewing access to this Google Sheets spreadsheet (below). (BTW, I quickly adjusted most of the data like prices and quickly re-typed to English. Excuse me if I missed anything).


View attachment 73829


So how our system has worked so far has been like this.

Every week (like the week that we 'ended on 20 July' because I go to the market on that day when I collect the commission), she sends me a WhatsApp message saying something like: "I sold 2 charcoal, 1 botanicals", etc. So, today, 25th July, I am about to enter her figures for what she sold last week. I plan on going on 27th July.
View attachment 73833

Inside some cells (like D7), notes give me more details, like how many bars I delivered on specific dates.
View attachment 73831

... and I enter formulas so I can keep track of all the deliveries amounts and sales.
View attachment 73832


At the bottom of the page, I show the total of all commission payments.
View attachment 73834
She seemed to have understood the spreadsheet without any guidance. In fact, she was very complimentary about it some months ago and often referred to it to see how much was due. I noticed that, before she had gotten a hang of the spreadsheet, she used a notebook with so many notes that she could barely figure where to find what she needed or what her notes said when she eventually found them. At least, we agreed on the delivery amounts and that agreement is still in WhatsApp. So every week, I have updated twice; first when she says what she has sold the week before (so we can see how much she owes) and then a second time a day or two after, ie after I go to the market when she pays me my commission. Then I alert her that I have updated the sheet.

Sales were going fine at first. Before I could ask the reason when sales got much lower, she explained that the market had become sluggish because of changes in the country's economy, etc.

... Then she started to complain about her 20-year old son being so young and irresponsible and how upset she was with him, etc, etc because he understated the sales when he did the selling. But she assured me she would pay for everything. She also suggested that I stop sending the spreadsheet to her son also.

... Then she started to complain that she is old school and has trouble understanding the spreadsheet. (Happy for any ways of improving its ease of use.) I also noticed that she would report that there were no sales for those weeks that if I could not make it to the market.

When I look at her social media posts of her table display and I physically go to the fair, I think her stock is far lower than what she has reported. I figure she is now panicking over having to pay to balance everything out. But I feel like she is paying me such small amounts that it is frustrating going to the market just for that amount . However, I also know that, if I do not go or try a cycle of 2 weeks, she will likely say that she had no sales for entire weeks. On 13th July, she claimed to have counted stock and knew the amount by which her son had understated the sales, that she had had no sales the previous and would therefore pay only what her son had understated. ... But I suspect the understatement is much much more than she says. When I was there recently, her son, likely unaware of his mother's concerns, blurted out that they were out of a soap X. I believe that he is telling the truth and that she has still not reported having sold all of that particular soap. One day, she went digging through some draws to find a soap that had gotten damaged and asked for me to deduct it from my deliveries amount. It feels so panicked and uncomfortable. Needless to say, quite some time before I had gotten a feel for the situation, I offered to bring more soaps because the spreadsheet said she was low. She refused, citing how overwhelmed she was and suggested that my system is hard, etc. At least, when I asked, she confirmed not feeling like I had somehow taken advantage of her.

... and then after a gruelling amt of time going through her weekly messages, etc, I also noticed an error that I made in forgetting to adjust one soap's formula for remaining stock for one week. So I suppose she is not actually checking the sheet as well as she should. Otherwise, she would have spotted it.

Happy for suggestions for improvements and new items to my preliminary list of things I could do to fix this situation .. and things to do differently in the future to avoid this from recurring.

Here are some things I thought of.

• Start with less bars, like 2 to 3 bars of each type of soap.
• Make a screen recorded instructional video on how to use the spreadsheet so no one can say they did not understand as an excuse. Perhaps I should remind the retailer to keep their own records so she can spot discrepancies and tell me right away.
• Let a sheet run for only a short period like 3 months before starting a new sheet that carries over the final figures. Maybe this would help both parties when it is necessary to check back figures.

I would suggest forgoing the consignment system and do straight wholesale. Prepare the number of bars you are going to deliver (say ten). Give her an invoice for ten bars at $7.50 (if that is your “take home” amount per bar). She will pay for the bars. When she needs more, she can contact you and you can deliver and get paid. Takes all the record keeping out of her hands. You make; she buys. Easy peasy. She may want returns - the answer is no but if a soap is not selling, you can offer to replace with bars that are.

