consignment

[pjfan74]

I have been approached to place my products in a shop on a consignment agreement with an 85/15 split...does this sound reasonable? I instantly thought so because I was so excited to get the invite to do this at such a nice shop, then I had a moment of clarity and thought I ought to check with those here that know more than I do. Also, any thoughts, ideas, suggestions, warnings about entering into a consignment agreement?
Thanks

 

[VanessaP]

You'll need to get it in writing about who will report the sales tax, who is responsible for loss & theft, how often they expect you to restock, etc. I know a lot of people who have been burned on consignment and won't do them anymore, offering wholesale options instead.

 

[Relle]

Because they haven't had to pay for it outright, they won't look after it as well. People will pick them up and smell and just shove them back, so they get damaged and things like dust accumulating on the packaging, you will be responsible to fix that, not them.

 

[deb8907]

I agree with Vanessa. If you can offer to wholesale your soaps, that would be better. You get your money up front and don't have to worry about how they are displayed, store theft, when to expect payment, etc. Consignment is tricky because you have to trust the store owner and sometimes that takes a leap of faith. 85/15 split is good. The best I've been offered is a 60/40.

 

[DeeAnna]

I will do consignment in only one place -- the art center in a nearby town. It's a win-win for the center and for me. They get unique "limited edition" or one-of-a-kind handmade pieces that aren't for sale anywhere else, and I get an outlet for my creative juices.

The art center is very good about taking care of their consigned goods, and I am close enough that I can keep an eye on things as well. The center does a 75:25 split or 60:40 split, depending on whether the artist helps out by working for the center 20 hours per season or not.

I did consignment in a couple of other places years ago, and got taught some hard lessons. The other posters are correct in that shop owner may not take good care of your product, since the shop does not own it. It can also be hard to get paid promptly -- there is not a lot of incentive for a struggling or lazy shop owner to send a check for goods sold. I have also had product that just "disappeared", and the shop owner did not pay me for the "lost" product at all.

If you do not deeply trust the shop owner and staff AND cannot personally and regularly check on your stuff (under the guise of "in the neighborhood -- just visiting!"), there is, IMO, far too much risk to consignment sales.

 

[dagmar88]

Don't forget your insurance.

 

[Candybee]

I know some have good experience with doing consignments but I don't like it for several reasons already mentioned. The store owner isn't invested in your product when they don't pay upfront for it. If someone wants to sell my soap in their shop they have to be interested enough to purchase at wholesale on my terms.

I had a shop owner in my town talk me into a small consignment a couple of years ago. I had long ago decided to not do consignments anymore but she was local and very charming so I thought okay I would like to help out a local merchant. Less than a year later she went bankrupt and could not pay me for my products. Fortunately I only had a few left in her shop so I didn't lose a lot. But it made me remember why I don't consign anymore.

So even if you have a contract which spells out the terms of the consignment, like who's responsible for theft, damage, when you get paid, etc., if they lose their shop you lose your product.

 

[outlawsoaps]

Thanks for this thread! We were just talking to a shop owner in the Haight about carrying some of our soaps. He wanted to do a consignment deal, but given his clientele (tourists, mostly), I didn't think it would be good to offer any kind of consignment at all. My husband didn't agree. He said we should get out there in front of people and that we'd make a fortune.

Here's what we're going to propose to the shop owner:
85/15 consignment for the first 10 bars, in a display that *we* provide, on the counter near the register. We'll put out a tester and the soaps themselves will be in boxes with seals.
After 10 bars, he can buy wholesale with low minimums (like 40 at a time) if he wants.

It's a risk to the business owner to buy wholesale, since they're not going to be sure the bars will sell. But it's also a risk to us because all those bars might just be gone to us, and that's valuable inventory.

Does this sound crazypants or like a good compromise?

 

[meeplesoap]

I do not like consignment; the owner is not invested in getting his customers on board with your product (especially in this case, as he's making so little.) He also won't look after it, because it's not "his."

Here's my recommendation. Instead of consignment where it sits at the register, go into the store one day and demo your product. Have business cards handy, let customers smell the soap, and give the shop owner a cut of whatever you sell that day. Then, take your soaps home. Have a set day and time when you'll be there that he can advertise to his clientele - every Tuesday and Thursday from 2-4 (for example.) After a month of this, he'll have a better idea of what scents sell best, and can add your line in with confidence, you've gotten your name (and cards, and site) out there with minimal loss of soapy goodness! (You can always leave a few soap bars behind for him to sell during the week if you think it'll be necessary.)

What do you think?

 

[outlawsoaps]

(snip)Here's my recommendation. Instead of consignment where it sits at the register, go into the store one day and demo your product. Have business cards handy, let customers smell the soap, and give the shop owner a cut of whatever you sell that day. (snip)

I think that's a great idea as long as there's a lot of foot traffic in the store. For the one in the Haight that we're considering selling to, I think that's perfect!

Thanks for the suggestion!