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  • Consignment Deals

    In my experience, credit is a part of business an entrepreneur cannot avoid and must learn to deal with. It is part of developing a relationship of trust with your customers and vice versa. In my case for instance, most of our suppliers offer consignment deals with a promise on my part to pay what is due on time. Hence, the supplier continues to supply the needed goods to my business with my reputation as a good customer and payer increasing.

    If you are a supplier, do you also offer consignment deals to your customers? What are the pros and cons?

  • #2
    Re: Consignment Deals

    I had experienced selling clothing items on consignment basis. A friend recommended me to a boutique owner who was just glad to allow me to get items for selling. After a week, I would return the items and pay in cash whatever was sold. That was actually what motivated me in putting up a boutique of my own. However, I couldn't find suppliers who would enter into a consignment agreement so I had to buy all the items in my inventory. And when the business did not pick up, I had to sell everything and closed shop afterwards. If that boutique of mine had prospered, I would probably consign items to those willing to sell just what I was doing before.

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    • #3
      Re: Consignment Deals

      I could remember that some years ago people who were promoting dance parties had the option of obtaining liquor for their parties on consignment from one of the leading liquor distributors. This type of arrangement was very successful and I had never heard of any resulting fallout. The party promoters would get a certain amount of liquor to be sold at the venue and if any of the liquor is not sold it would be returned to the distributor and the promoter would pay for whatever liquor was consumed. I am not sure if this type of arrangement is being continued anymore, but I suspect it is, but probably under more controlled guidelines because of the changing times.

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      • #4
        Re: Consignment Deals

        I wouldn't mind offering consignment deals with customers. If you're a business that does not discriminate and accommodates customers from all walks of life, then you'd be inclined to offer consignment deals but under strict conditions. Conducting a thorough background check would help lessen the risk of such deals.

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        • #5
          Re: Consignment Deals

          Depending on the nature of the business consignment deals can be very profitable and it's bad business to ignore good sources of profit. There are very thorough standards that would need to be met y all parties to ensure that everything will be handled above the board. No shady people or fly by night operations. If everything is done in an open, honest, and legal manner consignment can be a great idea.

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          • #6
            Re: Consignment Deals

            Basing from experience, I would also like to add another advantage of consignment that I have noticed. Since sometimes our business would lack funds to purchase more bulk goods, the consignment deals given to us by some of our suppliers are very helpful in adding up to our inventory so there's more to sell and we immediately gain from the products that are consigned to us, which gives us more funds in buying more goods especially those which we buy on cash basis only.

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            • #7
              Re: Consignment Deals

              Consignment sales is quite different from outright sales because normally, the arrangement means that the consignee will only pay the consignor when a sale was made. On the part of the consignor or seller, this is less desirable than selling on credit where you can reasonably expect payment after an agreed period of time. Our FMCG business tried it in an attempt to introduce a new product to the market but it was a failure and we ended up with stock returns and very little sales. I would not really advise it unless it's the prevailing industry practice.

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              • #8
                Originally posted by Jazmine View Post
                Re: Consignment Deals

                Consignment sales is quite different from outright sales because normally, the arrangement means that the consignee will only pay the consignor when a sale was made. On the part of the consignor or seller, this is less desirable than selling on credit where you can reasonably expect payment after an agreed period of time. Our FMCG business tried it in an attempt to introduce a new product to the market but it was a failure and we ended up with stock returns and very little sales. I would not really advise it unless it's the prevailing industry practice.
                The return of stocks is one concern that should not be overlooked. The cost of getting the stocks from the supplier is just the same as transporting the unsold items back to the supplier. Think if the consignment is in big volumes and the sales are not that fast then the warehouse will just be congested with the stocks when the seller returns the consigned items. But if the nature of business is consignment then I guess the manager should be well-versed with the methods.

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