 

[Michelle0803]

I agree with @TheGecko. The problem with consignment many times is the record keeping, and not wanting to pay for what was sold.

I have sold my soap in consignment locations many times and the problem has always been the record keeping. As I business owner I am record keeping driven so at every place I sold on consignment I had a spreadsheet showing what I had delivered. I always left a copy of the delivery sheet with the shop. When I would go into the shops to restock the delivery records went with me. I would count what they had on hand and expect to be paid for what was missing.

Their reports were ALWAYS different than mine. They always reported less items sold. But they could never account for the missing soap. One shop would sell product with no idea of what they sold so sale of my product was always off.

Needless to say I pulled out of all consignment shops. I was just offered a chance to sell in another location on consignment. I love the store and am a frequent customer however the shop owner doesn't track her own inventory. Even though she has other people selling on consignment her system for tracking sales involves cash and an envelope. I offered wholesale and we are currently working on ironing out those details.

NO ONE keeps track of our products the way we do IME.

I may have missed the original story of how you met this vendor and started into a consignment relationship with them, but is there a reason you are a regular vendor at this market?

Can your spreadsheet be printed and shared with her to make it easier if you continue this relationship?

 

[TheGecko]

When I would go into the shops to restock the delivery records went with me. I would count what they had on hand and expect to be paid for what was missing.

Exactly. I brought you 20 bars of soap (that you signed for) and now you only have 7 bars of soap, so I expect to be paid for 13 bars...end of story.

 

[Zany_in_CO]

It is generally agreed that selling on consignment is a bad idea. Lesson learned. Move on.

I made soap for wholesale customers for 10 + years. Together, we chose the formula and the fragrances that sold well. During market season, I sent a 32-bar batch every 2 weeks along with an invoice that was due on arrival. They paid up front for the first shipment.

 

[DeeAnna]

I have learned the hard way to not sell on consignment for these exact issues -- poor communication, lackadaisical management, too much "missing" product, slow payment, difficult person to work with, etc. Not worth it.

The one single exception to my rule is a local art gallery where all the art and craft items are sold on consignment, not just my stuff. I can walk in at any moment and verify my product is well displayed and properly accounted for. From day 1, they made a point to do it right -- timely payment, good communication, professional attitude, regular inventories of product, methods for accounting for shoplifting or damage, etc.

 

[Ephemerella]

Interesting and disheartening to read this near-unanimous avoidance of consigning because it has been very very good to me and a nearly effortless way to get launched in a large area quickly, move a ton of product, and have my weekends to myself to enjoy.

My shops either keep track themselves with the inventory sheet I provide, or I come in with an inventory sheet copy, tally up what's sold, and they write me a check on the spot. Either way, they call me to swing by and get paid. They're eager to pay me and eager to get restocked. It's been a fabulous relationship so far — zero missing inventory, zero issues — and they sell out quickly.

I'm seeing how fortunate and rare my situation is, and that's a shame.

 

[TheGecko]

I'm seeing how fortunate and rare my situation is, and that's a shame.

What is a shame is that I have to write an Employee Manual to tell adults how to work in a professional environment. But all it takes is just one person.

 

[Garden Gives Me Joy]

Thanks for your many thoughtful responses. I was unwell and unable to respond sooner.

How it all ended.
In the end, the consignee paid for all bars that could not be accounted for. When she turned down my offer to count the soaps with her because I said that she might be mistaken about the full extent of 'her son's under-declaration of sales', I decided to immediately close out everything on a peaceful note. The reality was that she had already sold ALL of the bars except only those she could no longer sell because the packaging or product had somehow gotten damaged. She seems to have only used her son as an excuse because after complaining about how terrible he was, she then said that she recounted everything to resolve her son's error and declared all of his mistaken underdeclared sales. However, the remaining stock was too little for it to be possible for her to have made an error over the significant remaining discrepancy. She was even stating sales for cheaper products she no longer had, and the converse. Example; if I only gave her 10 bars of bar X worth $x, she declared 12 ... but at the same time; UNDER-declared sales of more expensive bars by stating 1 sale of 10 bars worth $xx when, in reality, she had none remaining. The over-declaration happened at the same time as her refusal for a recount. In short, @TheGecko nailed it.​

