Consignment...the other side of the coin

[Love2Scent]

OK, I need some help please. I did a search but only found info on putting your items on consignment.

We are looking into renting a storefront and hopefully grow our candle business. The store is bigger (and a bit more expensive) then we need so we were thinking of having some homemade crafts in there to compliment our homemade goodies. I already have some local crafters in mind that I plan on approaching. We really don't want to buy a bunch of stuff outright since we aren’t sure what will sell and would rather put the money we have saved up into displays, signage, etc.

So now for the questions:

- Is there somewhere I can find guidelines on calculating a fair monthly cost for each consignment "space"

- Can I write the agreement myself or do I need to ask my lawyer to do it?

- Is it reasonable to add a fee on credit card sales?

- Is it better to do the flat monthly fee and each person keeps their sale $$ OR make it a % of sales?

- How does liability insurance come into play here...does each consignee carry their own or do I need to cover all the items?

- Anything I need to be cautious of?

I have done consignment on the other side (meaning I put items on consignment) but never this end...so I'm clueless. Any assistance would be GREATLY appreciated!

[Vicky_CO]

Well one question would be are renting to them or just consigning. Either way part of both fees should cover CC fees.

One way that will save you money and time is just a standard rent but they have to work 16 to 24 hours a month in the store that will free up some time for you and you will not have to hire someone in. That one is become really popular around here.

If you have a store locally that does consignment I would check with them about a contract. I would check with a few of them not just one. A lot of times they will help out as long as you are not a competing business.

You need to carry insurance but it a standard business liabilty insurance. In case some one slips and falls that kind of thing. As a store owner product liability insurance is not an issue on other people product as they can chose to carry it or not. You are not liable for thier product.

As what you should charge I do not have a clue.

[jennyjo]

This is exactly what I am doing right now. I am renting a store and consigning spaces. I will tell you how I am doing it. It is a small store so I only have 3 consigners and I have a 4th coming in. We open in May. Anyway, I am charging based on the size of space but it ranges from $20-30 per month, per space. I also am charging 10% commission on sales to cover overhead such as credit card sales and bags, tissue, etc. I have half of the store left for my own items. To my candles and tarts, air fresheners, I have added dip mixes made locally and a bigger selection of tart warmers.

It really depends on the location on what you charge per month. I have a consigned space in a bigger town and I pay $40 (for a small space) with no commission, but I pay extra for credit card sales. This is a big place that has been around for a while. Larger spaces are $100 a month. I decided to charge less, because I am in a smaller town, though I have many regular customers myself, they will have to get to know the consigners and their crafts.

As I haven't been open for business yet, I can't tell you how it is working out, but I am excited for the opportunity. I am requiring that the consigners make an initial 3 month commitment and then give 30 days notice before leaving, that way you know you can count on them for a little while anyway. The larger store I am in required 6 months. I got a large response from local crafter's. I actually have people on a waiting list to consign, but I need to see how much space I have after I get my own items set up, before I decide to take any more. My husband said I should have gotten a bigger store! We may expand if it goes well!

I got a great deal on the monthly rent, because I had two store owners competing for me, so that's great. The consigners will help pay the rent (which includes utilities) and give a larger variety of items to buy. I do have a "no compete" type of rule, where only one of each type item can be sold in the store. They cannot compete with any of my products or anyone else's, just because the store is so small. I would be happy to email you a copy of my consignment agreement, but it is not written by a lawyer. That would be your decision if you felt you needed it written by one. I only have a couple of people, so I think mine will sufice. I used my agreement with the larger consignment store to help, though I did not copy any of it.