Consignment Sales

[kbeck]

Hello all. I am trying to find the answer to a rather specific question, and the answer may not be available but here goes:

I opened a business 19 month ago. I sell handmade craft items (jewelry, woodworking, candles, tie dye, etc.) on consignment. I originally took 40% of the selling price. In an effort to reduce the price of larger items, I have a varying percentage that I apply. Have modified my agreement from the consignor setting the selling price, to them telling me what they want to be paid and I set the selling price.

My problem is I have quite a few who seem to be willing to let their stuff just sit on the shelf unsold. Some items have sit here the entire 19 months which probably isn't the best idea. I thought full shelves would be better than partially empty shelves. Anyone familiar with consignment know a way to get people to reduce and clear out overdue stuff, or do I just cancel the agreement and try to find replacements.

Ideas? Thanks.

[nealrm]

If something hasn't sold in 19 months, it is overpriced or junk.

First I would start working on getting replacements and a steady stream of new products.
For the new items in the stream, I would alter your arrangement as follows:

Items will be displayed at the given price for 6 months. After 6 months, the price will be marked down 10% each month. After 9 months, they will be moved to a bargain area and the price reduced 10% each week until they sell. Items that don't sell within 1 year, will need to be removed by the owner, or the owner will pay a storage fee, or the items will be disposed of. The owner can remove the item at any time after 6 months. Items can be resubmitted after 1 year. (Seasonal items can be submitted at the start of the next season).

After the 19 month contact is up on your current products, I would give them the option of removing the item or reducing the price 50% and going with the above terms.

You will also need to determine a min amount you need to make on each sale. If am item sells below that price, you would retain the entire sale.

Be very upfront on these terms. Spell them out to your clients. Make sure they understand it is their responsibility to remove the item if they don't want it sold at a discount. Mark sure they understand that the discount will reduce the amount the receive from the sale. Make sure they understand that if the price on the item drops below a set amount, they will get nothing from the sale.

The purpose of these terms is to get items on your shelves that are priced to sell.

[kbeck]

Thanks very much for your suggestions. I like the decreasing price structure. I need to see what I can put together in a new contract. My contracts are for 90 days and auto renew at the end of 90 for an additional 90. I have a few who's contracts have expired and I could implement immediately. The others, I will have to give notice and at most wait something less than 90 days. I would prefer to do something to minimize the number of items I have to retag every few weeks, but can come up with something.

It's really shame to have to force someone to this on thir own products, but I think many people are too emotionally attached to their "hobbies". I can usually tell if someone is going to overprice when they say "I have to have......"

Getting out and finding new stuff has been on my mind but once you get into the rut of manning the store, there's little opportunity to break away.

[Krystsina]

Hi!

I would suggest you to stop the contract with those who don't want to make the price lower to the products you can't sell for 19 months. I believe that you may look for new partners and to start making some money instead of giving space for something that is planning to stay at your shelf forever.

[kbeck]

Thanks for your reply. I am in the process of seeing what I can do within the agreements to auto discount at 90 days, 120 days, etc. Unlike a normal consignment store that sells 2 or 3 of this or that for someone, most of my vendors more like suppliers where as some products sell, they are replaced. I need to figure out how to pick and choose but within an agreement. Also need to be able to do the discounting in my homemade Sales and Inventory system. Working on it now.