Friday, May 14, 2010

The Consignment Selling Experience - Part II

So, now that you’ve decided you do want to try consignment selling you need to determine the answers to two basic questions before going any further. Those two questions pertain to pricing of your products and whether you want to sell only at local shops or if you are going to reach out to non-local venues.


You first need to determine how much you need to receive in your pocket for each of your products. You are the only person who can determine this. You are the one who knows the cost of your materials, how long it takes you to make each item and how much profit you want to make from each sale to make it worth your while. Remember, there are still some expenses involved in selling on consignment and these costs must also be considered. These would include such items as shipping or delivery costs (time and fuel), any packaging involved and time for the extra record keeping you will need to do.

Once you know your bottom line, you then need to decide whether you will maintain the same pricing both in your personal sales (online and at craft shows or wherever) and in your consignment venues. There are two schools of thought on this. Some feel that the same item should be the same price everywhere regardless of who is marketing it for you. Others, like myself, feel the price should have some flexibility based on where it is being sold.

I personally charge less on my Etsy site than I do at local craft fairs and other sales venues. I base a big portion of my pricing on overhead costs and the cost of selling online is considerably lower than my other venues. I also feel the online customer has taken the time to go to their computer, find my site and will be paying additional shipping charges. (Ultimately, the difference is usually negated by the time one considers added S&H.) Likewise, my prices are higher for consignment than on my site.
Most consignment stores will use percentages between 70/30 and 60/40, with the crafter receiving the higher percentage. A few shops are asking 50/50 but I find most of those are negotiable if you are persistent and have truly unique and high quality merchandise. I would not consider anything that sways the numbers in favor of the shop. (**Please note: Fine art galleries handling original artwork and large sculptures generally do charge 50%. This is a standard in that arena. This article is designed for the “crafter” not for fine art.)

Once you know what prices you will be offering you can start to look for the right consignment market for your goods.

Finding a Consignment Outlet

Local or Non-Local

Many crafters prefer to only deal with local shops. The advantages to this are you are able to keep a closer watch on your merchandise. You can actually see the shop, personally get to know the owner, see how your goods are displayed and maintained and drop in to check on your merchandise and sales on a regular basis. You are afforded the opportunity to identify problems and take steps to rectify the situation in a more timely manner. You also avoid shipping costs when you can personally deliver the goods. The downside is you are going after the same customers there as you may be going for at local craft shows if you are also physically selling your own products. Alternatively, while you are reaching the same market as the shop, they are usually displaying your merchandise 7 days a week in a location where the customer can always find them.

Dealing with non-local venues presents some concerns in that you cannot see the actual shop for yourself and cannot be sure of how your merchandise is displayed and handled. If a problem occurs with the shop, you have no way of knowing this until it may be too late to mitigate the damages. You also have the additional costs and damage concerns of shipping your merchandise to the shop. You will often only “meet” the owner through their e-mails or phone calls.

Now that you know the geographic location of the stores you are looking for, you need to find those that are willing to take your merchandise on consignment.

If you are looking for local outlets, the first thing to do is go and visit those shops you think look compatible with your work. If you don’t know of any such stores in your area take a walk through the various business districts and shopping centers. Try looking in the phone book under “gift boutiques” and any other tags you can think of. Ask in your local craft supply stores for suggestions as to what local businesses sell handcrafted items.

I generally advise two visits before approaching the owner/buyer/manager. On the first visit look at what merchandise the shop carries, the quality and price range of the products. Look at the displays and see what type of effort is put into showing these things in their best light. Go back a week or two later. Does it look like items are selling? Is there anything new? Have the displays been updated? Is the shop clean? What about the help? Were they friendly and helpful? If you feel good on this second visit, approach them about carrying your merchandise. You should have something to show them in the way of samples and be able to back that sample up with photos of additional merchandise. If they sound interested ask about their policies as to commission charged and such. Make an appointment to show them additional pieces and to go over the contract. If the shop does not have their own contract, offer to prepare one of your own and bring it with you. (*We will discuss contract provisions in a later section.)

If you are dealing with a non-local venue, you must make more effort to research the shop and scope it out. You will often see out-of-town shops advertise for merchandise in various craft magazines or on craft-oriented websites. Sometimes they will approach you through your online site or at a craft show. Ask if they have a website you can view or if they have advertising brochures or such to review. Check the local phone directory for their area to see if the shop is listed. (You can do this easily online for free.) You can go so far as to call the Chamber of Commerce there and ask about the business. Google both the business and the name of the owner who has contacted you. Often, you will turn up local newspaper articles that mention the shop. Ask for a sample copy of their consignment contract. (In most cases, if they have approached you, they should be prepared with a contract for your perusal.) Do not hesitate to ask for pictures of the shop - inside and out. They are well aware that you are not familiar with their location and a reputable shop owner who is truly interested in your merchandise will be glad to comply with such a request. If they object to your questioning, run the other way.

With all consignment shops, you want to ask:

1) What is the commission split? (If you can’t agree on this, there is no
sense discussing anything more.)
2) How long has the shop been in existence and how long at its current location?
3) How many consignors does the shop deal with?
4) Who is the owner and who does the day-to-day management of the shop? Who will you be dealing with?
5) What type of insurance coverage do they provide to cover your merchandise (fire, flood, hurricane, etc)? Do they cover theft?
6) Is there a theft problem in the store or in its neighborhood?
7) What type of advertising and promotions do they do?
8) Do they carry similar merchandise to yours?
9) How will they display your merchandise?
10) How long will they hold your merchandise on display before returning unsold items to you?
11) Who is responsible for return shipping for non-local venues?
12) Can they provide references from other consignors they deal with?

Go with your gut feeling. If communication is poor or it feels weird and uncomfortable. Do not go with this shop. Keep looking for the right outlet for your work.

Once you are satisfied with these answers, ask for a copy of the contract. Read it carefully. Take it home and review it several times. Questions anything you do not understand. If there is an issue you do not agree with, bring it to their attention and attempt negotiation in that area. Remain somewhat flexible. This should be a give and take discussion. Both parties will need to be comfortable with the agreement.

I will discuss the actual contract in Part III of the Consignment Selling Experience

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