Consignment deal gone bad? Take it to The People's Court!!!

When a consignment deal gone bad reached an impasse, a crafter and a shop owner took it to court - The People’s Court that is! I saw it myself this morning.

The crafter was a laid-back casual sort of old soul who truly enjoys the art of decorative painting. He claims to generally work on specially commissioned projects only. The shop owner was a polished, slick business type who seemed to put on a few airs, billing his shop as an upscale boutique offering “hearth products - home décor items.”

It seems the painter was an acquaintance of the shop owner’s mother-in-law who just happened to be the shop’s bookkeeper at one point in time. She suggested the shop carry some of the painter’s work “on consignment”. A verbal agreement was reached and the artist delivered the goods which were then displayed in the shop. It is unclear if this ever really resulted in any sales.

In time, there was some sort of family falling out and the mother-in-law left her position with the shop. The shop owner decided he no longer wanted to carry the painter’s merchandise and advised the mother-in-law to tell him to come and get his things. She did not want to do this as she wanted to spare her friend’s feelings. The shopkeeper removed the items from display and put them in storage.

The painter got wind of this and showed up to claim his merchandise since it was no longer on display. It was a “bad time” and the shop owner told him he would have to come back . After several attempts, the merchandise was picked up by the painter’s representative. The shop owner explained the delay as a “paperwork problem” and inferred that situation was due to his mother-in-law’s record keeping.

Had this been the whole dispute, the players would have taken their respective toys and simply agreed not to play together anymore.

Ahhhh, but there’s more…

At some point in this time period, the shop owner visited his mother “upstate”, where she either owned or worked for an antique shop. (Her role was a bit disputed but really not important here.) He returned with two antique milk cans which he wanted the painter to clean up and paint as room accents. He indicated to the artist that he had been given the cans but, in Court, maintained he paid $75 for each of them. The agreement between the two was such that the painter would paint the cans with whatever design he deemed appropriate and the shop owner would place them in the shop. When sold, at whatever price, they would split the profits. They actually had this agreement in writing!


The painted cans were placed in the shop but they did not sell . (We’re talking well in excess of two years later, here). At this point, the artist requested payment for the painting job. He demanded $250 for the work he’d done on each can as the shop owner had them priced at $500 a piece. (This was marked down from $700. Apparently, this shop is in a high rent district!) Funny, this particular dilemma had not been dealt with in the agreement. What would happen if they didn’t sell? Good question.

Judge Milian saw three possible solutions to this mess:

(1) The cans could remain in the shop waiting for a buyer to come along. (The shop owner blames the poor economy. He is convinced they will sell at that price when the economy improves.) Everybody would simply have to wait to make the profit. The Judge didn’t really feel this was an ideal solution.

(2) The shop owner could simply pay the artist outright. He didn’t like this solution.

(3)They could each take one of the cans and do with it what they will.

Since it seemed most equitable to all concerned, Judge Milian went with the third option. They actually reached easy agreement on which can each would take. No money exchanged hands as a result of this ruling.

However…

The artist took his can and left the courtroom. On his way down in the elevator, someone admired the can and, get this, bought it right then and there for $250!!!!
The moral of this story?

Make sure you take EVERY possibility into mind when entering a consignment agreement and get it ALL in WRITING!!!!

Of course, there is an underlying marketing lesson here, too. Take one of your best pieces and simply ride elevators all around town, who knows who might fall in love with the product!! LOL

The Consignment Selling Experience - Pt. IV

Let's get this show on the road. You now know where you are going to consign your merchandise, for how much and you have signed a contract with the shop. When starting a consignment relationship, I suggest taking it slow and starting with a fairly small amount of stock - kind of a "trial run." You can always add additional merchandise if things go well and sales are occurring with no problems in the payment schedule. Now, let's get that merchandise ready for delivery.

Tagging -

At this point, you should have already discussed tagging with the shop owner and know whether you will tag the merchandise or the shop will do this. If you are tagging, you should know what information, in addition to the price, needs to go on that tag. Tags will usually carry some sort of code to identify the product as yours (I refer to this as a "vendor code".) Normally, such code will have been assigned to you by the shop. It may be your initials or a number code. There will usually be some sort of code identifying the item itself and, of course, the selling price. Be sure this information is written very clearly and is easy to read to assure the correct price will be charged and you will be properly credited for the sale.

You should also have already sorted out what kind of personal contact information the shop owner will allow you to include on the tag such as your name, phone number and/or a website address. It is important to respect the shop owner's position on this matter. It is their right to ask that such information not be attached.

