Special Guest Article — Consignment Selling 
Editor's Preface
There are many ways to market and sell one's art or craft products. That goes without saying for those of you who've been doing this for many years already and have a successful art or craft career and business. Depending upon your art or craft, some means may work very well and others less so. In this article we're focusing on one particular means for you to get some great exposure and sales, particularly for those just starting out.
Kim Banks, of Craftisan DeSigns, a woodcrafter from Barrie, Ontario, shares her experiences on Consignment Selling... what it's all about and how to make the most of this excellent means for selling your creative wares. Enjoy!
What is Consignment Selling?
Consignment involves signing a contract with a retailer and having your products displayed in their establishment for the purpose of selling. You may not have a retail storefront, or studio where potential customers can come and buy your art or craft works, so using a retail store or shop to sell your products can be a tremendous advantage, particularly if it's well-known and often visited by prospective customers.
So here's how it works —
You give your products to a store to sell for you.
You get paid your portion only after they've sold your product(s).
In a consignment, the consignor (you, the owner of the products) transfers them to the consignee (the store). Although the store is temporarily holding your products, the inventory is not an asset on their books. You as the consignor still retain legal title of your art and craft products. The store, as consignee, is acting as an agent in an attempt to sell the products on your behalf.
If a sale occurs, the consignee (store) deducts from the selling price their agreed upon commission and related expenses, remitting the balance to the consignor, (you).
And hopefully you've made some good money for little effort on your part compared to other means of marketing and selling your products.
If you're just beginning your art or craft business, selling your art or craftworks on consignment can be a great way to get your foot in the door of the retail market. |
It's also one of the safest ways to start making money, and gaining you some good exposure and momentum. It only costs you time (and some commission for the store) and is pretty much a "no lose" option.
However, not knowing the pros and cons beforehand can lead to disappointment. There are a number of important points to consider before entering into any consignment agreement.
Research, Research, Research
There are a variety of shops and stores these days that sell mainly on a consignment basis. You can begin by looking in the phone book or local directories (both online and offline) for existing art or craft consignment stores or businesses. Also, check listings for antiques, collectibles, crafts, art galleries, and boutiques.
Try to think outside the box. It doesn't have to only be a consignment shop. If you see a store or business that would make a nice compliment for your products, approach them. For example, sometimes restaurants will agree to an arrangement for you to display your products as a way to decorate their establishment.
Make sure you thoroughly check out each place before handing over your products, signing a contract or agreeing to any kind of arrangements. Some things to consider when checking them out:
Begin by visiting the shop. Make note of the store's layout and atmosphere. Would it compliment your products?
Find out how your products would be displayed? What is the other merchandise in the store? Do they specialize in the type of art or craft products you are selling?
Is there similar competitors' products being displayed? And are they of a sufficient quality and uniqueness to match yours? Would yours be right at home there, too?
Check out the customers visiting the store. Visit on a weekday and weekend and observe the amount of customer traffic. Does the owner interact with the customers? Do a little eavesdropping on what customers may be commenting to one another as they browse the store… is the store missing "something". Do people walk in and out without buying? Or are finding lots that catches their interest? Observing some of this will tell you a lot about how your products might do in that store.
Look at the prices of other items in the store. Are your products priced similarly?
Setup Your First Meeting
Once you have a list of potential stores contact the owner for an initial information meeting. Don't be afraid to ask lots of questions.
Be sure to take a thorough look at their contract or consignment agreement. Remember to get all the details on what the commission arrangement will be. Commissions can range from as little as 10% but should be no higher than 50% depending on the product. Remember that you're looking for the most favorable arrangement you can. But also be mindful that a less attractive 30% commission in a very busy high traffic store may actually net you more sales than a lower 10% commission arrangement in a less frequented store. If you've done your advance research well, you should be able to find the best stores to sell your wares.
Be sure to ask the owner about insurance, fire protection and store security measures, too.
In my opinion, any reputable store will also gladly allow you to contact other vendors to discuss their experiences with the owner. The more you know about the "real" sales success or lack of it for any store, the less risk and wasted efforts involved for you.
Food for thought... Which store is more motivated to sell your products? The one charging a fee plus commission or the owner who only gets commission once your product is sold. Remember also, that just about everything nowadays is negotiable. "If you don't ask, you don't get… so ask for what you want"… Be humbly confident and make your case for it. At worst, you may have to settle for what they normally offer everyone. At best you may be able to cut your own creative deal…to both yours and their advantage.
