Tips for Selling on Consignment
Selling on consignment can be a great way to boost profits without assuming any risk for your retail shop. When you sell on consignment, the vendor (or consigner) owns the merchandise and often provides a point-of-sale display. When one of the products sells, you keep part of the profit and pay the rest to the vendor. The following tips for selling on consignment will help you increase profits with little effort and no risk.
What can you sell on consignment?
The short answer is “practically anything!” However, it’s in your best interest to only sell products on consignment when they meet certain conditions such as:
- The product should be relevant to your shop and your customers.
- The product display’s footprint should not be too large for your shop.
- The product should represent a good impulse purchase with an appropriate price point.
- The product should not be something you’d rather stock yourself; chances are, if you can sell it retail after buying it bulk wholesale, you’ll make more money from each sale.
- You trust the vendor. Make sure you know where the merchandise is coming from and that the vendor has a good reputation.
Common consignment products include candy, gift add-ons, sentimental trinkets, clothing, artwork, toys, jewelry, and fashion accessories. Again, you can sell just about anything on consignment as long as it makes sense for your shop and target customer base.
Tips for selling on consignment
In addition to selling consignment products that fit your customer base and working only with reputable vendors, these tips will help make your consignment selling experience more enjoyable and profitable.
Develop a formal contract that outlines the terms of your agreement with your vendor(s). Consider the following:
- What do you agree to do?
- What do they agree to do?
- What are the prices and profit breakdowns?
- Who is responsible for maintaining display stock (typically, the vendor)?
- Who is responsible for lost or stolen merchandise?
- When will you process and send payments (immediately after each sale, after a certain time period, such as monthly)?
Place the product display in a prominent place.
- Near the cash register is a good place for impulse purchases.
- You can also consider placing displays in targeted areas; for example, wine bottle toppers near party supplies.
- Reference consignment products whenever appropriate; do it in a way that is helpful to the customer. For example, a customer who is purchasing a gift and gift-wrapping is likely to be interested in a greeting card.
Actively seek relevant consignment vendors.
- You don’t have to wait for vendors to come to you to seek a partnership; instead, seek them out yourself.
- You can find vendors by scoping out displays at other retailers, at trade shows, and through online searches.
- You can even place a sign near your register, or launch a direct-mail or other marketing campaign, requesting interested consignment partners to contact you.
- Knowing what kind of foot traffic you get at your store, the average number of customers per day, and being able to define your industry and opportunities within it are great ways to attract vendors whose products tend to move quickly.
Selling on consignment is a great way to increase profits and expand your product offering without taking on more overhead. Follow these tips to ensure your consignment arrangements are mutually-beneficial and especially favorable to your business.