Inventory Sheets -

Make sure you maintain good records of what merchandise is delivered to the shop. Be absolutely certain your records agree with the shop's records in this area by keeping an exact copy of each inventory sheet for delivered merchandise.

When personally delivering to a shop, ask the shop's representative to go over the delivery with you and to sign and date each page indicating receipt of the listed merchandise. If shipping merchandise, pay the extra fee for a signed confirmation indicating receipt date and by whom. Also include in the packing paperwork, a written notice to the shop personnel to contact you within 48 hours of receipt if there is any dispute as to the packing slip and merchandise received.

Many stores have their own Inventory Form to use with your delivery. If they do not provide one, create one of your own. This should be done in table form and should include a column for the item's name, the item's code number, the price you will receive for that item, the shop's percentage of that price and the full selling price of the item. You may want to include a column that can be checked off when an item sells. I suggest the selling price column always be the last column (farthest to the right) as this makes it easier for the shop personnel to check the price f there is any question.

I mentioned a code number for each item. This should be done in the form designated by the shop and, if possible, with a system that makes sense to you. For example: "your vendor code+T-01", "T-02" etc. might mean T-shirts with the number indicating different designs.

Miscellaneous comments -

Once a shop has your merchandise, maintain communication on a regular basis. Most shops do have some schedule for reporting to you with regard to sales but if you desire, it is quite appropriate to give them a call or drop an e-mail every few weeks to ask how things are going. If it is a local shop, drop in occasionally to check on your merchandise. (I emphasize "occasionally." Daily would not be appropriate in most situations!) If after a reasonable amount of time (3 - 6 months) your work has not begun to sell, you may want to withdraw your goods and look for a shop that reaches your target market better.

If the shop is local, you may want to offer to carry a flier or business cards for the shop to any local craft shows you are doing or give them out to friends and family. Be sure to tell your customers that your work is also available in that shop. If the shop is not local, you may offer to mention them on your website or in your blog.

Go ahead, try a little consignment. I could be the start of a beautiful (and profitable) relationship.

Good luck and good sales to you!

The Consignment Selling Experience - Part III

Okay, so now you know where you are going to consign your products and you’ve worked out what percentage of the selling price you will receive. Now, you need to sign the contract. Never do consignment without a contract!!!


RULE NO. 1 : READ EVERY WORD OF THE CONTRACT. KNOW WHAT EVERY PART MEANS.


One cannot emphasize enough - NEVER, NEVER sign any any contract you have not read and understood! If you don’t know what it means, ask. Don’t accept a vague answer saying, “it’s just legalese.” “Legalese” usually carries a lot of impact and can be extremely important.
Read the contract very carefully. It should cover all aspects of your relationship with the shop.


Check to be sure each of the issues listed below is dealt with and you are satisfied with each provision.

1) Percentage of selling price to be paid to you (the crafter). Be sure the percentage you have discussed and agreed upon is the same as the one written in the contract.
2) When will payment be made for any sales. Most shops pay in 30 or 60 day cycles.
3) DO NOT accept any provision that allows the store to lower the marked price on an item at a specific point in time. This is a practice often used in consignment thrift shops but is NOT used in the gift/craft business arena.
4) If the store runs any type of sale that would reduce the selling price of your product, your payment should still be based on the original price you agreed to. (For example: If the shop has a 10% off sale for a specific holiday or such and an item you agreed to price at $20.00 sells for $18.00 during that sale, your percentage will still be based on the $20 price.)
5) The contract should specify a specific schedule for reporting to you regarding sales. Many shops issue bi-weekly or monthly e-mails.
6) How long will the shop keep merchandise if it is not selling. Most shops will return unsold merchandise after a specific time - often 3 or 6 months.
7) Who is responsible for lost, stolen or damaged merchandise? Do they carry insurance for these situations? Will you be paid your full percentage for such losses?
8) Some shop contracts will demand exclusive rights to sell your merchandise in a specific geographic area. This issue is entirely up to you but, generally, anything beyond a 5 mile radius for exclusive territory is excessive.
9) The contract should state that the shop is responsible for paying all applicable sales taxes on the total selling price. Do not agree to any other arrangement on this issue.
10) Some shops will have a clause pertaining to special custom orders on your merchandise.
11) Some contracts will also specify how an item can be tagged with regard to identifying you as the crafter. It is not unusual for a shop to request that you do not provide a website or phone number on your personal tagging. Most will allow you to include your name or your business name on that tag. Some will allow a non-sales venue internet address such as an e-mail or blog address. ** This is generally considered a reasonable request on their behalf.
12) Contracts may include language regarding a shop’s inventory listing procedure.


Just because something is in a pre-printed contract, it does not mean it must be included. Negotiation can occur and clauses can be crossed out and initialed by all parties or written in and initialed by all parties. Any changes written into a printed contract MUST be initialed by both parties.

