Consignment goods are goods supplied to merchants on a 'no risk' basis. The merchant is given a fixed profit margin, and doesn't have to pay for the products.
In some cases, goods on consignment are subject to a formal legal agreement regarding terms of consignment and sale.
The business arrangement for goods on consignment must be spelled out.
The letter represents an offer of terms of trade, and as such has legal ramifications.
Your letter should specify:
Note: Goods on consignment may need to be covered separately by your business insurance. Check your policy before offering your products.
The example below is a pretty typical instance of goods on consignment, a wholesaler making an offer to a retailer.
Goods on consignment
We're a wholesaler of home wares. We handle many major brand names in large volumes, and we can offer excellent discount rates on these products.
Please see our attached list of products for retailers. It includes the base and retail prices, and minimum order quantities.
As an introductory offer, we'd like to show you our range of products on consignment.
Our introductory offer of consignment:Set profit margin of 15% for retailers on minimum orders.
Set profit margin of 20% for retailers above minimum orders.
Guaranteed acceptance of returned goods.
Guaranteed refund for defective or damaged goods.
Full 1 year warranty on all products.
(Standard commercial refund provisions apply to all goods.)
For repeat customers, the 20% rate is the standard for goods on consignment.
If you're interested in our products and our offer, and you'd like more information or have any questions, please contact me directly on the above phone number or email.