To CONSIGN OR NOT TO CONSIGN?

[JMT]

Hi Folks,

I just got asked to put my candles in a little shop and they want to do consignment. Since this is my first shop maybe I should just do it as an experiment. I know a lot of folks say don't do it cuz you don't see any money till much later. Here is what the store owner sent to me.

Any advice would be great. Maybe I can tell them I just want to to wholesale.

THIS IS WHAT THE OWNER SENT ME:

We actually were hoping we could do consignment with you instead of wholesale. With consignment, we work with a contract and pay you as we sell the candles. We agree to a retail price together (the price they'll sell for at the shop), and do a 50/50 split. The thing you need to decide is how much you need to get per candle to cover your expenses (materials, time, design, etc.). So if the retail price is $10 for the little guys, is $5 each for you enough...?

Just for your reference, whatever you decide you need to get per candle for yourself is (or can be) your wholesale price. Some stores that buy on wholesale will keystone, or double, your wholesale price. Most will do 2.5x or 3x your wholesale price.

The big difference between the two is that with consignment you still own your work and we sell it at an agreed-upon price, and with wholesale the shop owns your work and can do whatever they want with the price.

For our part, I think we'd have no problem doing $12 retail on the small candles and $28 on the large ones. If you need to get more than $6 and $14 for them respectively, let me know and we'll recalculate.

SO WHAT DO YOU GUYS THINK? They are real nice so I think they would doop me.

THANKS

JMT

[Crowded House]

Doop? I'm not familiar with that term.

I think you should find out who they expect to eat the cost in cases of damage or theft.

[Guest Secretbuddy036]

I believe that most places that do consignment get a percent of the sale and I have heard it to be anywhere from 10-30% of the retail price some places also charge rent plus a small percent. But I would think that if you want to give it a try go ahead. What's it gonna hurt. Jus tmake sure that you have the following things on paper such as who is going to pay in the sales tax, and lost or damaged items. Etc...

Another thing if you can figure out the search feature on the forum. DO a search for consignment. I know that there has been some great discussions on it.

[Crafty1_AJ]

Consignment is not without its sticky issues and problems. I'd get terms outlined clearly up front. What percent do you get? What happens in the case of damaged / missing (stolen) items? How often will you collect and re-stock? Are the shop owners trustworthy/honest? Are they careful to keep things looking nice and attractive and clean? Etc. But despite potential pitfalls (and I'll admit there are many if you don't know who you're dealing with), there are a few success stories. Take this example.

Candlemaker walks into local shop filled with candles and approaches owner about wholesaling her candles to this store. Gives owner free candle to try. Candlemaker comes back later to check to see how owner liked candle. Owner is self-admitted candle freak and says she did like the candle very much. However, she is happy with her current candle suppliers and didn't want to make a change. Fair enough. But ... either because she liked the candle or had a soft spot for small businesses (being a small biz owner herself!), owner said the she *could* offer small shelf space for consignment, and the shop would only keep 10%. Fine, says candlemaker, who knows one of the co-owners and knows she is trustworthy. Fair enough. Candlemaker agrees to stock once a month and collect on sold items.

To make a short story long, the consignment candles began to sell. Small trickles at first, but then sales picked up steam. The candles began to develop a bit of a following amongst the locals. This goes on for a few months. Eventually, candlemaker can no longer afford to tie up stock in consignment and says "I need to either pull these or wholesale 'em to you." Owner agrees to wholesale.

This is how I got my very first and largest wholesale account, and it's still very active to this day. In fact, eventually the owner dropped her original mainstay line of candles in favor of mine. Also stocks my soaps. We are getting ready to launch more of my products in her shop as I write this.

So sometimes consignment can have a happy ending. Just wanted you to know that.

Good luck in whatever you decide.

[VerticallyEnhanced]

50/50 is WAY to much in my opinion. The biggest split I have ever done is 75/25 but usually it is 80/20.

[Trish]

I started with consignment as well, which helped me get several wholesale accounts, however, I don't recommend it.

I've never given over 30% to consignment, They want 50%...they should just buy wholesale. To give them 50%, there's really no "benefit" to you, except a starting place (which is great, don't get me wrong). This store is getting all the benefits. They can make the same amount of money as if they purchased the candles, yet they don't have to actually buy them. None of their money is tied up in stock, it's yours.

It could be a great start for you, but honestly, I wouldn't give them 50%. That's way too much, IMO and they'll never buy wholesale at that commission rate.

[Crafty1_AJ]

I started with consignment as well, which helped me get several wholesale accounts, however, I don't recommend it.

I've never given over 30% to consignment, They want 50%...they should just buy wholesale. To give them 50%, there's really no "benefit" to you, except a starting place (which is great, don't get me wrong). This store is getting all the benefits. They can make the same amount of money as if they purchased the candles, yet they don't have to actually buy them. None of their money is tied up in stock, it's yours.

