Tuesday, February 16, 2010

Consignment Warning Signs

Today, I am going to talk to you about consignment. I have consigned at a few different places, and only some of them were a positive experience in which I sent a few retired designs and was sent a Paypal payment whenever something sold. It worked out great and I got rid of some items that no longer fit in my shop.

(some of my necklaces displayed at Oak Boston for consignment, which has been a semi-good experience so far)

**Now, while my post today is mostly on negative experiences with consignment and seeing warning signs before hand, it can be a wonderful thing as well! There are great shop owners and contracts and such, but do your homework and make sure it's a good fit.** 

This post in the forums today made me smile. It was written by Unique Art Pendants and you can glean some insight from the thread that follows:

"Hey! Can I borrow all of your inventory? Of course, YOU have to bring it over here to ME and I'm going to show it to all of my friends and let them try it on and stretch it out and stuff - my friend Lucy might get some of her red lipstick on it, but I'm pretty sure it'll wash off when I give it back to you. Lucy's friend Michelle has sticky fingers sometimes and things tend to disappear around her but I promise I'll watch her real close if she's standing by any of your stuff. AND - guess what?! If my friends like something and want to buy it I'll give you 60% of the price you usually sell it for. I'll just go ahead and keep the remaining 40% for myself.
And, oh, not sure yet - but I may move two states over in a couple weeks but I'll for sure remember to get your stuff back to you somehow because, of course, you won't know where to find me after I move with all of your stuff.
So can I borrow all of your inventory? I'm looking to make some money but I don't want to actually spend my own money to do it. I just wanna use your stuff instead. Lemme know!"
Well, I can surely relate to this statement. Consignors take this route because they have very little invested in the products. They want them to sell, but if they don't they haven't put any money into the products. They may not dust your jewelry, fix the display after someone has rummaged through it, you are not protected if your items get lost/stolen/broken (which I assure you WILL happen). Their sales team may not promote your products.

Not all consigners are bad, some are amazing, but the only way I would consign, is if I knew the store well, knew the client base, lived close enough to be able to manage my display and rotate piece out on a weekly basis.

My Story of the Warning Signs

I once "consigned" at a little boutique that I was impressed with. I did my homework, read reviews online, checked out their website, learned the story of the place. I called ahead and made an appointment, came with my goods in a pretty display to meet the manager and see if my items would be a good fit there. It was very pleasant, exciting and the owner loved my jewelry and we set a date for me to move my things in the next day.

I had to pay them a lease fee and sign a 6 month contract. I "rented" a very small space for a relatively large amount of money (that I had already negotiated way way down), and I would also have to pay about 20% of each sale for credit card and advertising fees. I did the math and figured I would have to sell at least 10 things a day, just to make my rental coverage back. Having worked and managed retail, I knew this was not very likely and definitely not profitable, and how could I maintain that kind of stock there as well in my Etsy shop just to cover the cost of supplies? Well, the night I organized my tiny display, the manager whom I liked very much was not there. This is when more warning signs manifested themselves.

I was at the store during peak shopping hours and very few people came in, and those that did, were not in my customer base. I looked around the boutique and noticed it was full of jewelry. I spoke with the manager prior to when I signed the lease and she stated that she had only one other jewelry person leasing and very little jewelry to compete with. BUT, when I finally took the time to look around, jewelry... cheap, trendy manufactured over the seas styles were every where! I went in the backroom for some fixtures and there were boxes upon boxes of even more jewelry to replace any that sold.

Then, I noticed the sales staff. They were too busy trying on clothes, ignoring customers and talking about how their shop was overpriced and not on top of the trends. They actually talked about how they were going shopping at Target and Ross after work to get similar styles... and they did this in FRONT of customers!  Well, no shock that they did not make one sale the entire night. I finished my display right at closing time.
As I left the shop, I noticed they had 2 huge signs in the parking lot that they were accepting consignors. Knowing their leasing fee, this told me that sales were low and they were using the consignors to pay their rent as opposed to sales. Also, the owner had expanded and opened a second store across town, so she was spending more time over there trying to get it off the ground and neglecting this one.

