Choosing an
Online Consignment Store
for Your Jewelry

© by Helena Liu; all rights reserved

When Fiona and I founded High Tea, we noticed the wide array of designers out there who were selling their products through consignment stores and distributors. A consignment store is any store (online or bricks-and-mortar) that agrees to take on board a set quantity of products from a designer after they successfully pitch their goods.

In theory, the consignors (the store owners) will take quality digital photographs of the items for an online store, write charming, detailed and accurate descriptions for the items, and sell them through their store. Meanwhile, they will actively promote and market their store to improve the products' exposure.

Once the item has been sold, the consignors are responsible for packaging and shipping the items to the buyer, and take a percentage of the sale price (usually no more than 40%).

The majority of consignment stores are extremely stylish, stock gorgeous items, and run by independent, young, web-savvy entrepreneurs.

However, there is a small segment of consignment stores out there that you should be warned about before you start sending your handmade treasures to them.

1. Sale ratios

   A consignment split of 60/40 (60% of the sale price goes to the designer, and 40% goes to the consignment store) is the standard, with many stores in their early stages setting more generous ratios. Don't let people tell you anything else is the "real industry standard" and that they'd know because of their infinite experience in the fashion industry.

   Possible exceptions to this rule are bricks-and-mortar stores, especially if their choice location is quite pricey, and extremely well-established stores with the power to charge whatever they want. After all, this ratio is upheld by nothing more than goodwill and consignment stores are not legally bound to pay their designers at least 60%.

2. Longevity and stability

   Online consignment stores, compared to starting your own store of handmade goods, take less time to set up.

   As long as you can build a website or get someone else to build one for you, you can start advertising for consignment applications immediately. This reason, which makes starting a consignment business so appealing, is the same reason why so many fail. The owners simply lose interest after a few months, close the website down - and you could potentially find yourself with your items unreturned and no way to contact the consignment store owner.

   That is why when you are looking for websites to consign with, do check that they have been around for longer than six months. If possible, get an email address for the consignor that is not attached to the store's web domain (and hence cannot disappear when the site does or if they are having server issues). Even better would be business phone numbers and addresses, although as most online consignment stores are quite small, this is not always possible.

   If a consignment store shows great potential but it's just a fledgling, try getting in touch with some of the existing designers whose work is in the store. Without being too probing, ask if they have enjoyed consigning with the store so far, and whether or not they would recommend it. As long as you are polite and respectful, most people enjoy helping a fellow designer.

3. Apparent assets and expenses

   The 40% cut of sales the consignment stores receive goes toward covering rent and/or web hosting fees and advertising. In addition, most consignors spend hours toiling away at a professional design, a shopping cart system (which is more work than drawing up pretty pictures), and actively promoting the store - whether that involves contacting fairs, markets and conventions, or writing to magazine editors.

   While you can't expect consignors to disclose every little detail about where their expenses go, carefully read what they do disclose as their expenses. Some common purported expenses I discovered are:

   • Web "maintenance": If they design and run the website themselves, there is really no such thing as "web maintenance fees". Don't let stores hide behind technical jargon to make their list of expenses look valid.

   • Shopping cart and PayPal fees: Some shopping cart or point-of-sale software systems out there charge users for installing their software and then take a small percentage (less than 5%) with each sale transaction.

     If a store has installed a shopping cart software (as opposed to coded their own), you will see a small "Powered by [name of cart software]" at the footer of their store page. Visit the cart software company's website and take a look at their fees, and decide for yourself whether or not it is substantial.

     PayPal Business and Premier accounts again charge a small fee when money is received. Just keep in mind that while these expenses are real, anyone selling products online has to deal with them, and consignors who moan and groan about their fees costing them an arm and a leg and say that is why they need a big cut of the profits are trying to take advantage of your ignorance.

4. Adequate marketing

   It is extremely frustrating when I see consignment stores claiming to invest in marketing and advertising - but either they don't, or they do it through free avenues such as posting to link directories, or suggesting products to bloggers and magazine editors.

   While these advertising avenues are definitely not a breeze to commit to, just be wary that consignors who try to write them off as advertising expenses are merely trying to look better than they really are.

   Contact the stores you are interested in consigning with, and ask them about their recent marketing initiatives. While stores may not want to reveal all (and shouldn't necessary give you all the dirt about how they spend their profits), a store that can back itself up by saying anything as broad as "paid adverts in craft/fashion magazines" is probably coming from an honest and professional standpoint.

5. Professionalism and friendliness

   Ultimately, consignment will be a relationship built on trust and openness that keeps things between you and your consignor harmonious. No successful business relationship can be built on misunderstanding, contempt or suspicion.

   Does the consignor appear to have reviewed your application fairly, rather than giving you a rubber stamp then calling "next"? Did they respond in a timely manner? Did they show care in their correspondence (e.g. referring to you by name, minimal spelling errors, etc.)? Do you think you can trust this person to take care of your products and return them to you if they ever did choose to close down their store?

   This may seem like high standards, but don't forget you may need to entrust hundreds of dollars worth of your handmade items to them.

   And why would you do that with someone who is not honest and upfront with you about where their cut goes, treats you like a nameless product-machine, and doesn't show you a few extra minutes of respect in an email?

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