How to tweak your consignment acceptance policy
August 15, 2014
Is it time to review your store’s consignment acceptance policy?
In your eagerness to build inventory, it’s tempting to accept every item that a consignor is willing to place in your store. However, when you’re not selective about the merchandise you accept, you not only end up with a cluttered showroom, you’ll also have stagnant inventory. Both of these will drive away customers. As a result, create a clear and concise consignment acceptance policy.
Where to begin
First of all, realize your policy doesn’t have to have legal mumbo jumbo to be considered a legal and binding contract. Make your policy and your actual contract as easy for all parties to understand as possible. Begin by identifying yourself and your stated purpose.
Your review procedure
No two consignment shops are exactly alike which is what makes them so successful. That being said, there are no industry standards for a merchandise intake procedure. That process can be handled in a number of different ways.
a.) Limit Items Many consignment stores place a limit on the number of items they accept from each consignor. Between 15 and 30 items is a reasonable number. Read Come with me to the Twilight Zone of inventory management to learn the dangers of too much inventory.
b.) Drop & Run Policy This allows the consignor to leave their items which gives the shop a longer time to review and price. Setting an item limit with this system is also helpful.
c.) A Designated Time and Person Establishing a set time to meet with a particular salesperson is another way of streamlining your review of items.
Regardless of your procedure, be clear about whether you require designer labels, trendy styles or seasonal merchandise. State if you’re looking for particular sizes or items for a specific gender or age group. Above all, explain to consignors that because your customers’ preferences drive your guidelines, you must be particular about the items you accept.
The consignment period and terms
If you have implemented a sliding scale program, let consignors know up front. One model may look like this: The consignment period lasts 90 days, with a 25 percent markdown after 30 days and a 50 percent discount after 60 days. This is also the place to note your pickup and donation policy of unsold items.
Also, clearly state your consignment terms. A 60/40 store split is the most common. However, there can be exceptions to the rule for more expensive or truly rare items. Some consignment shops add an Item or Buyer’s Fee which they either do or don’t disclose to their consignors. Others use Memo Pricing where a set price is established ahead of the item reaching the sales floor.
Instructions for bringing items
Clothes should be brought in on hangers. This allows you to quickly inspect the garments. Outline your expectations that items must be free of tears, stains, missing buttons and odors. Be sure to outline in your acceptance policy what you won’t accept too.
For furniture stores, give clear guidelines for when and where items can be received. If you offer a pickup service, make sure those terms are stated clearly as well. If you only accept items based on photos submitted first, make sure prospects understand the rules.
Require an ID
Although it rarely happens, you must protect your business from selling stolen items. Along with extensive contact information, including home and cell phone numbers, mailing address and email address, you should also photocopy the consignor’s driver license or other form of ID. Finally, get a signature on everything. This will help to make your acceptance policy as airtight as possible.
