Consignment Selling

Consignment selling can be a great facet of a successful craft business. These craft consignment tips will help you succeed with your own consignment selling.

My own experience with craft consignment, specifically handmade jewelry consignment, has been completely positive and a profitable part of my business. I attribute a good deal of that success to building a good, trusting and mutually beneficial relationship with appropriate retailers.

Some professional craft artists, however, have some challenges with craft consignment, so it's important to consider and address a few issues before you commit to craft consignment as a sales strategy for your business.

Why Sell Crafts on Consignment?

• Consignment selling can add nicely to your overall income and be a good complement to other sales strategies.

• Craft consignment can provide you with more frequent and consistent sales opportunities than you would have if you were simply selling at a few craft shows each year.

• Consignment selling can be an effective way to get your foot in the door and move toward wholesaling to some retailers. Some retailers will offer the option to shift from consignment selling to a wholesale relationship within a set period of time (90 days is fairly common) if your items are selling well.

• It can be challenging to establsh wholesale accounts with retailers without proof that your items will sell well. Consignment selling can help you to create a track record of retail sales that you can then quote to potential wholesale customers.

Finding Retailers

• When sourcing inventory for their stores, retailers are looking for items that meet and exceed their customer's expectations in terms of quality, style, function and price. They want items that provide good potential for profit, and they also want to work with suppliers (that's you!) who are professional, reliable and respect their time. In addition to demonstrating to the retailer your items would be a good fit for their store, it's also important to show that you are someone they would be happy to work with.

• Visit the store as a customer before contacting the store owner or manager, it will help you to get a sense of types of items already available in the store, their price points and whether your items would fit well with existing items in the store. You'll probably want to look at more upscale consignment opportunities. Lower end consignment is not typically a good fit for handmade items because you'll struggle to charge a fair price in that type of setting.

  Once you determine a store is a good fit for your products, call or visit the store to ask for a meeting time to present your products to the retailer. If you go in person to request a meeting time, be dressed to make a good impression, and, when practical, do be sure to have some items available to show, or some photos of your items if it's not practical to bring them with you.

• One way to find good upscale consignment selling partners is to ask for referrals from others who sell items on consignment. Network with individuals you know in order to find a retailer who you can trust and build a mutually beneficial relationship. Networking can also help you to get your items into a retailer's store. Approaching a retailer by mentioning a mutual friend or acquaintance who referred you to their store can be much easier than cold calling.

• You won't want to consign your crafts to just anyone. You take on some risk when you consign your crafts. The store owner is the one safeguarding and promoting your work. You will need to feel reasonably comfortable that the retailer will take care of your items and pay you in a timely manner (or return the items to you in saleable condition when appropriate).

• There are pros and cons to consigning to newer stores. A new store owner who needs to be very careful about overhead may be more open to trying an unproven line and accepting items on a consignment basis. However, a new store owner may not have the experience necessary to successfully promote your products. If you're working with someone at a newer store, consider consigning a few items initially while you establish a relationship and provide more inventory if and when you see they are a good fit for your business.

• You'll have a certain amount of inventory tied up at the store(s), and you won't be able to retail those items yourself (i.e. at craft shows, home parties, online etc.). You'll need to ensure your products are being promoted effectively by the retailer. Remember, the retailer has not purchased your items outright, the only risk they have taken on is providing some space in their store for your items, so they may be less inclined to promote your items as opposed to items they've purchased wholesale for their store.

Understanding and Negotiating Craft Consignment Terms

• The shop will take anywhere from 30 to 50 percent of the sale price, with 40 percent being typical. You'll need to ensure you price your crafts appropriately so that you can still make a profit after the retailers take their percentage.

• Ask if the store has a standard consignment agreement, request a copy if one is available and be sure to review and understand the terms before signing the agreement. If they aren't accustomed to selling consignment items, be sure to put everything in writing including the retailer's percentage, selling prices and the terms you have agreed upon regarding sales and promotions.

Managing and Tracking Inventory

• Managing paperwork related to craft consignment selling can take up a surprising amount of time, so setting up an effecient system from the outset will be extremely helpful and allow you to use your time more efficiently.

• Create an inventory list to track the items you have provided to the retailer; provide a copy for the retailer and keep a copy for yourself. Note the type and amount of each item and check items off as they sell. Depending on the nature of your items, it may be helpful to provide the retailer with photos of your items to help you and the retailer track inventory.

• Determine a schedule for reporting sales, payment and restocking ahead of time; this will save you and the retailer a lot of time and ensure expectations are clear. Be open to a bit of flexibility if, for example, the retailer has sold more of your items than initially expected and wants to restock early.

• If you need to ship your products to an out of town retailer, be sure to package your items securely and seriously consider purchasing shipping insurance.

Promoting Your Items

• Determine the space you will have in the store. Knowing where your items will be displayed will give you an idea of how well they will be promoted (will they be in a well travelled, well lit area of the store or hidden in a dingy corner), and knowing how much space you have will be one factor to help you to determine how many items to provide.

• Determine whether you or the retailer will be responsible for setting up the display. While it's a little extra work, setting up the display yourself for a local retailer can be a real advantage because you'll be able to ensure your products are displaed to their best advantage.

• Consider partnering with a local retailer on special in store events. A painter might participate in a meet the artist night hosted and promoted by the retailer who carries his or her work, someone who makes unique baby products may provide a seminar for new moms that provides vauable information on some aspect of parenting which can be related back to the product, or someone who makes soaps and cosmetics may host a spa evening at the retailer's store. Partnering opportunities like these can provide good promotional oportunities for you and the retailer and can boost sales and build good will and loyalty all around.

Building a positive, productive relationship with a retailer you can trust is at the core of successful consignment selling. Remember, you are not approaching retailers hat in hand begging them to sell your products. You are providing unique items that meet their customers' needs and will help the retailer to make a profit. With a little bit of research, organization and good communication, consignment selling can be a profitable win-win situation for you and your partner retailers.