Photo courtesy of Erin Dollar
Partnerships between retail shops and indie makers can be fruitful and mutually supportive. Consignment can help craftspeople reach new customers, and offers a proving ground for makers interested in expanding into wholesale. Curious about what consignment means, and whether it’s a good fit for your business? First, let’s tackle the basics.
Wholesale vs. Consignment?
With wholesale, a maker sells the product directly to a retailer at a discounted bulk rate. Consignment is different: a maker supplies their work to the retailer for free, and receives a percentage of the price when the retailer makes a sale. Under a consignment agreement, a maker will typically receive a commission of 40-60% of the retail sale price.
You may be thinking, “That sounds great! I’d like to earn 60% of the sale price — that’s 10% more than my wholesale rate.” It’s true: selling on consignment could mean a higher payment than a similar wholesale order. If your products are a good fit for a shop, you may stand to earn more from consigning your goods. Plus, you get the added flexibility of being able to offer new products for sale on short notice. It’s one way to gain experience with B2B sales, without the costs of participating in a wholesale tradeshow.
However, consignment artists are not paid until after their product sells. An artist may not receive payment for 30-60 days, depending on the payment agreement. There’s a possibility that products may not sell at all, or could sit on the shelves for months, missing out on opportunities for sales in other venues. Patience is helpful when selling on consignment: it can take time for new products to “catch on” with customers.
Sometimes shops will only take work on consignment — for example, many art galleries are consignment-only. Consignment offers shops the opportunity to test out selling your work, especially appealing if your work is expensive or seasonal. If your work sells well, you may use that sales history to negotiate a switch to wholesale.
Working with Consignment Shops
Many shop owners take online submissions from interested artists. Try emailing the shop owner or buyer to inquire about consignment opportunities. It’s not necessary for makers to visit a shop owner in-person with their products. In fact, it can be disruptive to busy staff members when an artist stops by to “pitch” their wares. Consider leaving a business card, postcard, or catalog instead, and following up via email or telephone. Sharing a link to your website or portfolio is often a more enticing pitch for a busy shop owner.
Photo of Maven courtesy of Erin Dollar
Both parties should sign a contract or written consignment agreement before the goods arrive in-store. If the shop does not have a written contract, an artist can offer to supply their own. If you have issues with any of the terms, don’t be afraid to negotiate or ask for changes.
Look for terms in the agreement that state (for example):
- Inventory of goods delivered, with retail prices
- The length of time the work will be in the shop
- How much you will be paid per item sold (the commission)
- When/how the shop issues payments
- Who covers the cost of shipping products to/from the shop
- Who is liable in the event of theft or damage
- Promotion and display policies
- Whether your work may be discounted
- Return policies
Before consigning your work in a new shop, get as many details from the retailer as possible. Ask for a full name, address, email address, phone number, tax ID, references from other artists, and creditor information to determine the trustworthiness of a shop.
Consignors may restock their work on a monthly or quarterly basis, or upon request. Under a consignment agreement, the artist retains ownership of unsold products, which they may reclaim at any time. It’s courteous to coordinate drop-off/pick-up times with the retailer, to avoid impacting their customer service.
Risks and Considerations
Consignment comes with risks for artists. As retail customers handle your products in-store, items may become damaged or broken. It’s important to establish in advance who would be liable in this situation. Request a monthly inventory update to verify that items are not lost or stolen.
If your work isn’t selling well on consignment, take time to explore why. Is the price-point much higher than the shop’s average sale? Could you offer a more enticing display element to highlight your work on the shelves? Does the packaging soil easily, losing its appeal? Ask the shop owner for tips on what you could offer that might sell well, and what would complement their existing bestsellers.
Sadly, retail shops sometimes go out of business without warning. As a consignor, you risk missing a payment in the event of a sudden store closure. Unfortunately, retailers don’t always pay their debts and return unsold merchandise in mint condition. Keeping in touch with the shop owner can help alert you to any problems. Research local laws that may offer protection for artists, or consult NOLO’s consignment guide for artists.
To reduce your risk, set a limit for the amount of product that you sell on consignment at one time. Don’t be shy about checking in with a retailer to see how things are going. If you haven’t heard from a retailer that’s selling your work for multiple months, it’s a good idea to reach out and ask questions about how things are going. Perhaps you can swap out items that aren’t selling for products that are a better fit for that shop? If you experience late or missed payments, it may be time to re-evaluate the relationship, and look for new consignment opportunities.
Have you sold your creative work on consignment? Share your experience! Tell us what worked well (or not so well) in the comments.
Please note: This article is for educational and informational purposes only, and should not be construed as legal advice. The author and Craft Industry Alliance disclaim all responsibility for any and all losses, damages, or causes of action that may arise or be connected with the use of these materials. Please consult a licensed attorney in your area with specific legal questions or concerns.
Erin Dollar is an artist, surface pattern designer, and founder of Cotton & Flax, a collection of boldly patterned textile home decor that is designed and manufactured in California. Her work has been sold in 100+ retail shops, from indie boutiques, to large mass-market retailers like West Elm, CB2, and Need Supply. By growing her ecommerce business to accommodate wholesale buyers, she has built a sustainable business that generates income year-round, and built a platform for long-term growth. See her webinar, Wholesale for Craft Business, in our archives.