Many questions come up regarding selling on consignment. We have sold on consignment and can share some of the things that we have learned. There are many pitfalls when selling on consignment and it is important to make sure that you are well prepared and fully knowledgeable before you enter into a consignment sales arrangement.
First, what is selling consignment? Consignment is when you give your work to a shop or vendor and the shop agrees to sell your work for you for a percentage commission. This sounds great. You don't have to do anything but create and the store does all of the work to sell your work. Is it as good as it sounds? It can be. I emphasize can because there are many things that can go wrong.
Galleries are almost always working with artists and craftspeople on a consignment basis. If you want your work sold in galleries you need to be prepared to deal with selling on consignment.
The first thing to understand is that you are getting no money - nothing - until the item sells. When the item sells you will get X% of the sales price. Who decides what that percentage is? The store. Who decides the price? Usually you decide the selling price. Sometimes the store will work with you to set a price that the store feels will sell in that community. If that takes place, you need to make sure that you are satisfied with what you are going to get when the item sells. There is no standard to the percentage commission. On the average store consignment commissions range from 35 to 40%. The store gets 40% and you get 60%. Some stores and galleries want 50%. What you need to be prepared to do before presenting your work to the consignment store or gallery is pricing your work so that you will get what you want -and what you need to get to cover your cost of materials, your labor, and your talent.
You are going to be handing your work over to a store. There are no deposits given to you. One of the most important things that you need to have is trust in the store and the store owner. Meeting face to face with that store owner and seeing the store is very important in securing that trust for you.
You may be contacted by a "shop" by email or mail by an owner who is many miles away from you - perhaps thousands of miles away from you. The owner will present interest in your work and offer to sell it for you on consignment. You will be so thrilled about this prospect that you will be tempted to throw everything that you will learn here right out the window and immediately pack up your work and send it off with a smile. Who did you just send your inventory to? Mr. Uptonogood could send that email to you. Would you know that Mr. Uptonogood is looking for a carton of free merchandise? He could disappear into cybermyst and you will never see a dollar or your work again. If you consign to a shop that you have never walked into and with someone who you have never met fact to face, you take this very big risk. Of course, there are craft stores and galleries all over the country that sell on consignment with long distance artists. Those stores are well known, can be researched through local Chambers of Commerce, and are very reliable. Just know who you are consigning with before you jump to a long distance arrangement.
When you and the store owner have agreed that your work should be in that shop, you need to get specific assurances and understandings in writing that both you and the shop owner will sign. If the shop owner will not sign such an agreement, thank the owner and walk out. Here is a list of what you must have in your written agreement - and you must be satisfied with the agreement, along with the store owner.
1) The consignment commission percentage = x% to the store, x% to you. Be specific. List both.
2) The store is responsible to collect and submit all sales taxes on the total price of each sale - Not just the store's percentage. The store needs to give you a copy of the stores resale certificate so that you may account to your state's sales tax bureau for the work that is sold that you did not collect taxes on.
3) The store is responsible for each item if it is stolen, lost, or damaged while in the custody of the store. (The shop carries insurance for this and this is a generally accepted cost of doing retail business.) You are to be paid your percentage if an item is stolen, lost or damaged.
4) When will you be paid? Weekly, monthly?
5) How will the store notify you when there is a sale? Do you need to keep in contact with the store or will you get a call when you are going to get a check?
6) Relating to #3 above - in the event of fire, flood, disaster, etc. the shop is responsible for your items. If an item is destroyed or damaged you will be paid your percentage for that item.
7) If the store decides for whatever reason to take your work "off the shelf" and takes it off sale you are to be notified immediately so that you may come and take your work back. (There is no sense in having your work off display - you might as well have it to sell elsewhere.)
8) List every item that you leave with the store and its sales price.
9) Tag each item with a code number that corresponds to your item list (#8). The store needs to know what it is that has sold. Remember that stores have employees who do not always know what it is that they are selling.
10) Agree on an interval for restocking. Get new items to the store to replace those that have sold. Get those new items on the written listing.
With a written agreement you have covered all of problems that may occur. Business people are used to written contracts and agreements. These should not be of concern to them as long as the agreement is fair to each of you.
When your consignment agreement ends and you are removing your work from the store, make sure that you compare the inventory that you are taking out with your written list. Anything that is missing you must either have already been paid for or you must be paid for now. If there is a dispute - and the shop owner is not going to pay you, you are going to have to decide if you are going to pursue your loss legally. You will need an attorney or know how to file in your county's Small Claims Court. Here is another reason why long distance consignment may be a problem. Interstate law suits can be very costly. You must hire an attorney in that state to represent you and you may need to appear in that state during the court proceedings. This is with great expense.
Should you sell on consignment? If you have taken all of this advice and followed it, then yes.
I have turned wood jewelry on consignment in a gallery right now - and selling for more than I sell it for on-line. Our Ma Bears (c)(tm) sold well in a gift shop on consignment for several years at a price much higher than we were selling them at the time at craft shows. We have though in the past had a problem with a fancy shop that had two expensive artworks of mine for sale on consignment - despite covering the bases and knowing the shop and owner. One day we found that the shop was closed and gone and so was the owner. I never saw those pictures again or any money. It is a tough lesson to learn. One that may be unavoidable if it happens as business documents do not always lead to the location of the actual business owner.
If you want to sell your work, selling wholesale is far superior to selling on consignment. You have your money up front and you have no risk. If you are asked to sell on consignment, suggest selling on a wholesale basis instead - suggesting perhaps a better profit for the shop. If the shop does not want to do this and you can come away with an agreeable consignment arrangement then go for it!