Consignment?

[sockmonkey]

I suppose by now all of the questions you've had have been resolved, so let us know how things turned out.

I wanted to comment on a couple of things. In my experience, it's not normal for a consignee to establish pricing for your goods. If you're new to consignment a helpful consignee might tell you if she thinks you're pricing your product too low (or sometimes too high) if she has sold a similar product before and knows what the market will bear, but she will not dictate how much you must sell your products for. Depending on the facility and the type of merchandise, some consignees have rules that will require you to reduce the price on unsold merchandise periodically (this is especially true for bulky items like furniture).

The consignee should not determine the price of your product unless they are buying it from you wholesale, in which case it's no longer a consignee/consignor relationship.

The issue of price fixing is not applicable to this situation because as a consignor, you are leasing a space, so it's like having your own mini-store where you select the merchandise you set your own prices. An example of price fixing would be if multiple candle vendors in several shops around town got together and decided that they would all sell their candles for the exact same amount, so that consumers would end up having to pay higher prices for their candles.

[Jane42]

Update on my first consignment:

OK - I am always curious as to how things turn out, so here we go....

Positive parts of this: The shop will take 25% - an extra 3% if it is a credit card sale. She does all labeling of the products and sets them up. The shop is well kept and has security cameras in all rooms. (This is a historic school that has been renovated - so lots of rooms) She did suggest pricing, but didn't insist on it. She will contact me for more stock, but I will also be stopping in to check. Payment will be on a monthly basis, with a check being mailed on the 10th of the month. She said they are finishing up their busy season, so we may not be able to tell how our items are going to sell until it starts back up in May - she would at least like to carry our line through the next busy season. Our candles are finally out there for all to see without us having to lug them around!!!

Not so postive: They are not responsible for lost or broken items. I know, I know.....not good! She said that yes, they have had items stolen, but it does not happen often. At that point, I didn't want to back out only because I was so excited about getting in the door - that might cost me...:-(

Also, rather than going with my gut feeling on what the jar candles should sell for, I agreed to mark them up $1.00 more than I thought reasonable. Now, I have not price shopped in awhile, and looking at the other candles she had in the store, mine are still very reasonable so - I guess we will see how it goes.

There is another shop I approached and they are also interested in carrying our line of candles. Since this shop is on the main street of town, I feel that unless they cover stolen or broken items, I don't feel comfortable not making them responsible.....

Thanks for all the comments and advice, and I will be reading through them again and tweaking my contract before I do my next consignment.

You have all taught me so much about this business and I am grateful to be able to come here and ask advice. :smiley2:

[sockmonkey]

Jane, it will be difficult for you to find a consignment shop that will cover the cost of your broken or stolen items. I'm pretty sure that you will find just about any consignment shop you rent from will tell you that you are responsible for insuring your goods against loss or damage.

The reason being is that they are not the owner of the goods and their insurance company will not reimburse them for a loss on something they do not own themselves.

Unless you are selling a lot of very valuable items or have a huge inventory worth a lot of money at that location, for most consignees, it's not worth purchasing insurance because of the deductible you will have to pay, which may open an whole other can of worms if you're manufacturing candles in your home and your insurer doesn't know about it.

You might be able to get a rider on your homeowner's policy to cover the rental space, but in reality, unless the consignor's place is in a real crime ridden area, hopefully, you'll only wind up with no more than a couple of broken candles, or a few that go missing in a year, none of which would cover the amount of your deductible, let alone the premium. Of course, the exception to that would be if the building collapses or burns to the ground and you lose everything, but again, if the amount of inventory you stock there would not equal your deductible plus premiums, it's not worth having.

[Jane42]

Good points, sockmonkey. At this point, the stock that we have there is minimal. I just feel a little helpless where this is concerned - I am not there, so I can't watch them - and they don't want the responsiblity of them. I am ok with it at this establishment - but if this is the norm, I will have to remember to really look at the shops and where they are located before I decide to consign with them.

Between trying to keep up with the holiday craft and home shows and at the same time trying to figure out this consigment business, I am feeling totally overwhelmed. Thanks for letting me know that I didn't make as big a goof as I thought I did!! lol

Jane, it will be difficult for you to find a consignment shop that will cover the cost of your broken or stolen items. I'm pretty sure that you will find just about any consignment shop you rent from will tell you that you are responsible for insuring your goods against loss or damage.