Be sure you are given a copy of the signed contract. I also request a written alternative phone number and contact address for the store owner to be written on the contract.


If by chance the store does not provide its own contract, you should be prepared with one of your own making. Sample contracts abound online for free. Simply search the term “consignment sales agreements” (or contracts).


Part IV of the Consignment Selling Experience will cover inventory sheets and any other miscellaneous information I feel you may find helpful.

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.


Pricing

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

Part III of the Consignment Selling Experience - The Contract

THE CONSIGNMENT CONTRACT


Okay, so now you know where you are going to consign your products and you’ve worked out what percentage of the selling price you will receive. Now, you need to sign the contract. Never do consignment without a contract!!!


RULE NO. 1 : READ EVERY WORD OF THE CONTRACT. KNOW WHAT EVERY PART MEANS.


One cannot emphasize enough - NEVER, NEVER sign any any contract you have not read and understood! If you don’t know what it means, ask. Don’t accept a vague answer saying, “it’s just legalese.” “Legalese” usually carries a lot of impact and can be extremely important.
Read the contract very carefully. It should cover all aspects of your relationship with the shop.


Check to be sure each of the issues listed below is dealt with and you are satisfied with each provision.

1) Percentage of selling price to be paid to you (the crafter). Be sure the percentage you have discussed and agreed upon is the same as the one written in the contract.
2) When will payment be made for any sales. Most shops pay in 30 or 60 day cycles.
3) DO NOT accept any provision that allows the store to lower the marked price on an item at a specific point in time. This is a practice often used in consignment thrift shops but is NOT used in the gift/craft business arena.
4) If the store runs any type of sale that would reduce the selling price of your product, your payment should still be based on the original price you agreed to. (For example: If the shop has a 10% off sale for a specific holiday or such and an item you agreed to price at $20.00 sells for $18.00 during that sale, your percentage will still be based on the $20 price.)
5) The contract should specify a specific schedule for reporting to you regarding sales. Many shops issue bi-weekly or monthly e-mails.
6) How long will the shop keep merchandise if it is not selling. Most shops will return unsold merchandise after a specific time - often 3 or 6 months.
7) Who is responsible for lost, stolen or damaged merchandise? Do they carry insurance for these situations? Will you be paid your full percentage for such losses?
8) Some shop contracts will demand exclusive rights to sell your merchandise in a specific geographic area. This issue is entirely up to you but, generally, anything beyond a 5 mile radius for exclusive territory is excessive.
9) The contract should state that the shop is responsible for paying all applicable sales taxes on the total selling price. Do not agree to any other arrangement on this issue.
10) Some shops will have a clause pertaining to special custom orders on your merchandise.
11) Some contracts will also specify how an item can be tagged with regard to identifying you as the crafter. It is not unusual for a shop to request that you do not provide a website or phone number on your personal tagging. Most will allow you to include your name or your business name on that tag. Some will allow a non-sales venue internet address such as an e-mail or blog address. ** This is generally considered a reasonable request on their behalf.
12) Contracts may include language regarding a shop’s inventory listing procedure.


Just because something is in a pre-printed contract, it does not mean it must be included. Negotiation can occur and clauses can be crossed out and initialed by all parties or written in and initialed by all parties. Any changes written into a printed contract MUST be initialed by both parties.

Be sure you are given a copy of the signed contract. I also request a written alternative phone number and contact address for the store owner to be written on the contract.


If by chance the store does not provide its own contract, you should be prepared with one of your own making. Sample contracts abound online for free. Simply search the term “consignment sales agreements” (or contracts).


Part IV of the Consignment Selling Experience will cover inventory sheets and any other miscellaneous information I feel you may find helpful.

Part II of the Consignment Selling Experience

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.


Pricing

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.

MARKETING YOUR HANDMADE PRODUCTS - CONSIGNMENT SELLING

MARKETING YOUR HANDMADE PRODUCTS


This is the first in a series of articles that will discuss various means of marketing your handmade products. If you are reading this blog, you are already somewhat familiar with online sales. If you are trying to make a living off of your crafts, you have most likely also realized that online marketing should only be one aspect of your business. Many of you who are just starting out have only tried your hand at Etsy or Artfire and have no idea how to get involved in the rest of the marketing world. I’ve been at this thing for over 30 years and I’ve tried just about every approach out there so I thought I’d share some of the knowledge I’ve gleaned from these years of experience.


THE CONSIGNMENT SELLING EXPERIENCE - PART I
(What is it and what are the pros and cons?)


