Consignment Explained

Consignment is an arrangement in which an owner (the consignor) delivers goods to an authorized third party (the consignee) to sell on their behalf. Ownership typically remains with the consignor until the item is sold, and the consignee keeps an agreed portion of the sale as a commission.

How consignment works

• The consignor and consignee agree on terms (commission split, consignment period, pricing and return policies).
• The consignor delivers the items to the consignee, who markets, displays, and attempts to sell them.
• When an item sells, the consignee deducts their commission and remits the remainder to the consignor.
• If an item doesn’t sell within the agreed period, it is returned or the agreement is extended or renegotiated.

Examples:
– An artist places paintings in a gallery that charges a percentage of each sale rather than rent for wall space.
– A homeowner takes vintage clothing to a thrift or consignment store; the store sells the items and shares proceeds according to their agreed split.

Typical payment arrangements

• Commissions vary widely by industry and item type. Rates commonly range from about 25% to 60% of the sale price.
• Art galleries frequently charge commissions up to about 50%.
• Many consignment shops use standard fee schedules but may negotiate rates for high-value items.
• Agreements should specify payment timing, whether the consignee handles taxes or shipping, and conditions for unsold goods.

Benefits

• Broader audience without owning a retail presence: consignors gain access to the consignee’s customers and marketing channels.
• Convenience: consignors avoid the time and expense of building a sales platform, processing payments, or managing storefronts.
• Low upfront cost: consignment often requires no listing fee—consignors are paid only if an item sells.
• Suitable for specialized or secondhand goods (clothing, art, furniture, instruments, jewelry).

Challenges

• Commission reduces seller proceeds; high fees can materially impact profitability.
• Loss of control: consignee determines presentation, pricing strategy, and marketing—potentially conflicting with the consignor’s preferences.
• Sales are not guaranteed; items may be returned after the consignment period.
• Contracts vary, so unclear terms can lead to disputes over pricing, damages, or payment timing.

Common items sold on consignment

• Clothing and accessories (including vintage and designer pieces)
• Art and prints
• Furniture and home décor
• Musical instruments
• Jewelry
• Sporting goods and baby/children’s items

Frequently asked questions

What does “consignment only” mean?
– It indicates that a store accepts items to sell on behalf of the owner, who retains ownership until a sale occurs. The store handles sales and keeps an agreed commission.

Is consignment worth it?
– It depends. Consignment can expand reach and remove sales logistics, but commissions and reduced control can lower net returns. For sellers who value convenience or lack their own sales channels, consignment can be attractive—especially when negotiation on rates or placement is possible.

Bottom line

Consignment is a practical option for people who want to sell goods without managing direct sales channels. It provides access to buyers and reduces upfront selling costs, but sellers must weigh convenience against commission fees and reduced control over how items are marketed and sold. Clear, written consignment agreements help protect both parties and improve the chances of a mutually successful arrangement.