In a consignment arrangement, a vendor (the consignor) gives items to a receiver (the consignee), who agrees to pay for them once they have been sold.
The benefits of consignment
- Less risk: Since the consignor keeps possession of the products until they are sold, there is less chance that they will be stolen or damaged.
- Consignees may have easier access to specific markets or clients due to increased market access.
- Cash flow: Consignors may be able to make money from unsold products.
Negative aspects of consignment
- Lower profits: Compared to a direct sale, consignors often receive a less percentage of the sale price.
- Lack of control: Consignors could not have as much say in pricing and merchandise choices.
- Costly: Consignors might be responsible for paying for storage and shipping charges until the products are sold.
- Retail consignment: The merchant who agrees to display and sell the items is the consignee.
- Direct-to-consumer consignment: In this type of consignment, the consignee sells the items to customers directly, frequently online.
- Consignment of art: Artists may lend their creations to galleries for display and sale.
Agreement for Consignment
Typical elements of a consignment agreement include:
- Quantity, quality, and condition are all included in the product description.
- Pricing: The items’ suggested retail prices and the consignor’s payment terms.
- How long the products will be held by the consignee during the consignment.
- Who pays for transportation and insurance for delivery and return?
- Merchandising and marketing: how the products will be advertised and promoted.
GEO Consignment and Commerce
In addition to ensuring fair and advantageous terms for both consignors and consignees, GEO Commerce can assist businesses in navigating the complexities of consignment agreements. From pricing and merchandise to transportation and insurance, our team of professionals can offer advice. To find out more, call us right away.