I finally finished my display and was going back in the morning to fix it up a bit since I forgot some of my fixtures. I came home and tossed and turned and stressed and did the math all night.

My items are in this semi-high end boutique, in a hidden corner of a good shopping district, but located in a high theft area. I am paying a butt-load of rent, no insurance or protection if my items got lost or stolen, a very unlikely chance of profit, with an incompetent sales team who drive customers away and tons of competition within the store from mass produced cheap jewelry. Also, I was moving an hour away in the next 2 weeks. I originally thought this wouldn't be a problem, I could drive down a few times a month when I came to visit family and check on my items, but after seeing all the red flags, I knew this wasn't a viable solution.

Well, what did I do? I stressed all night long over what I got myself into. I drove down there first thing in the morning before they opened, waited outside until they unlocked the doors, walked back inside and packed up my jewelry and left. I of course told them I thought about it and realized the move was going to be too much for me, but that was the last thing on my mind.

Because the manager wasn't there the night before to accept my lease agreement, I technically didn't break the lease as I never turned it in. They weren't going to give me my money back either, even though my jewelry was never in the shop during opening hours, so I paid $35 bucks and canceled the hefty lease check.

I know there are lots of great experiences and lots of bad ones with consigning. But I think that with my experience, you need to look for red flags and listen to your gut when you check out shops. Look at the sales staff, the location, the types of shoppers...

Overall, I have done wholesale, and even though it does not make as much money up front, there is way less of a hassle, a guarantee that your items have sold and a management and sales team that have invested in you and will do more to sell your products.

Read Rosie's amazing article on the basics and inner workings of wholesale vs. consignment, how to approach shops and how it works from both the artist and the shop owner's perspective. Very insightful and valuable advice. Part 1 here and Part 2 here.


Stephanie of Pretty {much} Art said...

You touched on a lot of things I don't know that I would have thought of on my own. Thanks for sharing!

ClassiclyAmber said...

I'm glad that you got outta there! Sorry you were out the money...though, I'm convinced it would have been way worse had you stayed.

I've only ever TRIED to do consignment one time - and that was when I was about 2 weeks away from giving birth to our 3rd baby. Ugh...it ended up being a horrible experience and I was so angry! I don't know if I would ever try again...

You gave some good advice here, though! =-)

UberArt and Emerson Bindery said...

Sorry to hear of your consignment nightmare. At least you were able to get out as soon as you did.

I've consigned locally at two shops...one a great experience and one not so great (they lost my stuff and then later found it in a storage closet).

By far my worst experience has been an out of town shop. In the 10 months I've consigned there I've only sold 2 items. I have been trying for months to get my inventory shipped back to me to no avail. From now on I'm sticking to local consignment where I can march in there and take my stuff home.

Angela said...

Sorry to hear about the troubles. I have my things in one shop here. I found that it actually hurt me to be in the shop and I did better selling on my own. This year, I did not put my things in her shop and I did much much better.

Little Lovables said...

So glad to hear of your stories!

Bethany Dirksen said...

Hello! I just found your blog through the etsy forums and think it is great! I am now a follower and am excited to learn more about you and what you do. I have a blog as well and would love it if we were in community together!


Britt- said...

I am sooo sorry you had to deal with all that. That is so stressful. Good luck with that! P.S. I love your jewlery

Bad Cat Creations said...

Wow! What a horrible experience!! And obviously those people don't know how to run there shop!!

I personally own and operate a retail consignment boutique and I just want to say that there are some of us that do run great consignment shops!

I showcase about 50 artists, I promote all of them, pay attention to all my customers and I even have in my contract that if it gets stolen on my watch, I pay you for it!

Before I opened my shop, I too am a jewelry artist, I had looked into a couple consignments shops and had some similar red flags. High monthly rent on top of high commissions, and then the whole if it gets stole, opps-too bad! Not a great way to make your artists feel comfortable. I also worked next to a consignment shop that went out of business and never returned any merch. It's SO sad.

I took all those things into mind at my shop, and I know others do similar things that I do, not all of us are shady! Just make sure you feel comfortable and make a connection with the owner. I'm happy to say I'd consider all the artists in my shop to be my friends.

Little Lovables said...

sounds like you got it right, bad cat!!

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