Consigning Your Jewelry - Yay or Nay?
How do you know if consignment is right for your jewelry business?
Consignment - maybe you’ve been approached by a gallery that only does consignment, or there’s a store you have your eye on that will only take your work on consignment. And you may have heard only the horror stories and wondered why any jewelry designer would continue to consign their work anywhere, or provide unpaid-for jewelry to a store. The answer to your musings is that sometimes consignment is good - great even! Other times, just like with any business relationship, it turns out poorly. Only you can decide whether or not consignment is right for your business, so let’s dive in and define it and explore the pros and cons.
(There is a single affiliate link in this article - no pressure to click - if it’s of use to you, great, If it isn’t, also great!)
Consignment - What is it?
Not all galleries and stores buy jewelry outright for their inventory. The simplest way to describe a consignment relationship is that you, the artist, provide a set amount of jewelry inventory, and when individual pieces sell, you get paid. In a wholesale relationship, galleries and stores buy outright - they place an order and pay for it when it ships, or they pay for it on terms.
While consignment is less common in other industries, in jewelry, consignment is still around and quite common.
Nuts and Bolts
Every store and gallery will have its own way of dealing with payment schedules, payments, inventory control, reporting and sometimes even pricing. Payment schedules vary, but the typical method is for a consignment account to pay out for your sales in the month following the sale - in other words, your December sales will be paid to you by the end of January, March sales will be paid by the end of April and so on.
Consignment - Why is it?
Consignment is a way for stores to keep stocked with high-value, high profit inventory without taking on a big financial risk. For many small galleries and shops, consignment is the only way that they’d be able to manage their cash flow in a reasonable way. Consider it this way, if a store is able to move $1000 of your inventory each month (paying you $500 each month), that would mean they would have to spend thousands up front to stock your jewelry if they bought at wholesale. Not every store has that kind of sweet sweet cash on hand to do it.
You may see, floating around the internet, that some jewelry stores and galleries will switch you over to wholesale (buying outright) after a test period on consignment to see how well you do. This can be true, but a number of jewelry stores and galleries operate on consignment-only for all of their jewelry collections and will not move to wholesale. It is worth asking in advance if you decide to go this route.
OK, but why consignment? Really.
Now you might be wondering why an independent designer would even want to provide jewelry on consignment. After all, you are out all of the costs up front, you have to make all of the jewelry essentially for free in order to stock their shelves, and they take on very little risk other than insurance and sales tax. It is up to each of us as jewelry designers to decide whether or not consignment is going to benefit our businesses and brands or not.
Consignment - the pros and cons:
Pros:
Provides a sales channel that can provide you with a regular, monthly source of revenue
Having your jewelry out there in the world, where more people can see it, touch it and try it on helps you develop more relationships with potential customers, in a way that would be hard to do consistently on your own
It gives you a chance to test out designs and see what sells quickly and easily - this is great data for you to decide on future collections
It is a good way to move excess inventory in bulk
For the more tech savvy store and gallery owners, this can be a way of getting your brand in front of more people through their website and social media channels
Cons:
You risk loss if an account doesn’t pay, or pays late.
It happens, it sucks and it’s one of the biggest reasons why consignment has a bad reputation. I have been there and I hated every minute of it - see my note below about checking in on the reputation of the consignment account
You don’t have the budget to produce a lot of jewelry for free
It's risky if the gallery doesn’t pay on time, or doesn’t provide detailed reports
It may not be taken care of in the store (tarnishing and scratching)
You won’t have as much say (or you might have no say) in how it is displayed, sold or marketed
There can be legal issues with protecting your inventory if the store isn’t taking proper precautions
If you decide to do consignment and want to manage it well, remember that this is a mutual symbiotic relationship with your account - both you and the account are invested in having work that sells so that you can both make money:
Remember that the account needs to prove to you that they can sell your work as much as you need to prove to them that you have work that can sell
Only produce and ship what you have the budget to make
Ask the gallery if they can provide recommendations from their other artists (Writer’s Note: I consider this a must for any consignment account)
Ask the gallery how they report your sales - do they include sales dates, stock-keeping units (SKUs), descriptions, names, prices?
Use a software made for tracking consignment like Benchworks (I told you there was an affiliate link)
Other elements of the relationship that will help you and help them:
Provide jewelry care guidelines for your consignment stores
Print out or make clear your care and cleaning instructions and offer to clean and brighten up the jewelry once a year to refresh their stock.
Communicate all of your expectations in a diplomatic way - sales expectations, whether or not you are open to special orders, different ring sizes, managing custom orders etc.
Offer to do a trunk show in their shop - get to know their needs and expectations, show that you have newer and different pieces that can sell in addition to what they already have, help them with their relationships with their customers
When a consignment relationship is going well, you are making money, your account is making money, you keep them stocked with jewelry, they sell the jewelry and everyone is happy.
So what happens when you aren’t happy with consignment?
I often describe this relationship as a tripod - the three elements of a good consignment relationship are:
Good sales
On-time payments
Organized reporting from the account
Whenever one of these parts of the tripod weakens, the tripod starts to fall, and the relationship weakens.
When any one of these parts of the tripod falters, try to have a conversation about it - find out why sales are slow, find out why payments are late, find out why their reports don’t include the information that you expect. And be prepared to walk away if it isn’t working out.
Keep in mind that pulling out of a consignment account is a thoroughly reasonable response when your payments are consistently late or missing completely, or when the sales are lower than what you had expected. By all means have a conversation with the account, but remember that this is your inventory and you have every right to pull it if the account isn’t holding up their end of the agreement.
So there you have it, the good, the bad and the ugly. Have you had good experiences with consignment? Bad ones? What do you wish you had known earlier? Pop your comments below!
