A strong word called CONSIGNMENT

[TwoWayTrauma]

strictly for live men, not for freshmen...  Anyway

Has anyone here had any experience working with a retailer who offered to let them put their gear in their store on consignment?

I've been working with a local gun store to design a sign for them, and it seems to be selling well, although I'm not making a huge amount of money off of it.  The store is fairly small, and focuses on building custom AR-15's on the spot (which they do very well).  The owner told me he wasn't really willing or able to put up the cash to buy 4 sizes of cobra belts in 3 colors and 4 different styles, but he offered me a central rack in his store to put my stuff there.  I'm thinking of starting with belts, and building up to mag pouches and chest rigs in the next few weeks.

He proposed a consignment fee of 10%, which I think sounds right, although I have no idea what a typical consignment fee is.

Questions are the following:

1.  Do you have any general positive/negative experience with consignment?
2.  How do you negotiate fees and what is a typical consignment fee?
3.  Once you negotiated the fees and terms, how did you solidify this contractually?
4.  Do you have any other input?

Thanks,
Chuck

[SunriseTacticalGear]

Chuck,
It sounds like you are making progress, by having your gear in a store.
I have never done consignment but I will share how I handle getting my gear sold in my dealer's store.
I started about three years ago selling a few custom items, I would stop bye every few weeks and make deliveries, getting a check on the spot. Last year they opened up a new facility which houses an indoor range and gun store, they gave me an area which I now stock 5 items in 4 colors. I have now become too busy to stop, so the owner now texts me a picture of my area and I build them a stocking order and UPS it to them, on me (they are about 40 miles away). I am in the process of getting some signage made to place above my gear.
Most gear I sell them with a 25-30% discount from my list price, and give them 45 days to pay. I don't have a written agreement but I figure if things go sideways I will drive to the store and pick up any of my unpaid for gear.
If he is only charging you 10% I think that is a steal, as I don't think he has taken into account what his time is worth, meaning the book work involved and other hidden costs of doing business.
If I were to do consignment I guess I would decide on a stocking level. Then drop off the inventory on an invoice showing the value of the product and have him sign it to show that he is responsible for it. Then I would go there every few weeks to top off the levels and write an invoice for the product missing.
I would be very interested to see how others handle dealer sales or consignment.
Thanks, Scott

[Gear Dynamics]

My dealer arrangement is fairly simple. No contractual obligations or anything too formal. I simply offer a volume based discount that is dependant on the product. Most items are 30% off of the retail price. Smaller items might have a higher discount but also have a larger minimum. The dealer can either email in an order or they can simply place the order through the online store, using an appropriate discount code. Either way, everything is paid for up front.

[TwoWayTrauma]

Thanks Ben and Scott.

I thought 10% sounded like a deal also.  The downside is that i have to do all the tagging and add bar codes.  He is giving me a good deal on this in return for me giving him a discount on the slings I make for him.

I'll keep you posted on how it works out.

Chuck

[Green Ant]

Working with consignment storages is something which the company I'm working for in my "1st job" is doing massively.

I'm not the one negotiating the terms of the consignment, however I've been involved in a couple of projects which also had to deal with consignment storage aspects.

The aspects which you might want to discuss are:

• When and how often and upon which trigger will you receive money from purchases from your rack?
• Who is responsible for the inventory of the rack? What happens if items are missing without having being sold?
• Who can cancel this arrangment with how much time in advance?

[li]Does the consignment holder have the right to tell you which products you have to put into the consignment storage
[/li][/list]
Just my 2 ct.

[TwoWayTrauma]

• When and how often and upon which trigger will you receive money from purchases from your rack?
• Who is responsible for the inventory of the rack? What happens if items are missing without having being sold?
• Who can cancel this arrangment with how much time in advance?

[li]Does the consignment holder have the right to tell you which products you have to put into the consignment storage

We still have a few details to work out.  The preliminary agreement is that I will get paid by check monthly.  I'm not sure what will happen if something goes missing.  The store is pretty secure when closed.  It always has plenty of surveillance, so I don't see that being a huge problem, but I could be wrong.  I guess either of us can cancel this arrangement whenever we feel like it.

The last question is one I have been working on.  The store owner has a very strong opinion of what he likes, and assumes that what he likes will sell.  Sometimes he is right, sometimes he isn't.  I've sold enough stuff to know what people like.  I'm pushing him to trust my judgment here.  Right now, he just wants me to fill up the rack with gear.  I'm thinking that once he sees how it sells, he will continue to let me put whatever I want there.

Chuck

[Green Ant]

The "something is lost" isn't necessarily connected to thieves, sometimes. At least not external ones. That's why I brought it up...

[TwoWayTrauma]

Good point.  I trust the people working at the store, but that being said - I generally trust most people until they give me a reason not to, and then I don't.  I guess my only resource would be to stop doing business with them.

[Stoner63A]

Well, that allows your consignee to make his shop look like it has bunches of inventory without them having to pay taxes on accrued value of those stock items each year.

IF he is allowing posting a pegboard tree with your belts with your product tags with your website/contact info, with possibilities for you to make some side sales, if you can afford the labor time to produce and the $ fronted for materials cost, especially those damned Cobra buckles, its good exposure at only 10%.

 Frickin' sleezebay charges more % than that on sale value and they take a % of shipping charges.

[Green Ant]

Good point.  I trust the people working at the store, but that being said - I generally trust most people until they give me a reason not to, and then I don't.  I guess my only resource would be to stop doing business with them.

Would be a hard choice, wouldn't it? Would you really want to stop doing business with them if just one of your belts really had been stolen? Wouldn't that be too harsh? I guess you would rather want to be able to distinguish between "consignee has not billed your belt" and "thief has stolen belt", right?

I prefer clarity up front because it helps to get over situations like these - which have the potential to end in negative relationships.

You write that you generally trust people: I do as well. However, having an agreement in place doesn't mean mistrust. It just means talking about what can happen and fixing a plan for it.

If the shop owner reacts like "Why should we talk about lost items from your rack? Do you mistrust me?" your perfect answer is "If I did mistrust you we wouldn't be talking to you right now in the first place."