Is consignment a good idea?

2009/10/22 1:07 AM

Dear Sarah,
I have a few wholesale clients now and want to really grow the business now. How do I structure my terms? Of course I need a return polcy, the date I’m required to ship to them. But the payment part, how do I set that up? Net 30 days, do I request payment up front? Should I do/not do consignment? How does that really work and is it a good thing?

Tanea She’s Got Papers

Dear Tanea,

Congrats on the wholesale accounts!
First of all there are no RIGHT ways to do all this – just personal choice for most of it.

I only take credit cards to be honest. I have very few net 30 customers these days.
Since I don’t know what your minimum order is, I am going to layout a scenario.
If it is under $250, if they don’t have it on a CC, they are never going to pay you in 30 days. Capisce?
If it is a store you know and trust, then do the homework and ask for references for terms and ask the other vendors if they pay on time and how much etc… Don’t be shy about this.

As far as return policies go, Boutiques know there are no returns unless the product is damaged. Of course, if there is ever a problem with the product, at that point you take it back or exchange it – again personal choice. Just use your common “customer service” sense and give them the best option so they stay a client.

***Tip for you: I noticed that you use PVC boxes to wrap the stationery sets…..wrap each one in tissue and ship in HARD shipping cartons. They break and scratch really easily.

Consignment is good when you are first starting out – not a bad thing really. It can help build your customer base and give you more confidence. But I would start with this method in your local stores at first where you can go in a see how it is displayed to get your feet wet etc. and collect the money easily.

In fact, I just did consignment with 2 stores recently as I wanted in (and they weren’t sure about my products) and it worked – they sold out in 2 weeks and reordered. Just be sure to keep on them, and get paid every month.

Email Sarah with your questions here