Could a business owner profit from consignment?

[Starmix]

Yes, a business owner profit from consignment, but how and when depends on whether they are the consignor or consignee. The consignor earns money only when the goods are sold by consignee. Since ownership stays with the consigner until sale, unsold goods can be returned, minimizing losses. By placing goods in multiple stores or locations, the consignor can reach more customers and increase sales opportunities. Payments are received after sales, so cash flow might be slower than outright sales.

The consignee profits by taking a pre-agreed percentage or markup on the goods sold. There is no need to purchase inventory upfront, means less capital tied up, reducing financial risk. Because the consignee doesn’t own the goods, profit depends on their ability to sell effectively.

Overall, consignment can be a profitable arrangement if managed well, with clear agreements of payments, responsibilities, and inventory handling. It offers flexibility and reduced risk for both parties, when done correctly.

 

[eLdavis]

Consignment allows business owners to sells goods without any upfront inventory cost, so business owners can make profit from this.

 

[Starmix]

A business owner profits from consignment, but how and when depends on whether they are the consignor or consignee. The truth is, consignment is senseful and useful.

 

[Suba]

I've studied the consignment system both theoretically and practically, especially while helping my parents run a shop. The shop receives goods on consignment from the manufacturer/maker (consignee). The consignor doesn't invest any capital to purchase the goods, and the goods remain the property of the consignee until they are sold. Consignors often don't make a profit because there's a lot of competition for similar goods, so they can't mark up their prices and only receive a commission.

 

[Starmix]

Indeed it's crucial if the goods aren't sold. The consignor may return the goods when its expiry date is near. The consignee must also manage to create goods that people need to avoid wastage. The consignor may not earn well.

 

[Augusta]

Commission-based income:
The business owner earns a percentage of each sale, which can be a fixed fee or a percentage of the selling price. This provides a clear and predictable income stream.

 

[Starmix]

That's the actual scenario of a consignor to receive a commission from the consignee for having sold the products.