Consignment policies

Lately, a couple of people have emailed asking about consignment policies. Normally I don’t answer questions like this because I don’t think that DEs should do consignment but on the off chance you have a prototype or samples that didn’t sell and you want to recoup your investment, below are some policies I gleaned (and modified) from Case Studies in Merchandising Apparel and Soft Goods that I mentioned last week. It’s my understanding that consignment policies vary widely so these are just guidelines. If after reading these terms you are still interested in selling on consignment, please do yourself the favor of reading Miracle’s post The Consignment Trap. She knows why “struggling designers might think that putting their merchandise into consignment stores is the easiest solution” and agrees “that it is easier to get your merchandise into a store on consignment than it is to get a store owner to pick up a new line” but there is still much of which to be wary.

  1. Number of selling days:
    The contract is for a fixed duration of time (the example in the book was 90 days). If after 90 days the merchandise [has not sold and] has not been picked up by the consignor (you), the merchandise becomes the sole property of the retail store. This particular contract says all unclaimed merchandise is donated to charity but I wouldn’t assume that’d be the case with every store.
  2. Merchandise requirements:
    All merchandise must be clean and pressed, in good repair, on hangars and “fashionably” appropriate for the season. Spring/summer items will be accepted during January to June. Fall and winter garments will be accepted from July through December.
  3. Receipt of merchandise:
    Listed are the days of the week and hours in which one should bring in garments.
  4. Payment to the consignor:
    Consignors are paid monthly and may contact the store at the beginning of each month for their current account balance. The retailer will determine selling prices on merchandise [I understand this practice varies a lot], based on current prices and the prices of new, similar goods. The consignor’s percentage on each item is as follows [this also varies a lot]:
    under $10.00 = 40%
    $10.01-$50.00 = 50%
    $50.01 and over = 60%
  5. Merchandise markdown:
    After 30 days in stock, consignment items will be marked down 20% of original selling price. After 60 days, the items will be marked down an additional 50% off the original selling price. [The book provided an example that didn’t make sense; the sum of it being that after 60 days, the item was marked down a total of 50% off the original asking price].
  6. Responsibility of merchandise:
    This retail store is not responsible for theft or damage to merchandise while on the premises. [if I give something to somebody, they sure as heck are responsible.]

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  1. Like Kathleen, I tell my proteges not to sell by consignment, especially if you are just beginning. It gives you a bad mark for future selling potential. Of course its difficult to sell to retailers today. So many don’t know what will sell themselves, both big stores and small boutiques. They want some proven history to feel assured themselves.

    The best way to get started selling is DIRECT TO CONSUMERS. The reason is that no young start-up truly knows what the consumer wants, and this is the best learning any designer can get. Trunk shows at a hotel are good, or a home party with the host inviting guests. Let them honestly tell you what they feel about your designs. In the 1960s I took a group of students to New York to see Oscar de la Renta. They will never forget what he said to them. “My customers taught me how to design.”

    I’m just starting a blog, “Fashion Solutions” Please see my “FAMOUS SUEDE EVENING GOWN”. I probably won’t be talking much about marketing, bevause I believe a designer should work to get a GREAT FASHION PRODUCT first. My emphasis is ENGINEERING DESIGN, and I love to answer questions. I’ll be emailing Kathleen because I want to work more with you. Perhaps put this comment up on my blog and suggest people read more here?

    Thanks so much for your great blog, Kathleen.

    Shirley Willett

  2. oni says:

    in response to Shirleys message above. If one is only starting out with a small line, is a trunk show still the best option? Is seven pieces enough to get a considerable amount of sales? And wouldn’t all the customers look at each other and notice they are buying the same things?

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