Though the details of consignment arrangements can differ by retailer, here’s how selling on consignment typically works:
1. Enter into an agreement with a shop. The consignment agreement outlines the terms and conditions that both the maker and the shop will follow. If you're unsure about any details in the agreement, consider discussing them with the shop first to clarify—or even negotiate—the terms.
An effective agreement includes details about the:
Percentage split. Makers typically receive 60-75% of an item’s sales price, while the shop keeps the rest. Note if there are any other fees collected, like a flat-rate fee each month, in addition to the percentage split.
Consignment period. How long will you and the shop work together? Is there an opportunity to extend the consignment period and what are the steps?
Payment frequency and method. The agreement should clearly outline how frequently you can expect payment from the shop.
Display and promotion. What are the expectations about merchandising products on consignment? Will the shop handle that or are you responsible for setting up the display?
Inventory management. Will the store notify you when stock is getting low or if certain products aren’t selling?
Instances of dirtied, damaged, lost, or stolen merchandise. Who is responsible for any losses due to handling, accidents, or theft? Do you, the maker, have the right to inspect the merchandise before accepting it back?
2. Bring in your products. Once the agreement is reviewed and signed, it’s time to introduce your candles to the retail space!
Makers are almost always responsible for delivering their products to the shop, or shipping them, which includes shipping costs. As items sell or don’t, you will need to restock or switch out products.
3. Receive payment for sales. In many consignment situations, the shop reconciles the sales for the past month and then issues payment to the maker.