The reason being is that they are not the owner of the goods and their insurance company will not reimburse them for a loss on something they do not own themselves.

Unless you are selling a lot of very valuable items or have a huge inventory worth a lot of money at that location, for most consignees, it's not worth purchasing insurance because of the deductible you will have to pay, which may open an whole other can of worms if you're manufacturing candles in your home and your insurer doesn't know about it.

You might be able to get a rider on your homeowner's policy to cover the rental space, but in reality, unless the consignor's place is in a real crime ridden area, hopefully, you'll only wind up with no more than a couple of broken candles, or a few that go missing in a year, none of which would cover the amount of your deductible, let alone the premium. Of course, the exception to that would be if the building collapses or burns to the ground and you lose everything, but again, if the amount of inventory you stock there would not equal your deductible plus premiums, it's not worth having.

[JimJuris]

If I was in your situation, I would be willing to place 4 to 6 of my items in the shop and see what happens as long as I felt comfortable about the shop and the shop owner.

If I didn't like the look of the shop or if I didn't have a good feeling about the shop owner and with dealing with this shop owner, then I would not be willing to place any of my products in that shop.

If everything seems and feels good to you, then I would say go for it. Either way, I think that this will be a great learning experience for you.

Hopefully you will have a wonderful business relationship with this shop for many years.

[Judy, USMC]

Also, rather than going with my gut feeling on what the jar candles should sell for, I agreed to mark them up $1.00 more than I thought reasonable.

Think of the extra 72 or 75 cents you will be getting from the price increase on each candle as self-insurance. You'll be making a little from each sale to off-set any loss. I think that was a good move!

[Jane42]

If I was in your situation, I would be willing to place 4 to 6 of my items in the shop and see what happens as long as I felt comfortable about the shop and the shop owner.

If I didn't like the look of the shop or if I didn't have a good feeling about the shop owner and with dealing with this shop owner, then I would not be willing to place any of my products in that shop.

If everything seems and feels good to you, then I would say go for it. Either way, I think that this will be a great learning experience for you.

Hopefully you will have a wonderful business relationship with this shop for many years.

I think you are right - start small and see how it goes. I want a "presence" in their shop, so I gave her 18 jars and several of our holiday scent votives and melts in our display boxes - I want people to be able to "see" our product, so I thought that was enough for her to be able to set up a decent display.

[Jane42]

Think of the extra 72 or 75 cents you will be getting from the price increase on each candle as self-insurance. You'll be making a little from each sale to off-set any loss. I think that was a good move!

Very good point, Judy - that makes me feel better about it!

Now....I have to go in and drop something off - and I can't wait to find out if anything has sold!! lol I feel like I dropped off my "babies" and wonder how they are doing. Oh, good grief, I need to take a vacation....I am totally losing it!!!

[lsbennis]

Very good point, Judy - that makes me feel better about it!

Now....I have to go in and drop something off - and I can't wait to find out if anything has sold!! lol I feel like I dropped off my "babies" and wonder how they are doing. Oh, good grief, I need to take a vacation....I am totally losing it!!!

lol...I thought I was the only one that felt that way about my candles...

[JimJuris]

Now that you have dropped off your goods, you need to check in on this shop at least once every two weeks to see where and how well the items are displayed.

You will also be able to see if the items are placed in a good location or if they are tucked some place that makes them hard to see.

Then you can count your items and see if any of them have sold, been damaged, etc.

I would keep good notes of what you drop off to this shop, when, the retail price for your items, etc.

Also, if you visit the shop on the last day of each month, an hour or two before the shop closes, you will be able to see what has sold so that you know what to expect for payment when the shop owner pays you.

Hopefully your figures will match hers. If not, then there is a problem. You may have had something stolen or broken.

If you don't receive payment as promised that could be a warning sign that the shop is having financial problems. That may mean that you should reduce your inventory or pull your stuff out of that shop.

I am not trying to be negative, just trying to prevent you from losing your shirt.