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White Paper: Consignment Sales - Suppliers And Manufacturers Advantage?
Consignment, like layaway, is an old retail service that is seeing new life in these down economic times, a re-emerging option offered by wholesalers and manufacturers. Usually, retailers will expect a higher margin to suppliers who want the money for their goods up front. A lower margin is accepted from those vendors who are willing to wait until the products are actually sold. In either case, the retailer typically takes a greater portion of the profits, albeit not nearly as much as selling paid for items. The supplier has the advantage of placing goods on to store shelves, closer to the end user, thereby converting inventory to cash much sooner.
A consignment occurs when suppliers (the "consignor") provide goods to a reseller (the "consignee"), whereby they agree to pay the proceeds from the sales minus a commission.. The consignee reserves the right to return any product that does not sell, and thus the consignee assumes very little risk for they do not have to purchase the goods. The advantage to the supplier is that it provides access to sales outlets that might not otherwise be available.
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