What is Consignment: Business Model Explained

What is the Consignment Business Model? The consignment business model is a type of retail business in which a shop contracts with individuals or businesses to sell their items for them.

In this model, the owner or maker of the items essentially lends them out to a consignment shop, which contracts to sell them at an agreed price, then splits the proceeds in accordance with an agreed formula. As we have seen, a typical consignment percentage is split 60:40 in favour of the seller.

Benefits and Risks of Consignment Selling Consignment selling has many benefits, such as allowing craft artists, fabricators, and private citizens looking to dispose of lightly used or estate items a chance to make money without the hassle and expense of storing and advertising the articles themselves.

This can be lucrative, too, if the consignment percentage split for these goods is fair. However, there are also risks associated with consignment selling, such as potential damage or loss of merchandise, shopper damage, and shoplifting…