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    Making to Sell, Part III – Consignment

    Last week, Sarah looked at two direct distribution channels for makers’ products: markets and online. Today she focuses on selling via consignment, one of two popular indirect distribution channels.

    For those not in the bizzo know, indirect distribution means selling goods to consumers through an intermediary, such as a retailer or distributor.

    If you are looking for retail stockists for your work it means you are pretty serious about this selling biz! Consignment and wholesale do work pretty differently though, so for those of you who are making first and working out a price after (and want to keep it this way!) I would suggest sticking to consignment.

    For those of you who are super biz-focused and are able to create to a price point – you are definitely more than capable of taking on the world of wholesale. That said, it doesn’t hurt to start with some consignment stores, especially if you are still testing the market.

    As a crafty, creative type it is likely you’ve heard about consignment at some point as it is one of the most lucrative sales channels for craft and handmade products.

    Selling on consignment involves retailers selling your products then forwarding on the sales profit once they’ve taken out their commission. Most commonly this commission is 40-50% of the retail price.

    Small retailers love selling goods on consignment as there is no risk for them.So as long as you can happily afford to produce your goods without needing your sales profit soon after, consignment could be a great way for you to start. 

    Benefits for selling on consignment include:
    • Minimal overheads – all you really need are some great images of your product and an internet connection to get started. Email is the best way to get in contact with potential stockists, unless you already have a connection with the retailer/buyer and then it doesn’t hurt to approach them face-to-face or on the phone! Emailing images lets retailers’ size up your offering quick smart and decide if it is right for their store. 
    • Simple business processes – business processes are far less involved in consignment than wholesale. You will need to consider your retail price though – retailers can be quite helpful with this though and will usually be happy to guide you here if necessary. Also it is also important to think about tracking your stock – will you go in store every month to check what has sold or are you happy for the retailer to let you know?
    • Suits one-off and small series products – if you are an artisan and making production pieces is not your thing, consignment will also work well for you. Many retailers are more than happy to sell goods on consignment where pieces are one-off or have slight variations within styles.

    Time investment – low to medium

    You might already have some retailers in mind that you’d like to approach. If not, a great chunk of your time will be spent researching and then contacting best-fit retailers that take products on consignment. Look for stores that sell either similar goods or complimentary ones.

    Financial investment – low to medium 

    The most important place to invest your money when starting to sell product is top quality images. If you are lucky enough to have a professional photographer for a partner/best friend/sister/cousin – utilise their skills! If not, get a pro on board. When products are on offer, photography is always the place to invest your budget.

    Because there is so much to say when discussing indirect distribution, the topic of wholesale will be discussed next Monday on the blog. See you then!

    Posted by: Tess McCabe
    Categories: Advice and Tips, Starting a Business | Comments Off on Making to Sell, Part III – Consignment

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