A Word of Caution… Be careful when doing consignment, especially with stores or galleries that don't exclusively deal with consignment items. I can't stress enough how important it can be to always put something in writing. The good stores that regularly do consignment will be more than willing to have a contract stating how often you will be paid and how much interest they'll owe for late payment, etc. This is to protect both your interests. The last thing you want is to be cheated, or have to spend months chasing down the owner for your money, via endless phone calls, letters, or in some cases legal threats. If a store owner refuses to sign a contract, then you probably shouldn't trust them. You should find a better store.
If you work with a reputable retailer, and find a place where your work "fits in", then consignment sales can be an excellent means to grow your business! |
Reading the Fine Print
There are other things to consider before reaching an agreement:
How often will you be paid for the items sold? Many stores tend to work on a monthly remittance policy.
Who is responsible for lost or stolen products? What's their policy? Or is it a case of splitting the loss 50-50?
How will sold items be tracked? Are they recording your sales using handwritten notes or will the items be coded into their cash register?
And what kind of sales reporting will you receive? A handwritten list of sold items? Or a computer generated list of sales with product codes, description, dates, who purchased it, etc.? If the store gives you more sales and customer demographic details than less, you may be able to take advantage of it and do some targeted email marketing or follow-up with previous customers.
What are the expectations for bringing in stock? How often do they want or need you to restock. Careful tracking of your sales can help you know when your best months are.
What is the store policy for customer returns?
Be sure to discuss your right to "pull" your items if they aren't selling. You don't want to be showcasing snowmen in July.
Be informed about any "discounting" policy. Who decides when and how to discount your products? How much of a discount do you want to allow?
Make sure that each time you submit your products, you either submit a list of products which the store owner signs for, or alternatively, you can have a receipt given for the products you've submitted.
An experienced consignment shop will cover all of this and possibly more in their contract. If not, be sure to write down all the answers to your questions and make sure both of you sign the document for future protection.
Great Idea — Take photos of your items before delivering them to the store. It's a get way to keep track of what you've submitted and helps for recalling details of the item at a later date.
All Signed Up… Now What?
Depending upon the store or gallery, you may be assigned a booth. Or your products may be distributed throughout the store as a décor depending on the layout of the store, or the way the owner prefers to showcase vendors' products.
You will need to decide what kind of items you will be displaying.
Can you setup your own display?
If you have limited space make sure you consider how to use the space wisely. Don't overcrowd it but do "put your best foot forward'. If your product presentation looks creative and professional, store visitors will likely believe the same about your products. While customers may find a large selection of crafts filling every nook and cranny of a shop as desirable to browse through, they do appreciate neatly arranged orderly displays.
Be sure to inquire how often you can change your stock, or re-arrange your product display.
Consider your market --- is it better to display a diverse selection of your products or should you focus on a particular theme or style?
If you're allowed to setup your own display, be sure to arrange your products to showcase your best works and ideally place your products at different height levels. You'll not only be able to display more but it will be much more interesting than everything just sitting there flat and one-dimensional.
If it is a smaller community you may have to rotate your stock monthly to ensure customers don't get too used to seeing your products.
Keep Good Records
How often you reconcile your stock will depend on your payment arrangements with the store. A good rule of thumb would be to reconcile stock sold with each payment received. Then compare your records against existing stock in the store to ensure that all stock has been accounted for. If there are any discrepancies it can be resolved quickly and easily while sales are fresh in the owner's books and memory. Staying on top of your sales can help you decide how often to restock, and whether to adjust your product mix. Learn from what sells quickly and what doesn't.
Delivering Your Products
Be consistent! If you say you will deliver products every three weeks then stick to that commitment. You're only as good as your word… Forge the kind of relationship with the store or gallery owner that will be to both your advantages.
Store owners will depend on you for stock and customers may come to expect your stock, possibly ensuring future sales and repeat business.
When dealing with seasonal items make sure you deliver the products in a timely fashion. Will your Christmas items really get sold if they aren't delivered until the second week of December?
Consider whether delivering your products earlier than later will gain you some display advantage when the store owner perhaps chooses to specially showcase or theme-display some of their vendors' wares. Don't miss out on being able to quickly take advantage of this should it arise.
Keep Costs Down
One way to ensure you recoup as much profit as possible is to buy your supplies in bulk. Although there are a number of places to buy bulk or wholesale items, you can ensure better savings by obtaining a Retail Sales Tax number, if you don't already have one. Some wholesalers require it and subsequently offer deeper discounts with this number. [Some art and craft shows even require this of participants before they can register a booth].
