consigning

Consigning is a commercial arrangement in which the owner of goods, known as the consignor, entrusts those goods to another party, the consignee, to sell on the consignor’s behalf. Ownership remains with the consignor until a sale occurs, while the consignee takes physical possession and handles marketing, pricing, and sale transactions.

Key elements of a consigning arrangement include a written agreement that specifies the inventory, acceptable sale prices or price ranges, commission or fees for the consignee, payment terms and timing, the duration of the arrangement, and the treatment of unsold or damaged items. The contract also defines risk allocation, insurance requirements, and procedures for returns or disposal of inventory.

Process and operations typically involve the consignor supplying goods to the consignee, who then displays and markets them. When a sale happens, the consignee collects payment and remits the agreed share to the consignor. If items remain unsold at the end of the term, they are returned or otherwise disposed of according to the contract. Some agreements allow consignors to set minimum resale prices or to reclaim inventory at predefined times.

Accounting and legal considerations vary by jurisdiction but share common patterns. Because title passes only on sale, consignors generally record consigned goods as owned inventory and recognize revenue only upon sale. Consignees treat the stock as inventory held on consignment and recognize revenue when items are sold to end customers. Contracts govern liability for loss, damage, and returns, and compliance with applicable consumer protection and commercial laws.

Commonly used in art, fashion, books, antiques, and other markets where expanding distribution without upfront ownership risk is advantageous.