Consignment

Consignment is a business arrangement where a seller (consignor) entrusts goods to a third party (consignee) for sale. The consignee only pays the consignor after the goods are sold. This arrangement allows businesses to expand their reach, test new markets, and reduce inventory risk. The consignor retains ownership of the goods until they are sold, and the consignee earns a commission on the sale. The agreement typically outlines the terms of the sale, including pricing, commission rates, and payment schedules. Risk is mitigated as unsold goods are returned to the consignor.

Consignment meaning with examples

• The art gallery accepted the artist's paintings on consignment, allowing the artist to showcase their work without upfront costs. The gallery handled the sales process, and upon sale, the artist would receive a portion of the profits, while any unsold works would be returned to the artist. This offered a lower risk sales avenue.
• Sarah decided to sell her gently used designer clothes through a consignment shop. The shop agreed to list and sell her clothing. This allowed Sarah to earn money from her unwanted items, while the shop benefited from attracting a wider variety of customers with high-end goods without purchasing items.
• A new furniture store started offering consignment deals to local artisans. The store displayed the artisans' furniture in the showroom, and only paid the artisans once the pieces were sold. The artisans benefited from a wider customer base, while the store had a variety of unique merchandise available. Both parties saw the benefits.
• The online marketplace became popular for selling electronics on consignment. Individuals could list their used gadgets, and if sold, the platform handled the transaction and the seller was paid. This arrangement gave the sellers a method to remove unwanted items and make money, while offering buyers attractive prices.
• Before launching a new line of clothing, the fashion designer placed sample garments on consignment at a few select boutiques. This enabled the designer to gauge customer interest and gather valuable feedback before committing to a large production run, effectively testing the market's viability.