The Truth About Consignment and Whether It’s Right for Your Business.




Just as there are an infinity of brands and products out there, everyone’s strategy for making money with their business is as infinitely particular. Nonetheless, the common ground among us all is that in business, we need to make money. And making it fast, is a welcomed cherry on top.

Turning a profit right away can be a challenge, especially for an emerging brand or a new business. Even getting stores to take a chance on you by buying your product at wholesale isn’t always an easy task. So, a big wheel has got to do what a big wheel has got to do, right? Or is that right…


Consignment by definition


Exploring different avenues that could potentially lead to landing sales is always the right approach. And, building brand awareness should be at the top of your list of priorities when starting out. Testing the waters with alternative sales strategies such as consignment can often be quite tempting. And may be the right course of action.

To sell on consignment means that you choose to give a store the right to sell your product without getting paid for said product beforehand. With this sales strategy, you’ll only get paid once your product sells to consumers. This approach to selling can be appealing on the one hand since it facilitates growing your brand awareness (your customers are able to try things out with your product without having to commit monetarily). On the other hand, if your product does not sell, chances are that it will, over time, become “shop-worn” by shoppers touching and handling it. And once that happens, you cannot resell this product to another customer and you’ll unfortunately end up absorbing its cost. Ouch.

We feel it important to point out that venturing into selling on consignment will require a lot more tracking and monitoring than what you’re used to with your wholesale customers. Making sure that you keep a diligent eye on everything you have out there on consignment will help keep your business mess-free. You can take a look at our post entitled “To wholesale or not to wholesale, the outline that could tip the scale where we talk about “sell-throughs” as a vital tool for observing your product’s performance in stores.


If the thrill of consignment tempts you, you should definitely weigh out the pros and cons of trying your hand at it before making a move. Consignment works really well for some businesses, while for others, it can be a headache more than anything else.


The Pros of Selling on Consignment


  • Brand awareness: Exposure, exposure, exposure. Consignment opens up the door for additional opportunities to showcase your brand as it alleviates the risk for customers looking to carry your brand for the first time.

  • Building relationships: Getting a foot in the door of a popular or well established store has a whole lot of value. Offering these stores a “trial run” of your product and simultaneously proving that it can move on off of their shelves should sell them on committing to purchasing wholesale the following season.

  • Larger profit margins: Consignment deals can mean good leverage for you to negotiate smaller discounts for your customers. Since the stores you’re striking this type of deal with will be benefiting from carrying your brand without making any payment up front, you’d be benefiting from offering a “less interesting” discount than what you would normally offer your wholesale customers.

The Cons of Selling on Consignment


  • Risk: Nothing in this life is without risk. But, certain things are riskier than others, and selling on consignment is one of those things. When working on consignment, you are now the one responsible for dishing out the cost of production up front for consignment customers; needless to say it’s a costly way of doing business.

  • The unknown: Will your product sell or will it sit on a shelf and collect dust for a while… on your dollar? Kind of an unsettling thought, isn’t it? Waiting for your product to sell in order for you to get paid can sometimes be a slow ride, increasingly stressful as time goes on; especially if you are counting on these sales to cover the costs of your contractors. In other words, if your product doesn’t sell, you’ve not only lost time, but also money.

  • Set the standard: It’s imperative for you to avoid setting a precedent when working on consignment. Failing to set solid standards can lead to stores avoiding risk altogether when doing business with you by solely willing to buy on consignment. Offering a consignment deal for the first two seasons (maximum, please!) and then proposing a wholesale partnership will help you avoid bearing the entire load of the risk forever.

Again, consignment deals can work wonders for some, like businesses which sell their product at very high price points. Without a consignment deal, some interesting customers would not be able to carry such an expensive product, as stocking even one or two units would burden them with a too-hot-to-handle outlay. But, once these items do sell… it means “KA-CHING!” for everyone involved.

As mentioned earlier, working on consignment can also be an interesting approach if you are in the early stages of developing your business. This strategy could allow you to test out your product on the market for yourself and allow to gather valuable feedback from live customers.


If you’re not convinced either one way or the other whether consignment is the right way to go for your business, we’re happy to help! You can contact us right here for answers to any questions or to set up a consultation session.

Always remember, consignment insinuates the temporary, and so should the consignment deals you make!




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