Wholesale versus Consignment

I had a really good day in the workshop today. I finished up my Recent Indian points for my spring wholesale orders. I have yet to pair them up to see if I have enough sets of earrings, but I should be set for necklaces. In Newfoundland, Recent Indian refers to the ancestors of the Beothuk who start to appear in the archaeological record sometime before 1000 years ago.

When I was in the office I was answering e-mails. I got some good feedback on the Ivvavik reproductions that I made last spring -- apparently they are being used "and people LOVE them", which is great to hear. I was also e-mailing with Vicky Taylor-Hood about wholesaling. I'm a big fan of wholesale over consignment.

I've thought for a while that it would be interesting to have a pair of articles in the Craft Council of Newfoundland and Labrador Newsletter, one pro-wholesale and one pro-consignment. I have a pro-consignment writer in mind, but I've never actually talked to her about writing her side of the story. The pros of consignment include a better percentage of the sales going to the craftsperson - usually between 60 and 75% of the retail price, greater control of what product is sold in a particular store, and its easier to get stores to carry your product because there is no risk to them if it doesn't sell.

Wholesale, on the other hand is usually a 50/50 split between the producer and the shop. Which means less money in the pocket of the producer. So why go for wholesale?

The downside of consignment, I believe, is the time it takes to keep track of your product and sales in multiple shops. With a few notable exceptions, my experience with consignment was constantly monitoring stores carrying my product and periodic reminders and requests for payment of product that sold. With consignment you get paid as the product sells and you are responsible for the unsold product at the end of the season. As your business grows the amount of time it takes to monitor consignment orders eats into the amount of time you can spend in the studio creating new product. The more you are selling, the less time you have to make it.

When you sell wholesale, you get paid for your product when you deliver it. You are in contact with the buyer when they place the order and again when you deliver it. After that, selling it is their concern. Obviously, you still need to build a good relationship with your customers, but wholesaling your product puts much more of the day to day selling of your product in the hands of the shop owner, which frees you up for all the other aspects of your business and life that need attention. Wholesaling cuts down on the administration side of the business. To me, 10-25% more time spent in the workshop is much more valuable than the 10-25% more money that I could make on a consignment sale.

From the shop's point of view, you might be a bit more of a risk as a wholesaler, because they are stuck with your product if it doesn't sell, but selling wholesale means less paperwork and a higher percentage of the sale stays in their register. For every one store that walked when I said "I no longer sell on consignment" I picked up 2 or 3 new ones.

As I got busier, I also found it difficult to keep consignment shops adequately stocked. A consignment order is a potential sale and it has to take second place to an actual sale. If someone is placing an order and they are going to pay for the product when you deliver it, they have to take precedence over creating excess product to sit on a store shelf, that may or may not sell, and that you may or may not get paid for.

I realize that the numbers don't work for all craft producers. The cost of materials and labour on some one-of-a-kind pieces is too great to allow for the 50% mark-up necessary for wholesaling. Everyone's business is different, but I'm happy with the decision to choose wholesale over consignment.

Photo Credit: Tim Rast

Photo Caption: Recent Indian projectile point reproductions, ready for necklaces and earrings.