biz tips :: consignment vs. wholesale

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I am thrilled to introduce Mélanie Kimmett from Pretty Paper Please to the blog to talk to us about her experience with consignment / wholesale and creating your own product line. Mélanie has been a great help while I put together a catalogue and as I prepare to expand my own line of handmade goods to retail shops. She’ll be covering a lot of information, so make sure to follow along! – Andrea

When I first explored the idea of developing my own stationery line, I found most information about how to approach wholesale opportunities strangely allusive. Over these next several posts I’ll cover all relevant topics I wish I had been privy to before venturing into the world of consignment and wholesale myself.

Now, I also want to preface this by saying I’m really not an expert, but I’ve certainly gained some real life insight from my own trial and error ways. Hopefully you can all benefit from those lessons. Feel free to add your own points or comments in the comment section below. I’d love to treat this as an ongoing conversation!

Here’s the outline of what I’d like to touch on over the next coming weeks:

1. Consignment or Wholesale?
2. How to Brand and Package Yourself
3. Create your own Line Sheets + Product Catalogue
4. The Business of Running your own Product Line

First things first, let’s understand the top-level difference between selling goods on consignment vs. wholesale. Here are the dictionary’s definitions for selling on consignment or wholesale.

Consignment – With the provision that payment is expected ONLY on completed sales and that unsold items may be returned to the one consigning.

Wholesale – The sale of goods in large quantities, as for resale by a retailer.

In simpler terms, one option provides you with monetary compensation now (wholesale) vs. later (consignment). Either way you look at it, someone (whether it’s you or the retailer) is taking a gamble on your product, especially if you’re just starting out and haven’t made much of a name for yourself yet.

Where wholesale seems like the favourable choice when you’re first starting out, I’d like to mention that consignment is often times easier to come by, but it should also be recognized as a personal investment in yourself and product line. While it exposes your product to the marketplace, it also provides a testing ground for items you were maybe questioning and could help you streamline things in the future. Another strong point is that you sometimes profit more (per item) from selling on consignment. Most consignment shops offer you a 60/40 split on all goods sold, whereas in wholesale you have to find that magic wholesale price point that works for both you AND the retailer, which can get tricky. I’ll delve deeper into that in my ‘Create your own Line Sheets + Product Catalogue’ blog post in the next coming weeks.

Most shops make a clear distinction on whether they are consignment or wholesale-based, but some will entertain both options. Some wholesale-based shops may want to try you on a consignment basis to minimize some risk on their end. Be open to this as an option, as this flexibility can strengthen your work relationship with the shop owners. If after a trial period of a few months on consignment you’ve proven to be a good fit and your product is selling well, you should then think about approaching the shop about wholesaling with them.

Check back as we cover topics such as ‘How to Approach Prospective Shops’ and ‘the Follow Up’!

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