Consignment

Consignment is the act of consigning, which is placing a person or thing in the hand of another, but retaining ownership until the goods are sold or person is transferred. This may be done for shipping, transfer of prisoners, or for sale in a store (i.e. a consignment shop).

The word consignment comes from Fr. consigner "to hand over or transmit", originally from Lat. consignare "to affix a seal," as was done with official documents just before being sent.

Consignment Shops

"Consignment shop" is an American English term for second-hand stores that offer used goods at a lower cost than new. Many offer new items as well.

In the context of sale, it is usually understood that the consignee (the seller) pays the consignor (the person who owns the item) a portion of the proceeds from the sale. Payment is not made until and unless the item actually sells. The consignor retains title to the item at all times, and can end the arrangement at any time by requesting return of the item. A specified period of time is commonly arranged, after which time if the item does not sell the owner can reclaim the item (or, if not reclaimed within a period of time, the seller can dispose of the item at his discretion).

Merchandise often sold through consignment shops include antiques, athletic equipment, automobiles, books, clothing (especially children's, maternity, and wedding clothing which are often not worn out), furniture, firearms, music, musical instruments, tools, and toys. eBay drop off stores often use the consignment model of selling. Art galleries, as well, often operate as consignees of the artist.

Consignment shops differ from charity or thrift shops, in which the original owner surrenders both physical possession and legal title to the item as a charitable donation, and the seller retains all proceeds from the sale. They also differ from pawnbrokers, in which the original owner can surrender both physical possession and legal title for an immediate payment, or surrender physical possession of the item in exchange for a loan, and can only reclaim the item upon repayment of the loan with interest or else surrender legal title to the item as well. Example; Pef inc. in the USA, which is a prime example of this.

In the UK, the term "consignment" is not used, and consignment shops selling women's clothing are called "dress agencies". Although the other types of consignment shop exist, there is no general term for them.

Vendor Managed Inventory and Customer Managed Inventory

The consignment process can be further facilitated by the use of VMI (Vendor Managed Inventory) and CMI (Customer Managed Inventory) applications. VMI is a business model that allows the vendor in a vendor/customer relationship to plan and control inventory for the customer, while CMI allows the customer in the relationship to have control of inventory.

See also

• Scan-based trading
• Vendor Managed Inventory

Consignment Business Model

Further reading

• consignment-software.com (2002). How to Start a Consignment Shop Business: A guide to the necessary details for opening and operating a consignment, resale or thrift store.. Lulu. ISBN 0978-0-615-25134-9. (Saddle Stitch, 44 pages)
• Nissanoff, Daniel (2006). FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want. The Penguin Press. ISBN 1-59420-077-7. (Hardcover, 246 pages)
• Holmes, Kate (2006). Too Good to be Threw: The Complete Operations Manual for Resale & Consignment Shops. Katydid Press. ISBN 0-9755886-1-3. (Spiralbound, 202 pages)

References

• VMI: A paper on the benefits of VMI. http://clearspider.com/vmipaper/clearspidervmi-2-1.pdf
• CMI: A paper on the benefits of CMI. http://clearspider.com/vmipaper/clearspidercmi-2-1.pdf