[...] she sold your soap, but can't pay you because she spent all the money. [...]​

... and was trying to drag out payments by stating additional sales of cheaper bars to pay as little as possible. In the final meeting, I assured her that I understand the challenge of keeping track of sales in a busy market. My feeling is that, regardless of whether she under- or over-stated sales, once I was not cash-strapped, I would forgive discrepancies and just ensure that payments balanced out in the end. I think that the spreadsheet that I updated and shared based on her weekly sales declarations (by WhatsApp like "I sold 2 bars of X and 3 of Y") ensured that her final payment was correct because every verifiable detail was tracked. So we could see where figures did not balance. Some of you asked about the relationship. Unfortunately, I am new to the area and did not know anyone. Our relationship therefore started when I approached her with the proposal.


My final thoughts. Happy for your feedback.​

1. Re whether the consignment business model is worth the potential headache. Despite my bad 1st experience, I still think it can be worthwhile for strategic reasons like those in @Ephemerella's list ... BUT with the 'right' approach.​
2. Consignment is appropriate only if you can handle the risk of loss and have specific objectives like @Ephemerelia's list or market testing (the latter of which was my primary objective). In most cases, it should only be a short term means to an end of wholesale, not an end in itself.​
3. Unfortunately, this bad experience did not allow me to learn trends like which soaps were faster selling, had more repeat sales, etc. I got few ideas from her son's feedback but not as much as I would have liked. I am consoled by the fact that all undamaged bars were sold. @Blufuz' idea re using the weekly net weight of a box to decide on dues sounds good for traveling (farmers' market) retailers, like this lady. This means that, if I had met her at one of her sites (which I did), I should have always gone either before or after her sales. My error seems to have been that I was too reliant on her to report honestly. I never took physical inventory and assumed that I saw less soaps on the table because she had more in boxes under the table. I was too worried over seeming hard nosed while building a relationship with this ostensibly sweet lady.​
4. The consignee agreement should have a clear close out date, even if to be followed by a new open date the day after. This seems critical when you have not yet built enough trust. Afterall, she would have likely continued for as long as I could not detect the issue.​
5. The consignor should definitely keep detailed records. @Epheerella, 100% agreed re ease for consignees. BTW, she did not need to update of even look at my spreadsheet. I just shared it to be transparent. However, I have redone the spreadsheet with a summary front page that gives consignees less numbers to look at. If consignees want to verify anything in greater detail, they can go to subsequent pages. Re the error I made, I created more formulas to minimize / avoid my error. Now, I only need to enter the number of bars consignees declare in the column for the particular week. All other pages with outstanding balances, amounts due, etc recalculate automatically. She definitely respected the spreadsheet. She was just running out of excuses when she said it was hard. Afterall, she had already volunteered praises of its usefulness weeks beforehand. The sheet left her without any argument.​
6. @Ephemerella mentioned giving consignees an inventory sheet. Would be happy to see a copy. If not possible, can I assume it works by sticking the sheet on the salesman's backend of his table? That way, consignees could quickly draw sticks to count sales. The pen and paper should be already in place. The retailer should ensure that sales people understand how our system works. However, this may be overkill if I am also doing a frequent physical inventory check (with the weight box).​
7. Packaging MUST be very secure, like boxes. My products were plastic wrapped with sticker labels on only the front and back panels. The returns at 7.5% of all delivered bars were only those units whose packaging was compromised or the product was somehow exposed to excess sunlight (or something of the sort). The 'weight box' should protect against sunlight and being tossed about in transit. I am considering some type of rectangular wire basket, several of which fit inside of larger boxes that are dark when closed.​
8. Re shoplifting or catastrophic events, how does one account for that? Neither of us brought it up. I think vetting consignees should also consider how well their sales and storage operations can avoid theft and damage. Any thoughts on making an empty box stuffed with styrofoam available for shoppers to handle and read before asking to buy? I gave her shelf talkers but still got the broken packaging. I realize people like to smell soaps. However, my packaging blocks smell anyway.​
9. @Blufuz spoke of the potential downside of providing only small amounts to consignees. Perhaps I can offer step-like structures on which consignees can stack bars to give the illusion of more bars. Would that help?​
10. Seeking consignees with whom you have a prior relationships like @Ephemerella discussed are ideal when possible.​

EDITED: to include 'catastrophic events' (#8)

 

[Ephemerella]

@Garden Gives Me Joy First, hope you are on the mend!

