Consignment

Consignment is a business arrangement in which goods are delivered by a consignor to a consignee to be sold on the consignor’s behalf. Ownership of the goods remains with the consignor until they are sold to a final customer.

The consignor provides inventory and bears the risks and rewards until sale; the consignee handles marketing, sales, and customer service. In many contracts, the inventory is recorded as consigned stock on the consignor’s books, while the consignee records it as held-for-sale.

Payments are typically due to the consignor after a sale, with the consignee retaining a commission or fee. Unsold items are commonly returnable within an agreed period; if not sold, they may be returned or renegotiated.

Benefits and drawbacks: For consignors, consignment reduces upfront marketing costs and expands market reach; for consignees, it reduces capital needs and broadens product ranges. Drawbacks include delayed revenue, administrative complexity, and the risk of unsold inventory for the consignor. Contracts typically specify title transfer, risk of loss, payment timing, commissions, and return procedures.

Common contexts include bookstores, art galleries, fashion and jewelry, antiques, and automotive dealers who offer vehicles on consignment.