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Articles and Advice To Wholesale or Consign?, By Debbie Gill
You've created some items that you'd like to sell, and made the decision
to place your items for sale in a shop or gallery.
The next step is to call the managers or buyers of these establishments
and set up an appointment to have your product placed. Please don't just
stop by with your product in hand. This can be detrimental in your
search to find a brick and mortar place to start selling your work. When
you do schedule an appointment, be sure to bring a sample of your work,
along with a photo portfolio to show your range of quality work.
Now that you're in the establishment, speaking with the manager or
authorized buyer in charge, what next? Be understanding if the
representative is called away to assist with clients. Be prepared to
have several interruptions if it is a busy store or gallery.
Do you leave your product on consignment and have the establishment sell
your work for you and send you a check for the agreed upon payment? Or
do you wholesale your product outright to the establishment?
There are pros and cons for both. Both can result in a very rewarding
financial experience for you. Both can flop badly, too.
Before even deciding which way to go, you'll want to draw up a contract
for both that protects your rights as the designer against things such
as damage, theft, or even if the shop ends up closed and out of business.
Consignment basically means leaving your product with the
establishment's representative, and they'll find a place to display it,
and also sell it for you. You determine the price, and whether or not
your price may be reduced to be put on sale to move the item. They would
then send you a check minus their consignment fee. Consignment fees can
range anywhere from 10% to 50%, so make sure you know what fees will be
charged and have that in writing. Creating a contract between you and
the establishment is crucial. Your rights as a consignor will be
outlined in the contract you draft. DO NOT leave your items without
having such a contract. You retain all ownership of the property until
it is sold. More on creating your own contracts will be posted in
another article.
Wholesale has many different meanings. Most people think of wholesale
products as cheap knockoffs that are mass produced in another country
and sold very cheaply here in the USA. That is not always the case.
Wholesale is offering any number of your items for sale at approximately
50% of the suggested retail price to an establishment, and then the
product becomes the property of the establishment for resale. They
retain the right to sell at whatever price they desire. You can ask for
payment on the spot, or work out an agreement to have a Net-30, and show
up with new product to wholesale as each item sells. New accounts
generally should be asked to pay when the order is delivered.
If a shop prefers to take your work on consignment and asks for a 50% or
more consignment fee, you'd be better off selling it to them wholesale.
I've run into this often, and ended up selling my work. The only time I
chose to consign for 50% consignment fee, the shop went out of business
and they disappeared into the night. Fortunately for me, I only left two
pairs of earrings that retailed for $25.00 each, and cost me $3.00 per
each pair to make. It was an inexpensive lesson, but I still learned
from it. That was my first ever consignment, and I did not have a
contract, nor did I have a list of what was left there. I was still able
to write it off as theft on my property tax rendition, but only for the
cost of materials.
Ask the manager or buyer if anyone else has items on consignment with
their shop, and ask for the other vendors' information. Speak with the
other vendors and find out how they like consigning items to this
establishment. Ask if they've ever had problems with theft or receiving
payment for their items.
Always have a list of items you've consigned to the establishment, and
before you leave, have the store manager or buyer sign the list. You
sign below, and make sure that each of you has a copy. This will aid you
in receiving payment, and protect you in the event of theft.
Periodically check up on your item(s) that have been consigned. Calling
about once every two weeks or so is acceptable, or stopping in if the
store is local. If the representative is busy, call or come back another
time. Don't check up more than that, as you will be viewed as difficult
to work with, and the store won't have any incentive to keep you on as a
consignor.
Once you establish a sales relationship with these types of shops, you
can work out an Exclusivity Contract, meaning you create a product line
that is exclusive to that particular establishment for a specific price.
When you do have an exclusivity agreement, do not sell that product
anywhere else. A nice thing to do is to advertise the shop that sells
your exclusive line and link to it on your website. It's recommended
that you offer exclusivity with only one or two shops in the beginning
to make it easier on you. One thing that is very important regardless if
the product is sold wholesale or left on consignment, is that you NEVER
undersell the place. This reflects badly on you as a designer and a
business person, and could affect future transactions.
I typically consign for 25 – 30% when I do decide to leave my work on
consignment. It's been a while since I have consigned, as I do tend to
sell more often than I consign. In my honest opinion, I prefer to go
ahead and sell wholesale to the establishment. Once it is purchased, it
becomes the property of the establishment, and I usually leave with
payment in hand, unless I work out a Net-30 account.
So, does this mean that one is better than the other? It depends on the
product, the establishment, and the reputation of the designer.
Both wholesaling and consignment can be lucrative endeavors if done
properly and with the right contracts and paperwork to protect you. Of
course, you can earn more money selling direct to the public. However,
selling on consignment or wholesale will get your work in more venues
and seen by more people.
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