I'm terrible at multi-quoting so I'll do my best:

1. Yes, it has to be the right approach. You need to identify what you want, and what you want to achieve (ie, market research, forge partnerships, etc.) and contrast that with your reality (I'm new here, I have to travel long distances to shops, I can only handle so much volume, etc.). Then outline what you need to do to achieve your wants (ie, I want market research across different price demographics to see if my product moves at a higher price point, so I'd like to be featured in two low-priced boutiques and two high-priced boutiques), and then forecast what you'll have to live with to achieve that (ie low-priced boutiques might be flakey, high-priced boutiques might be high maintenance, etc.). Prepare yourself for trade-offs, but don't compromise on what you ultimately want to achieve.

2. I factor in a 20% loss into my pricing. I build that into my bottom line price. That covers not only product that goes walkabout but also production issues on my end (goof-ups, bad batches, spills, etc.). I also build in an hourly rate that I pay myself for making products. All of that is my "cost", and then I multiply up for wholesale or retail.

3. You had a bad experience for sure. And you will have more. The trick is creating an insurance policy for yourself. You do that by expecting everything to go wrong, and knowing how you'll solve it or resolve it (and sometimes simply walking away is a perfectly good resolution). Then when a problem arises, you have a plan of action. You don't spend time wondering, deciding, or debating. You have a plan, execute it, and move on. Your most valuable product is NOT the product you create, it's 1) your BRAND which includes how people (retailers and consumers) perceive you, and 2) your EMOTIONAL ENERGY, because that is your driving force, your creativity, and your passion. Preserve and treat both with the utmost respect because, carefully cultivated, they will see you through the worst of times and rocket you forward in the best.

3b. When it comes to honesty, hope for the best, and expect the worst. Just be prepared.

3c. There will be bumps in the road. There always are. When you accept that every once in a while, all heck is going to break loose, you prepare for it, and it really feels like no big deal when it happens. Building a stable business is every bit a mental game as it is prowess and stamina.

4. I am not this technical, I don't have close-out dates, etc. Perhaps I'm just a Pollyanna because I have good relationships, but honestly, I just drop by with a load of product, a product delivery sheet, and a smile. I leave it to my retailer to make all the decisions. I check in every other week, see what's moving, work with them to provide them with more of what they want and less of what they don't, and cycle out slow movers. About every 4 weeks, they need a restock. I swing by, they hand me a sheet noting everything that sold, what is left over, and cut me a check. If I need to verify, I can, but I'm lucky, my retailers are great, and there have never been any hiccups.

Some of my retailers insist on paying me in advance when they place an order, and honestly, they buy much less (obviously) than the consignment shops get, and they have the most sluggish sales. Cosigners usually move 4x the amount of product pre-payers do.

Also, I do NOT and WILL NOT cosign to retailers who primarily or only retail in a farmers' market situation. First, my audience is a super-duper niche, only a small percentage of my potential buyers attend these. But also, there is too high of a risk of product damage from schlepping, too great of a risk of loss from sticky fingers (it happens, one of my retailers did an outdoor event, and innocently, passerbys thought some of my smaller items were "samples" and took them before the retailer realized what was going on). And, the exposure to my buying market is too limited. I prefer brick-and-mortar locations that have traffic at least 5 days a week.

6. Very simple but very clear. I list every single item, the quantity of each, the date delivered, who I delivered it to, and reiterate the wholesale and retail prices for each. Some retailers create their own spreadsheet and give me a report, some retailers hold onto the sheet, and when I come in, I count what they have left, and they cut me a check. Then again, I'm dealing with brick-and-mortar locations that routinely manage wholesale inventory, they have systems in place.

7. I use boxes. I can label appropriately (I worked with Marie Gale on correct labeling, etc.), and the product is protected, stackable, packable, and looks smart. It is also convenient for consumers to use, gift, store, etc. Ultimately it protects my product from handling, sunlight, etc.

