Does the thought of seeing your handmade goods displayed in lovely shops and galleries excite you? If so, there are two ways to make this happen. The first option is consigning your work to a store or gallery and the second is wholesaling those items to them. In this article we are going to examine both methods so you can decide which will work best for you.
What is Consignment?
Consignment is when you bring your goods to the store and arrange for the store to sell them. In this selling method you are still the owner of the goods.
Let us look at how consignment works in a perfect situation. You make an appointment to show your work to the store owner, manager, or buyer and that person is excited and thinks they will sell. So, who sets the price? You do! (Although, you should listen if the store has an experienced opinion for you to consider.)
Once the price is set, it is time for an agreement to be made. How long does the consignment last? Usually a few months, although if the merchandise is seasonal, say Christmas, it may be shorter. Ultimately, if the merchandise does not sell, you or the store can end the relationship.
If it sells, how are the proceeds split? In most cases 50-50 between you and the store.
When do you get your money? Most likely right after the end of the month in which the merchandise was sold.
What is Wholesale?
Wholesale is when you sell the goods to the shop so that the store now owns them.
Now wholesaling your work is more straightforward. The store places an order with you for the pieces they want to buy. You can set a minimum dollar amount for the order and determine a mutually agreeable delivery date. Today most artists ask for payment before they ship the goods. Speaking of payment, the store is expecting to pay “the wholesale price” which is most likely a bit less than half of what your retail price is. The goods now belong to the store.
Which Method is Best For You?
So which method is preferable? Undoubtedly, you will prefer to wholesale your work and get paid immediately. In the long run, this is clearly the optimal way of growing your business. However, do not rule out consignment entirely. It can work for you in interesting ways.
First, if you are new to selling your work to stores, consigning can open doors. The store is much more likely to give your work a chance since they have no upfront cost. You might not be ready to develop and produce a full line of merchandise so consigning your products is a good way to learn about retail operations. Consigning should tell you if you have a salable product priced well so folks will buy it.
How to Use Consignment
Consignment often works best when it is done locally at a successful store. You can keep your eye on your merchandise and remove it if you feel conditions are not favorable for its sale. If it does sell, you can replenish it easily without shipping costs. One of the biggest risks in consigning goods is that when they sell, you are not paid promptly, but that is less likely when you are local.
Even after your business grows, you might want to keep a consignment arrangement with a retailer. Consignment can be an easy way to test new products before you invest in large-scale production. Also, it may enhance a wholesale relationship. Often a retailer is reluctant to invest in a piece at the upper end of your line. If this is the case, you can take their order and offer to add one of your more expensive pieces on consignment. This can be a win-win because it gives the retailer a spectacular piece and you have the opportunity for a large sale.
However, consignment can have disadvantages. A retailer is more likely to promote merchandise in which they have an investment. If you have just a few items in the store they may not warrant display in an advantageous location. Items in a store can become “shopworn” and not look appealingly fresh if they sit too long. Of course, the biggest disadvantage is that they are sitting in a shop and you have not received any money for them.
How to Use Wholesale
If you wholesale your products, you can charge the retailer before you deliver or ship the merchandise. Today there are many ways for the retailer to place an order with you. One of the most efficient is by placing your merchandise on a digital, wholesale platform such as Stockabl. On-line wholesaling is an excellent way to begin to build your business, test new products, and develop sharp business practices in production, inventory control, accounting, and shipping.
As your experience deepens and your business grows, you can take your products to an in-person trade show where you display your products, meet retailers, and hopefully write a lot of orders. Generally, trade shows are a substantial effort requiring time, energy, money, and planning. It is best to get your wholesale game on solid ground first and even visit the show before registering for it.
Are there disadvantages to selling wholesale? Perhaps one of the most notable is the amount of money you are paid for your products. If you have been selling retail, the thought of reducing your price to sell wholesale can be downright scary. However, with the proper cost analysis and price adjustments, you will compensated by selling in quantity. Building a strong relationship with a store means they may be ordering hundreds if not thousands of dollars of your merchandise over the course of many years. Then if you do sell items at retail yourself, they are just icing on your cake!
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