Tuesday, March 1, 2011

consignment. to be or not to be.

I'm thinking spring. It's been a long, cold and snowy winter. The holiday season was great. I made money doing what I love to do. I saved it too! In late November through early January, when all of the sales started to roll in, I thought there might be an end to the madness. And there was. And it wasn't much fun. It is so much easier to spend the little extra money you make instead of saving it. There are so many little things you may think you 'need'. I am so grateful to have had such a successful holiday season. It was the first year I didn't have a "day job" to steal all of my time away. I was able to see what was selling and make more of it. I was able to keep all of the boutiques that carry my line stocked. I had time to scout out new wholesale accounts.

I want to start a weekly post focusing on advice for my fellow crafters. When I first started my line, I had no idea how to approach a boutique or other brick and mortar store. I finally got the courage to go into one store and bring a few shirts to see if the buyer would be interested in carrying them. There are many little handmade shops all over the country waiting to have your handmade goods to sell and each has their way of finding new talent.

Lots of the stores that carry my wares also seek out merchandise by attending big trade shows that happen once or twice a year (i.e. Pool Trade Show, New York Gift Show, Craft Council) . Many have websites requesting that you fill out an application. Often times they will review and get back to you only if they are interested. Some buyers are really busy and only like to look at new designer requests by appointment only.

When I was just starting out, I was so excited to have my line anywhere that it didn't matter if it was consignment. I didn't care if the split was 50/50. It didn't matter if I wouldn't be paid without having to ask.

I have now been selling my clothing and jewelry for years and I still have a hard time deciding on whether to keep consignment as an option for my line. For those of you who don't sell yet, or only sell online, consignment is a lot of work both for the artist and the shop owner. It's a lot to keep track of. Before I seem negative about it, I want to say there ARE some shops impeccable about paying on time, each month, sending out a list of what sold, etc. But there are a lot of shops that don't do this. I'm not a bill collector, I'm a clothing designer. I hate having to badger people for money. It's okay though, you have to decide if it's worth it for you.

Here are some things to consider
  • wholesale or consignment? After much trial and error, I decided to be picky about consignment. I stuck to just a few boutiques and pushed for wholesale. I only consign my clothing locally, where I can go in and check on it or if I've already been selling smaller accessories and I am 100% sure it will sell. Shipping is too costly and the items are too valuable to lose if a place doesn't have their act together. Some places just don't do wholesale but they may be a great outlet for you to sell your goods. Don't totally rule out consignment.
  • ask the potential boutique for references. If someone isn't willing to provide you references of fellow crafters, they may not have a great track record and therefore, I'd skip it.
  • start small. think ahead. After a lot of trial and error, I decided that if I was consigning with a new account, I would send out 10 pairs of button earrings. This way it's not a TON of stock, if something goes terribly wrong but it's enough to tell whether things will go over well or not. Things sell better in groups. Look at the pictures below and notice which stands out more.
  • Consignment Agreement Before you decide yes or no, ask the potential store to send you their consignment agreement. Read it over. Are you paid monthly or quarterly? On the 1st or 15th? If things don't sell, who pays return shipping? Are things donated if you lose touch within 3 months? Are your tags cut off and removed so that no one knows who made the item? All of these things are fair game if you sign a contract stating so. **MAKE SURE YOU GET A COPY SIGNED BY THE PERSON IN CHARGE** A contract is null and void unless it's signed. Some, few, but some stores don't have contracts. You have the option of writing your own. Be sure that the store signs it and returns it to you.
  • percentages and dolla, dolla bills. How much does the store take? What is fair? Some stores take 40% and give you 60%. I think this is a fair amount. It allows you to make more than a wholesale cut and gives the store a decent cut also. Some take an even lower 30% and give you 70%, great for you but the store doesn't make much. Some places do 50/50. I've noticed that MOST of the places that are 50/50 are in bigger cities, with higher rent and expenses. This can work and does work for me in a few spots. The downside of a 50/50 consignment rate is that sometimes it's nicer to have the extra 10-20% because you are doing more work (double checking sales, inventory and paying for shipping). If your items are making the higher 60-70%, and things sell well, there's always the option to ask the store to start on a wholesale basis.
  • sales and special orders. If it doesn't detail sale information in the contract, ask. Some places will run sales and they should take the cut out of their end. I have also been asked if I'd like to participate in sales (a percentage coming out of my end and the shops end). You have every right to not agree to a sale price. After all, you are already only making a % of the retail price. Some places may ask you to make a special order for a customer. Sometimes their percentage will be a bit lower, sometimes not.
  • pricing and other notes Whether you sell your items in a few different retail venues, they should be priced the same. I know that if you sell on Etsy, you make 100% of the profit and you will only make a fraction selling in someone else's venue. Price your work at a fair price so that you can knock 50% off and still be making a fair wage. Evaluate your pricing and don't try to be cheaper than everyone else. Handmade is worth the extra money. I will write a blog post on pricing in the near future.
I hope this is clear and helps! I'm sure I left some out and please ask questions in the comments section if you have them.

I also wanted to say thank you to all of the boutiques that I deal with that are wonderful. You know who you are :)


New Duds said...

woohoo! excellent post and thanks for sharing... we generally avoid consignment for the same reasons but do have one VERY GOOD store that makes it worth while. They need to have their stuff together and be professional. I'm really looking forward to more of these posts!

Sara said...

Great post Nicole! Now I'll never have to ask you any of this stuff. :)

ohzie said...

Love what you have written & shared!!
Thank you, Nicole!!