8. People are going to handle your products, and the product will get damaged. Build loss into your expectations. A good retailer will feel HORRIBLE about shoplifting, they know this is a handmade product. Let them know it's not their fault and chalk it up to the cost of doing business. If it becomes a habit, then it's time for a hard discussion and/or cutting ties with that retailer. At a tradeshow, I once watched a customer walk up and open EVERY ONE of my sealed jars of an item just to smell them all. I had smellers out, but it didn't stop this person from breaking the safety seal on over 20 items. Sigh. When people are allowed to touch the merchandise, some of them will to the fullest degree, and not be a little bit careful.

9. It depends, I find that my cosigners do best when they have about 40-60 items from me, about 3 of each "flavor". People, when presented with options, will often find their "favorite" and then be inclined to buy it. Retailers that pre-pay for only 10-20 items at a time, etc., tend to move products much slower.

10. I created my relationships. Again, I'm in a hyper-niche which has a very communal feel, so we all kinda feel like a big extended family. But I shopped at my locations for years. They knew my face when I walked in the door. Some have become friends, and we go out for drinks or dinner together. Some were/are fresh faces, but when I make a new liaison, I make an effort to be in their world and be a face in the public to them and their customers. I volunteer for a few hours with projects they mention are important to them. I show up for events. I patronize them for my needs. I promote them on social media and cross-post with them. And I play an active role in the community. When there is an auction or event for charity, I'm first in line to donate a big basket of my goods.

I'm far from profitable, but I'm getting there.

Just the other day, I was at a large public weekly event. Someone had given me a gift the week before. I returned with a gift of one of my products with a mock label on it that was a joke for them. That person wasn't there, but other people at the event noticed it, inspected it, laughed, and chatted amongst themselves. I was so amazed and proud as I heard murmurs in the crowd ... "Oh, I've seen this before... their stuff is nice! Oh, I see them everywhere! I just bought a bunch at so and so for gifts...." I really got teared up.

I've had a smooth introduction into the world of selling, primarily because I'm in a super niche of very tight people that I've been a member of for decades. But, even still, it hasn't been easy. But it sure has been fun!

 

[TheGecko]

My final thoughts. Happy for your feedback.​

1. Re whether the consignment business model is worth the potential headache. Despite my bad 1st experience, I still think it can be worthwhile for strategic reasons like those in @Ephemerella's list ... BUT with the 'right' approach.​
2. Consignment is appropriate only if you can handle the risk of loss and have specific objectives like @Ephemerelia's list or market testing (the latter of which was my primary objective). In most cases, it should only be a short term means to an end of wholesale, not an end in itself.​
3. Unfortunately, this bad experience did not allow me to learn trends like which soaps were faster selling, had more repeat sales, etc. I got few ideas from her son's feedback but not as much as I would have liked. I am consoled by the fact that all undamaged bars were sold. @Blufuz' idea re using the weekly net weight of a box to decide on dues sounds good for traveling (farmers' market) retailers, like this lady. This means that, if I had met her at one of her sites (which I did), I should have always gone either before or after her sales. My error seems to have been that I was too reliant on her to report honestly. I never took physical inventory and assumed that I saw less soaps on the table because she had more in boxes under the table. I was too worried over seeming hard nosed while building a relationship with this ostensibly sweet lady.​
4. The consignee agreement should have a clear close out date, even if to be followed by a new open date the day after. This seems critical when you have not yet built enough trust. Afterall, she would have likely continued for as long as I could not detect the issue.​
5. The consignor should definitely keep detailed records. @Epheerella, 100% agreed re ease for consignees. BTW, she did not need to update of even look at my spreadsheet. I just shared it to be transparent. However, I have redone the spreadsheet with a summary front page that gives consignees less numbers to look at. If consignees want to verify anything in greater detail, they can go to subsequent pages. Re the error I made, I created more formulas to minimize / avoid my error. Now, I only need to enter the number of bars consignees declare in the column for the particular week. All other pages with outstanding balances, amounts due, etc recalculate automatically. She definitely respected the spreadsheet. She was just running out of excuses when she said it was hard. Afterall, she had already volunteered praises of its usefulness weeks beforehand. The sheet left her without any argument.​
6. @Ephemerella mentioned giving consignees an inventory sheet. Would be happy to see a copy. If not possible, can I assume it works by sticking the sheet on the salesman's backend of his table? That way, consignees could quickly draw sticks to count sales. The pen and paper should be already in place. The retailer should ensure that sales people understand how our system works. However, this may be overkill if I am also doing a frequent physical inventory check (with the weight box).​
7. Packaging MUST be very secure, like boxes. My products were plastic wrapped with sticker labels on only the front and back panels. The returns at 7.5% of all delivered bars were only those units whose packaging was compromised or the product was somehow exposed to excess sunlight (or something of the sort). The 'weight box' should protect against sunlight and being tossed about in transit. I am considering some type of rectangular wire basket, several of which fit inside of larger boxes that are dark when closed.​
8. Re shoplifting or catastrophic events, how does one account for that? Neither of us brought it up. I think vetting consignees should also consider how well their sales and storage operations can avoid theft and damage. Any thoughts on making an empty box stuffed with styrofoam available for shoppers to handle and read before asking to buy? I gave her shelf talkers but still got the broken packaging. I realize people like to smell soaps. However, my packaging blocks smell anyway.​
9. @Blufuz spoke of the potential downside of providing only small amounts to consignees. Perhaps I can offer step-like structures on which consignees can stack bars to give the illusion of more bars. Would that help?​
10. Seeking consignees with whom you have a prior relationships like @Ephemerella discussed are ideal when possible.​

