Why consignment matters to a first-time founder
Consignment can place products in shops without an upfront wholesale order, but the founder still owns the unsold stock and carries much of the risk. The agreement should state the commission, payment timing, insurance, returns, damage, and stock-count process. Weak records can leave you unable to prove what sold or recover missing goods.
Examples of consignment
A jewellery maker places 40 bracelets in a boutique at £50 each. The boutique keeps 30% of each sale and reports 12 sold this month. It pays the maker £420 and returns no stock. The maker’s records should still show 28 bracelets held by the boutique on consignment.
Common misunderstanding
Sending goods to a retailer does not necessarily mean the retailer bought them. In a wholesale sale, ownership and usually the risk pass under the sale terms, and the supplier records revenue accordingly. Under consignment, the sender, called the consignor, normally keeps ownership until the consignee sells the goods to a customer.
When to use it
Use consignment when a credible seller can reach customers but will not buy uncertain stock upfront. Start with a small quantity, written terms, regular sales reports, and a right to inspect or recall goods. Avoid it when cash is tight and you cannot afford stock sitting elsewhere unpaid for months.