It could be a great start for you, but honestly, I wouldn't give them 50%. That's way too much, IMO and they'll never buy wholesale at that commission rate.

Agreed. That's not fair, IMO. If they want that much, they should just be wholesaling from you. You should be keeping more because the trade-off for them is they don't have to shell out $$ up front. Hope that makes sense; not enough coffee yet this morning.

[Crafty1_AJ]

50/50 is WAY to much in my opinion. The biggest split I have ever done is 75/25 but usually it is 80/20.

Agreed. I've heard some shops keep up to 30%. But not 50%.

[sandissoap]

i agree, 50% is way too much, heck I don't even wholesale at that much! I have 2 consignment places, one takes 10% plus $35 a month in rent, the other I pay no rent and they take 20%. I've had a bit missing/stolen and its basically my loss, but overall sales are definetly good enough to not worry about the few things stolen in a year. I think 50% is nuts!

[mystical_angel1219]

I honestly would not recommend consignment.

Especially on those terms. If you do decide to take a shot at this opportunity, I would suggest drawing up a very specific and detailed agreement with the owner. Stand behind it like a brick wall, never deviate for a second.

It is a good idea to get "out there" so to speak.

But I would be asking many questions. What is the gross dollar amount per month this shop does in candle sales? What is the foot traffic like? Do they have a website? I see the proposed equation doesn't include paying you.

Time is valuable, sorry- I wouldn't even take a second look at this offer.

I second the "search for consignment" on this board.

IMO, 50% is wholesale. With a minimum order and various conditions.

Separate the men from the boys- so to speak.

Don't sell yourself short. If they want handcrafted candles, they should be prepared to pay up front- no questions asked. Do suppliers drop off boxes to you without being paid for first? Hell no. The same should be for your business as well, IMO.

Good luck with whatever you decide to do. :smiley2:

[Fire and Ice]

I honestly would not recommend consignment.

Especially on those terms. If you do decide to take a shot at this opportunity, I would suggest drawing up a very specific and detailed agreement with the owner. Stand behind it like a brick wall, never deviate for a second.

It is a good idea to get "out there" so to speak.

But I would be asking many questions. What is the gross dollar amount per month this shop does in candle sales? What is the foot traffic like? Do they have a website? I see the proposed equation doesn't include paying you.

Time is valuable, sorry- I wouldn't even take a second look at this offer.

I second the "search for consignment" on this board.

IMO, 50% is wholesale. With a minimum order and various conditions.

Separate the men from the boys- so to speak.

Don't sell yourself short. If they want handcrafted candles, they should be prepared to pay up front- no questions asked. Do suppliers drop off boxes to you without being paid for first? Hell no. The same should be for your business as well, IMO.

Good luck with whatever you decide to do. :smiley2:

I fully agree with Mystial in this!!! Spend some time watching the store and see how many people go in and if they come out with something they bought. This does you absolutely NO good if they customers are only lookers and not buyers!

I had my first wholesale account try to sway me with consignment because he was cheap! when I totally refused his offer he DID go for wholesale. Many times, shope with TRY consignment first to see if they can snag you with NO investment on their part. If your candles are that good, Say NO and walk away. If they want them they WILL call and DO wholesale but they have to find out how desprate you are first.

Fire:cool2:

[HeavenScentU]

I have done consignment, but only for 3 months. I don't recommend it under no circumstances. I worried about my products. It isn't worth it, to me to do consignment. Everyone's nice until things come up missing and how are you really going to make them pay for items that are missing or broke. I think I would ask why they want to do consignment? What is the benefit of consignment yours and theirs? You might want to sit down and write down some more questions you would need answered and weigh the pros and cons. It doesn't hurt to ask questions, especially when it is going to affect you. When I hear the word consignment I think of being desperate and I feel the merchants don't think the products are worth buying. If more of us wouldn't agree to do consignment than the store owners would buy our products.

[gerrie]

I've done consignment, but had everything down on paper, including that they can't change anything about my candles, and that they are responsible for anything damaged or missing. It's always worked out fine, BUT not at 50%, like the others said, might as well do wholesale for that. I wouldn't go more than 25% myself. The only time I had to pull out of a consignment shop was in a beauty salon, just to many little fingers messing with my stuff, not to mention hair spray floating around and landing on my products.

[David Fields]

We tried Consignment....No more...we have found..if the People that are selling your Candles do NOT have any $$$'s invested....they could care less if they sell....50% or NOT. They are going to push the items that they have their own money invested in. I would try my best to just figure your costs and go with the Wholesale aspect. One of the stores that had our Consignment stuff...set them in the window area where they got bleached out...then some got broken..and it was JUST our loss!! Not to be a downer on the whole thing, but Consignment just did NOT work for us!! If you decide to do it...we wish you luck.

David & Joyce

[KristinesShower]

Boo on consignment here too.

if the People that are selling your Candles do NOT have any $$$'s invested....they could care less if they sell....50% or NOT. They are going to push the items that they have their own money invested in.

Absolutely!!