1) There are tons of successful 'consignment' shops around...think clothing stores and antique malls, so perhaps it is your particular way of doing things that is an issue (see below).

2) There shouldn't be any losses...period.

3) As a business owner, it is MY responsibility to manage what is/is not selling and adjust accordingly, NOT my supplier. But with that said, you don't make money if the business owner doesn't make sales so there needs to be constant communication...what are 'tried and true' scents, developing scents, dupes, seasonal scents.

4) There should be a legal agreement in place detailing all aspects, but at the same time you want to keep it simple. I would start with a 90-day trial period, then a one-year contract after that.

5) Again, you follow the KISS rule. You start with xx number of bars of soap valued at $$$ per bar and the retailers signs for those bars. You then come in every week, do inventory, get paid, restock (again signing for what is received). After 90-days you can go to a bi-weekly or bi-monthly arrangement. BUTT, you never restock without getting paid in full first. No need for fancy shared googly spreadsheets until you get home.

6) You're complicating things. This is what I do for craft fairs (2 days events)...I write on a piece of paper how much of what I am packing into boxes. And the end of the day, I do a quick looksee to see what I have left and make a note of what I need to restock. I then write on a piece of paper how much of what I am packing into boxes. The next day, I unpack all the boxes and take an inventory. On a spreadsheet, I have a list of my products with four columns: Day 1, Day 2, Inventory, Total Sales. Day 1 + Day 2 - Inventory = Total Sales. Then at the bottom, Total Sales x $$$ per bar = Money in my Bag. I then count my bag and go to the bank.

7) Packaging is important. I prefer boxes and I seal each end of the box. Once the soap has been signed for, the retailer is solely responsible for it's packaging and proper care of the soap (included in the Agreement). Any damage to the packaging or product that occurs after the retailer has signed for it is solely their responsibility. And since I seal my boxes...if I were to find that the seals had been broken during inventory, then I would expect full payment and I would attach another sticker on the bottom to show that it is no longer part of consignment.

8) You are NOT responsible for shoplifting, In case of 'catastrophic/natural disasters'...again you are NOT responsible. Consider this...do you think BrambleBerry or Nurture Soap or Wholesale Supplies Plus or Costco or WalMart is going to reimburse you for the cost of your supplies because of a tornado? No, of course not. Same difference.

9) As to how much product to give...that's up to what the retailer can afford since they will be the one who is responsible for it.

All in all...just keep it simple. The retailer gets xx number of bars valued at $$$ and they are responsible for it...period. Now you can include something in the Agreement that says that if there is a product that hasn't sold in say...thirty days (not all scents appeal to the same people), providing that the packaging is in the same condition, you will swap it out. If the packaging is damaged you'll still swap it out, but there will be a small fee to cover the cost.

 

[Zany_in_CO]

I'm terrible at multi-quoting so I'll do my best:

TIP: Highlight the bit in the sentence you want to reply to. When you stop, a balloon comes up with two options, "quote" or "reply". Tick Reply. That bit shows up in your reply box. Hit "Return" to leave a space between that one and the next one. Keep reading and repeating the process each time you run into something you want to reply to.
HTH