What is a Consignment?
Understanding Consignment in E-commerce
Quick Definition
Consignment is a retail arrangement where a seller (consignor) provides goods to a seller (consignee) who sells the items and returns a percentage of the sales revenue. The consignee assumes minimal risk, only paying the consignor after successful sale, making it an attractive model for specialty retailers, boutiques, and online marketplaces.
Understanding Consignment in Retail
How Consignment Works
Consignor's Role
- •Provides product inventory
- •Retains ownership until sale
- •Sets pricing guidelines
Consignee's Role
- •Displays and markets products
- •Handles sales transactions
- •Pays consignor after sale
Typical Consignment Revenue Splits
| Industry | Consignor Share | Consignee Share |
|---|---|---|
| Art Galleries | 60-70% | 30-40% |
| Vintage/Secondhand Clothing | 50-60% | 40-50% |
| Boutique Accessories | 40-50% | 50-60% |
Advantages of Consignment
For Consignors
- •Low upfront selling costs
- •Access to broader markets
- •Minimal inventory risk
For Consignees
- •No initial inventory investment
- •Diverse product offerings
- •Performance-based income
Potential Challenges
- ⚠️Complex tracking requirements: Detailed inventory and sales documentation needed
- ⚠️Payment timing variations: Delayed revenue recognition
- ⚠️Quality control issues: Ensuring product condition and presentation
Consignment in Modern E-commerce
Digital platforms have transformed consignment, making it easier for sellers to reach global markets. Online marketplaces and specialized platforms now enable seamless consignment experiences with advanced tracking and payment systems.
Tools like Growth Suite can enhance consignment operations by providing detailed analytics on product performance, helping consignors and consignees optimize their strategies through precise sales insights and engagement tracking.
Successful consignment requires transparent communication, clear agreements, and robust systems for inventory management and sales reporting.
Put Consignment into Practice
Ready to apply these concepts to your store? Growth Suite provides the tools you need to implement effective consignment strategies.