Thursday, October 16, 2014

How to Sell Your Handmade Crafts on Consignment

Crafting for many is more than just a casual pastime. The ability to earn money from crafting can mean a dream come true that is a means to extra income or even the development of a full-time business. While there are a number of approaches to earning income from crafting, one of the simplest means of doing so is selling on consignment.

The article below was originally published on Helium in January of 2011.

How to Sell Crafts on Consignment

Selling your handmade crafts on consignment is a great way to make a little extra money. With the investment of some considerable time and effort, it is an enterprise that can even be developed into a full-time business.
Consignment is the process of placing things for sale with a retailer, such as a boutique or gift shop, that agrees to sell your items for you in exchange for a percentage of the proceeds. The consignment terms are generally set by the retailer and the percentage generally starts at around 30-35% of the sale price of the craft item, though it can be as much as 50%, depending on the business.
For large scale items, such as quilts that can be retailed for hundreds of dollars each, the fifty-fifty split isn’t that bad.  While a crafter has to look at the amount of time spent in creating their craft items as well as the cost of the supplies used, a retail shop has its own costs of maintaining a storefront from rent to utilities to employees to consider.
One disadvantage to the crafter setting out to sell by consignment for the first time is lack of experience. Because retailers generally purchase their inventory for resale, they often look at items on consignment much in the same way as items purchased wholesale, and therefore they set a retail sale price based on what they perceive to be their per unit cost of the item.
In actuality, the only thing an item on consignment costs a retailer is shelf space. Selling items on consignment is actually more cost effective for a retailer than having to purchase inventory outright. In addition, a purchased inventory item may or may not sell; in the instance where it doesn’t, it will have to be reduced later and sold at a clearance price in hopes of recouping at least some of the money spent purchasing it.
If inventory on consignment doesn’t sell, it can simply be returned to the crafter at the end of the consignment period. This is an advantage to the retailer since s/he doesn’t lose any money in the process. It can also potentially work out for the crafter as leftover inventory can be rotated around to different markets or even recycled to create something new that can in turn be offered for sale.
When setting out to establish a relationship with a retailer to sell items on consignment it is important to purchase an invoice book to keep track of inventory and to establish a formal agreement. If the retailer doesn’t have a document outlining the consignment terms already, a hand-written agreement can be drawn up and signed by both parties at the time the agreement is made. (A second copy should be made so each party has one.)
The consignment agreement needs to detail the time period for the arrangement (30-90 days) as well as the terms by which the retailer will pay (once per month, within x amount of days of sale, etc.). Many small businesses prefer not to pay as soon as an item is sold. It is better for them to tally up all sales once per month and to pay at a designated time in the following month.
Once an agreement has been established and inventory delivered, it is important to visit the venue every month to take inventory and check on sales. Consignment agreements are a great way to get started selling your crafts without having to open up your own business.

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