Craft Consignment Selling Tips

How to develop and maintain consignment sales deals with retail partners

by Lisa McGrimmon

My own experience with craft consignment selling was a completely positive part of my business. It's been a while since I've sold on consignment. I started selling handmade jewelry at a local, independent shop several years ago, and it was a positive starting point for my young business.

I attribute a good deal of the success I had to the time I spent networking and building a good, trusting and mutually beneficial relationship with an appropriate retailer.

Why Sell Crafts on Consignment?

Consignment selling can add to your overall income and be a good complement to other sales strategies. It can provide you with more frequent and consistent sales opportunities than you would have if you were simply selling at a few craft shows each year.

Consignment opportunities can be an effective way to get your foot in the door and move toward selling your crafts on a wholesale basis. Some retailers will offer the option to shift from a consignment agreement to a wholesale relationship within a set period of time if your items are selling well (90 days is fairly common). Some retailers will not enter into a wholesale arrangement without testing your products in their stores on a consignment basis first.

It can be challenging to establish wholesale accounts with retailers without proof that your items will sell well. Consignment selling can help you create a track record of retail sales that you can then quote to potential wholesale customers.

For some, consignment selling may present smart, long term opportunities, and for others, it may be a stepping stone towards a bigger business goal.

Finding Retail Partners

When sourcing inventory for their stores, retailers look for items that meet and exceed their customer's expectations in terms of quality, style, function and price. They want items that provide good potential for profit, and they also want to work with suppliers (that's you!) who are professional, reliable and respect their time.

In addition to demonstrating your items would be a good fit for their store, it's also important to show the retailer you are someone they would be happy to work with.

Most craft professionals will probably want to look at more upscale consignment opportunities. Lower end consignment is not typically a good fit for handmade items because you'll struggle to charge a price that earns you a reasonable profit in that type of setting.

Visit the store as a customer before contacting the store owner or manager. It will help you to get a sense of types of items already available in the store, their price points and whether your items would fit well with existing items in the store. 

Once you determine a store is a good fit for your products, call or visit the store to ask for a meeting time to present your products to the retailer. If you go in person to request a meeting time, be dressed to make a good impression, bring copies of any print-base marketing materials you have, and, when practical, do be sure to have some items available to show. If bringing your products isn't practical, be prepared with some excellent photos that show your products at their best, just in case the retailer asks to see your items right away. When you go in to make an appointment, don't expect the store owner to meet with you right away, but do go prepared in case the owner does want to talk with you immediately.

One way to find good upscale consignment selling partners is to ask for referrals from others who sell items on consignment. Network with individuals you know to find a retailer you can trust and with whom you can build a mutually beneficial relationship.

Networking can also help you get your items into a retailer's store. This is how I set up my first craft consignment partnership. Approaching a retailer by mentioning a mutual friend or acquaintance who referred you to their store can be much easier than cold calling.

Potential Concerns with Consignment Arrangements

You take on a degree of risk when you decide to consign your crafts, so you won't want to partner with just anyone.

Sometimes professional craft artists encounter issues and challenges related to craft consignment, so it's important to consider and address a few issues before you commit to this business strategy.

  • Remember, the store owner is the one safeguarding and promoting your work. 

You will need to feel reasonably comfortable that the retailer will take care of your items and pay you in a timely manner or return the items to you in saleable condition when appropriate.

  • There are pros and cons to consigning to newer, less established stores. 

A new store owner who needs to be very careful about overhead may be more open to trying an unproven line and accepting items on a consignment basis. However, a new store owner may not have the experience necessary to successfully promote your products.

If you're working with the owner of a newer store, consider consigning a few items initially while you establish a relationship, and provide more inventory if and when you see they are a good fit for your business.

  • You'll have a certain amount of inventory tied up at the store(s), and you won't be able to retail those items yourself (i.e. at craft shows, home parties, online etc.). 

You'll need to ensure your products are being promoted effectively by the retailer. Remember, the retailer has not purchased your items outright. The only risk he or she has taken on is providing some space in the store for your items, so retailers may be less inclined to promote your products as opposed to items they've purchased on a wholesale basis for their store.

  • You'll need to ensure everyone is clear about the terms of the wholesale arrangement. 

Be sure to discuss and put in writing all of the pertinent details that affect your consignment arrangement (see below for details).

Understanding and Negotiating Craft Consignment Terms

  • The shop will usually take anywhere from 30 to 50 percent of the sale price of craft consignment items, with 40 percent being typical.

When you sell your crafts to retailers on a wholesale basis, they usually pay 50 percent of the retail price. There may be exceptions, but in a consignment arrangement, in my opinion, a retailer should usually receive less than 50 percent of the retail price of items sold because they have not taken on the risk of buying your product as they would in a wholesale relationship.

In my own craft consignment selling, I negotiated a 60-40 split of the sale price (60 percent for me and 40 percent for the retailer), which seemed fair and reasonable to everyone involved.

You'll need to ensure you price your crafts appropriately so you can still make a profit after the retailer takes his or her percentage.

  • Ask if the store has a standard consignment agreement.

Request a copy if one is available and be sure to review and understand the terms before signing the agreement.

If they aren't accustomed to selling consignment items, be sure to put everything in writing including the retailer's percentage, selling prices and the terms you have agreed upon regarding sales and promotions.

Managing and TRacking INventory

Managing paperwork related to craft consignment selling can take up a surprising amount of time, so setting up an efficient system from the outset will be extremely helpful and allow you to use your time more efficiently.

Create an inventory list to track the items you have provided to the retailer; provide a copy for the retailer and keep a copy for yourself. Note the type and amount of each item, and check items off as they sell. Depending on the nature of your products, it may be helpful to provide the retailer with photos of your items to help you and the retailer track inventory.

Determine a schedule for reporting sales, payment and restocking ahead of time. This will save you and the retailer a lot of time and ensure expectations are clear. Be open to a bit of flexibility if, for example, the retailer has sold more of your items than initially expected and wants to restock early (this is a good problem to have!).

If you need to ship your products to an out of town retailer, be sure to package them securely and seriously consider purchasing shipping insurance.

Promoting Your ITems

Craft Consignment Selling Tips
  • Determine the space you will have in the store.

Knowing where your items will be displayed will give you an idea of how well they will be promoted. Will they be in a well travelled, well lit area of the store or hidden in a dark corner? Also, knowing how much space you have will be one factor to help you to determine how many items to provide.

  • Determine whether you or the retailer will be responsible for setting up the display. 

While it's a little extra work, setting up the display yourself for a local retailer can be worthwhile because you'll be able to ensure your products are displayed to their best advantage.

  • Consider partnering with a local retailer on special in-store events. 

A painter might participate in a meet the artist night hosted and promoted by the retailer who carries his or her work. Someone who makes unique baby products may provide a seminar for new moms that provides valuable information on some aspect of parenting which can be related back to the product. Someone who makes soaps and cosmetics may host a spa evening at the retailer's store.

Partnering opportunities like these can provide good promotional opportunities for you and the retailer and can boost sales and build goodwill and loyalty all around.

Building a positive, productive relationship with a retailer you can trust is at the core of successful consignment selling.

Remember, you are not approaching retailers hat in hand begging them to sell your products. You are providing unique items that meet their customers' needs and will help the retailer to make a profit.

With a little bit of research, organization and good communication, consignment selling can be a profitable win-win situation for you and your partner retailers.

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