Within the last few weeks, I’ve been approached by several retailers about selling my work on consignment. I’m sure this resurgence in the consignment system is based strongly on today’s economic conditions. There just isn’t a lot of capital out there to fund small businesses at the moment. Cash flow is limited for just about everybody from Fortune 500 companies right down to the one-woman gift shop. Only those who can creatively manage their shops will survive. They need to be resourceful in maintaining a fully stocked store and in getting those shoppers who actually do have a few bucks in their pockets into their businesses.


When I started to seriously sell my work, way back in the early 70s, there were a huge number of stores that worked predominantly with the consignment system. It was the norm at that time. As time went by, they became harder and harder to find. Then, the craft mini-mall and co-op system took hold for a while. That now seems to be declining. When I left my job in the legal field a few years ago, I searched for a few consignment markets for my work and had trouble finding any in my area. There were a few craft malls within a reasonable distance but nothing very impressive.


Today, small gift-based businesses are suffering and there simply isn't enough cash flow to fully stock without being resourceful - in comes consignment selling! If crafters enter these arrangements in a professional manner, with written contracts that spell out everything, and with caution (check out every shop to the best of your ability), consignment can be very beneficial to both you and the shop. You can get considerably more exposure and sales without a lot of marketing effort on your part. The shop is fully stocked which encourages more sales (hopefully, of your product). The concept of “handmade” is kept alive.


Over the years, I have been on both sides of the consignment contract. I have sold on consignment in a number of stores along the way and I have owned and operated my own shop where I hosted a number of consignors. I’ve experienced the pros and cons from both sides of the issue. There have been good and bad experiences.


Let’s start with the basics:


“Consignment Selling” is when you create the product and then turn it over to someone else to sell in their shop for you. When the product sells, you receive a percentage of that selling price. You retain ownership of the product until it sells but it is not in your possession.


From the Seller’s Point of View:

The Pros of selling on consignment:

You do not need to devote your time and energies to marketing, whether that is sitting at craft shows, listing and promoting items on line, working a party-plan system, whatever. This is ideal for those who have physical limitations and cannot get out and sit through a long day at the craft show or haul their merchandise and displays in and out. If you are not “a people person,” you don’t need to interact with strangers and make small talk simply trying to push a sale. If your time is limited, this gives you time to devote to creating and not sitting and waiting for a sale. You have the opportunity to reach an audience that may never see your work otherwise. Your work is on display at all hours of the shop’s operation without tying you down for that time period. You don’t have the overhead of doing shows such as entrance fees, travel expenses, display costs, etc. In most cases you control the selling price of your product.


The Cons of this system:

You do not have physical control of your merchandise. You are not there to protect it and see that it is being handled gently and displayed in a safe or appropriate manner. You cannot talk up the sale or attempt to “sell up.” You may be subjecting yourself to possible losses of merchandise or damage to your goods. In some cases, crafters have trusted their products to less than reputable folks who have absconded with the goods or have sold the merchandise but not paid you for them. Shops have closed up and simply disappeared without any warning to the crafter and you are left with trying to find the owner and your merchandise.


From the Store Owners View Point:

The Pros:

You can provide a better quality, quantity and wider variety of merchandise to your patrons without the huge initial cash layout. Crafters are not paid until the product has actually sold and the money has come into the till.

The Cons:

You are now responsible for someone else’s merchandise. You have a tremendously increased amount of paperwork, both for inventory purposes and bookkeeping purposes. You cannot always count on what merchandise is coming and when. Often, quality of the workmanship will vary. Some crafters see consignment as a means of dumping whatever doesn’t sell in their other markets (odd colors, weird color combinations, etc.) Dealing with the crafters can be trying at times. All believe they should have the best spot in the shop and special treatment when requested. Some will call or come in almost daily to check on their sales and advise as to what you should be doing to move their merchandise.

You are responsible for display racks, insurance coverage, taxes and other business licenses. You are paying the lease, utilities and promotional expenses. You are often devoting a large amount of space to merchandise that simply isn’t moving but you cannot mark it down or run a special as you have agreed to a specific price with the crafter. Crafters often come in without notice and want to pick up their merchandise for whatever reason. Many like to treat the shop as if it has a revolving door and want to “borrow” their merchandise back to do a craft show and then bring it back to the shop after that show. Checking those products in and out takes time and disrupts the flow of business.


Done wrong - consignment can be a nightmare for all involved. Done right - everybody can benefit and make money from a good consignment arrangement.


So, how do you find the right shop, get the right contract and work it out to have a good experience? That’s what I will address in Part II of the Consignment Selling Experience.

So, take some time to create and I'll be back to tell you how to find the right consignment arrangement that works for you.