Top 12 Tips for Selling Handmade on Consignment

Hello! I have gained some more experience that I am sharing with you today. This time I am talking about selling handmade items on consignment in a local shop. And once again I will start off by telling you that this particular experience was not a success but I have learned quite a few things so that is the positive side.

Here is the backstory. This shop was opened in my town and my husband and I are acquaintances of the owners so when they approached us about putting my handmade items in their shop on consignment we thought we would give it a try. I was feeling a bit trepidatious because they are a new shop and they didn’t seem to have much sales experience behind them but it doesn’t hurt to try.

They stated clearly up front that they would be taking a 20% commission on anything that sold and that was fine with me. In fact, I wouldn’t be willing to go much more than that as that would cause me to have to raise my prices out of the range that local people would be willing to pay. They also stated that if anything was stolen or damaged that they would still pay me my 80% for the item. None of this was put in writing and even though nothing went wrong, in hindsight I think we should have had a written contract and I would advise you to do that.

The shop owners asked me to provide my own display so I used a quilt ladder that we had offered for sale but that didn’t sell and I just strung some small ropes with clothes pins to hold smaller items and larger items were in baskets tied to the quilt ladder. This was something that was already built by my husband and on hand so that is why I went with that. (The ladder was also for sale.)

From October to March (this month) I made about $100.00 so as you can imagine I do not feel that this was worth it. Here are some of the things that frustrated me so you know what to watch out for.

The need for display. That kind of threw me because this opportunity came out of the blue and I wasn’t prepared to invest in a professional retail display. Plus, there was a small space (about two square feet floor space) allotted to me and I didn’t want to impose by asking for more space. Because of this I don’t think that my products were displayed to their best advantage. I acknowledge that is is partly my own fault.

The other products in the store. The main premise of this shop is locally grown and produced vegetables and foods. So quilts, pillows and Christmas stockings did not really fit in with that. I sold a couple of coffee sleeves, a Christmas stocking and a couple of pillows before Christmas. The pillows were discounted and then I received 80% of that so really didn’t make much profit after you account for the cost of supplies.

Special requests for me to make things. After Christmas the shop owner seemed in a hurry to get the Christmas themed items out so I picked all of them up during Boxing week (the week between Christmas and New Years). There was no attempt at a Boxing Day sale or anything like that. Then the shop owner asked me to make baby themed items and dog bandanas because those were selling fairly well. I complied by making baby bibs, dog bandanas and kitchen aprons which I though would sell since it was a food store. These are not things that I normally offer for sale in my online shops or at craft shows. The quilt ladder also came home with me and there was a request to bring in bags and a display for them.

So now I had my husband building me a sort of a coat rack hanging display which took him a week to get finished. I hung the bags and aprons on the coat rack display which again took up only about two square feet of floor space. None of them sold. Two dog bandanas and two baby bibs sold between Christmas and now for a total income after commission of about $26.00.

This was so not worth all that work!

Shop owners competing with me and other vendors. Another things that really annoyed me was that the shop owners were bringing in all these different handmade items on consignment and then they were attempting to create their own versions of these items thus competing with their own vendors. Granted, these versions were not as well done but they were priced quite a bit lower which was not cool in my opinion.

Not working for their commission. The shop owners seem to have no sales or merchandising training. They basically expect the products to sell themselves. I mean, literally, they just stand behind their counter and wait for the customers to approach them to buy. When I worked in retail sales positions this was an absolute no-no. You should only be behind the counter when someone is actually paying you for their products. Otherwise a shop owner should be walking around the shop interacting with the customers and sharing the features and benefits of the products. This also helps to prevent theft.

I really do appreciate having been invited into their shop and having had the opportunity. However, I think you can hear the tone of frustration in my blog post with this experience. In the spirit of saving others from the same and also preserving this for future reference for myself my tips follow below.

My 12 Tips for you for selling handmade on consignment:

1. Ensure the shop wants to sell what you want to make and that your items are a good fit with their customer base. If they are asking you to make things that you don’t normally sell don’t enter into that (unless you actually want to start making and selling those things.)
2. Ensure you have a contract with all agreements in writing.
3. Check into what is expected of you regarding displays before getting into a contract. Or, if you already have a display that works well for your products is the shop open to having that display in their store?
4. Ensure that the commission amount is acceptable to you. Are you able to raise your prices to cover the commission and still sell your items?
5. Find out what kind of sales history and merchandising experience the shop owners have. Will they be actively working to sell your products? Or will they just stick your items on a shelf and expect them to sell themselves?
6. Will they be advertising and marketing your product? Or what exactly are they doing to earn their commission?
7. Start out with a two or three month trial basis and have this stipulated in the contract in case things are not working out.
8. Do you need to pay rent for the space in their store that you are using? I would be cautious of that plus paying commission as you could wind up making very little money or even losing money. But if they really do sell a lot of your product this could be worth it.
9. Make sure that you have an accurate inventory and that the shop has a reliable way of keeping track of what has sold so everything is transparent and easy to understand for both yourself and the shop owner. When you are dropping products off have an inventory list ready to provide to the shop owner and ask them to confirm that the list is accurate.
10. When you receive a payout ask the shop owner for a list of what sold so you can keep your inventory updated and also know which items are selling well.
11. Make sure to create price tags for your items with your logo, your website information and other small bits of information about you or the product. (ie. handmade in “town name”, organic cotton, makes a great baby gift etc.).
12. Before you approach the shop research them by visiting a few times and seeing what else they are offering. Are your products a good fit for their shop? Be prepared as you would be for a job interview if you are approaching the shop. (In my case the shop approached me and I was pretty sure it was not the best fit but decided to try it anyway.)