Presentation is Everything
When preparing your products remember that presentation is everything. It can't be understated nor underestimated. Making your product look as good as possible can help seal a sale. Placing gift tags, special labels or product info cards or even personally signing your products will help customers identify your products easily and can even help with repeat sales.
Remember! You're not able to be there to chat with them when they're considering their buying decisions, so make it easy for them. Consider providing them with whatever will help them choose YOUR art or craft work. I can't tell you how many times I personally chose the product that had the little info card attached to it that explained either something about the process in making it, the kind of materials the artist took care to use, or perhaps the inspiration that prompted the creation of the product, or some information on care, safety, or ways to use the product, etc.. All of these "little extras" make it something special and more personal for the customer and can truly set your art or craft work apart from everyone else. It can give some background, some depth and perhaps some history which can seemingly make your product more "alive" and worth it than the next guy's.
How Much Should I Charge?
The question of questions… This is a tough decision every artist and crafter has to face at some point. You want to make a profit, and be competitive but you don't want to undersell your product. So what are you to do? There are many theories floating around about how to price your product.
Since the store has their own overhead rent and whatnot to pay, and perhaps some hired staff to sell your merchandise, many of them may require anywhere up to 50% of your total sales. However, don't let this stop you from considering the opportunities of consignment. One theory is to simply mark up your items accordingly by the cost you incur from the store. Meaning....if you want to sell your pottery, and you figure you need $20 for a vase to cover your costs and give you a little profit, and the shop requires 50%, then you would have the store sell the vase for $40. Others will have a different personal formula that works for them. There's many factors to consider.
Different markets have different visitors with their own unique buying preferences. In my experience, location has a huge impact on prices --- An item in a small community may not catch as high a price tag as something sold in a larger city.
In deciding how to price your products you need to take into account the following:
Material Costs — You need to at least cover the cost of your materials.
Your time — You probably won't make big bucks per hour but you should put a reasonable value on your time.
Location — he location of where your products are being sold will affect how much you may be able to charge.
Demand — A niche product in high demand can sometimes fetch a higher price
Competition — Are your competitors' products priced similarly in the same store?
Remember... Being lower priced doesn't always guarantee a sale. Some customers may even perceive a lower priced item to be poorer quality, whether it really is or not. A "higher priced well-made" item can oftentimes sell better than its "cheaply made lower priced" counterpart.
And don't make the mistake when you're new at it, of discounting away your "real" time and effort you put into creating your product, just because you want to sell as much as you can as soon as you can. That can be a bad precedent to set. Find better ways to ensure successful sales.
Always Remember... Set yourself apart as having that something extra or special added to your display. I'm not talking about just the uniqueness of your art, but maybe that info card or a bit of history about your craft or how you've created your kind of products, sitting on the table to further embellish and enhance what you've created. Everything helps in making your art or craft works that much more desirable and sellable. Put in the extra value and price accordingly. If your art is similarly priced to a similar vendor in the store that's selling a similar kind or style of art, but you've added the above kind of value, there's a good chance the customer may prefer yours.
Another important consideration is that some customers are willing to pay more for a quality, handcrafted piece than something they perceive as being mass produced easily and more common and utilitarian than artistic. The best way to get a benchmark for your product is to do some research – check out online prices, other consignment stores and local art and craft shows – and decide for yourself a comfortable price point for your products. A popular theory to test the waters is to price your items reasonably and then increase the price gradually each month and see how it affects your sales. There's very little magic to pricing, mostly just some common-sense and paying lots of attention to what works and what doesn't while you do a bit of that "marketing & price experimenting".
Consignment can be a tremendous growth experience for the budding crafter or artisan. It can also be a great way to test the waters of the retail market for your craft. If you do your research, consignment is a great way to get your feet wet without too much risk provided you make every effort to education yourself about the process. The experience gained can be invaluable and the resulting sales very rewarding. |
We thank Kim Banks for her excellent advice. She's "been there and done that" before and we appreciate her offering these Pros and Cons about Consignment selling.
Be sure to visit Kim's website at: www.craftisandesigns.com
She's been doing it for many years now and not only supports a thriving craft business but also provides products, services, and expertise for her peers and craft enthusiasts in her neck of the Art & Craft woods.
Craftisan DeSigns creates Unique Wood Signs and Handcrafted Woodcrafts that compliment your home decor and also make great artistic gifts for your home, family or friends. They've created a unique selection of custom-crafted products in a variety of styles including rustic, country, whimsical, and primitive. Kim's specialty is creating wood signs with quotes and sayings that invite you to smile, laugh out loud or ponder life, at its best.
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