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Why I avoid selling on consignment…

An online seller recently asked me "should I be an eBay Trading Assistant"/"should I start a consignment business"?

In short, no.

See, I avoid doing any consignment because (my opinion) there are two major detriments to it (I'm sure there are successful people who are in the consignment business, this is just my opinion):

1.) In consignment, I (the consignee) am dealing with people (consignors) who want me to sell their stuff. But the consignors' perceived value of their items is usually much more than the items' true market value, so I have to spend a lot of time 'talking them down' from their requested selling price (consignors typically have some kind of emotional connection with their goods); and

2.) For most items (that have a selling price of, say, $250 or less), it's only profitable for me (the seller/consignee, who incurs the bulk of the labor, shipping costs, risk of returns/refunds, and Amazon/eBay selling fees)  if I take 50% of the selling price (most other consignment experts would agree). That leaves the consignor (the person whose item I am selling) with the other 50%, and that's a tough pill for them to swallow.

Where consignment can be worth the effort is in this example: I agree to sell a large, expensive item (a car, a boat, a motorcycle, a pricey piece of furniture) locally, where I simply place a free craigslist ad/inexpensive eBay classified  ad for my customer (the owner of the car/boat/motorcycle/furniture) using my email and my phone number in the ad, and then I pass along the messages from prospective buyers to the item owner). That way I'm not shipping goods or handling payments. I'm simply just creating the ads and coordinating the sale, and I can charge my customer (the person who hired me to sell his/her goods) ~15% of the selling price. This is less time- and capital-intensive for me, but (the main reason why I don't offer this service either) is my customer (who wants me to sell the goods) can say, "hey, I can do that to, I don't need to hire you", and I have to trust my customer to pay me the agreed-upon percentage after the sale.

So that's why I avoid consignment. There's lots of money to be made in retail arbitrage/buying wholesale/buying used products for reselling on eBay/Amazon that takes less effort and less time.

-Jordan

{ 9 comments… add one }
  • Carol April 30, 2013, 1:27 pm

    AND 2 more:

    1. Unless the item consigned is worth more than a few hundred dollars, I can make a lot more using the time for my own inventory. When the dollar value of the items I’m listing is the same, I’ve spent far, far less than 50% of the item’s value on my own inventory.

    2. When a number of items are consigned by the same person, they will sell at different times, and the consignor invariably feels that (s)he hasn’t been paid for all items – no matter how thorough your recordkeeping is.

    • Jordan Malik April 30, 2013, 1:32 pm

      Carol thank you for that input, you are helping other sellers who are considering providing consignment services by doing so. I’m not trying to be all down on the consignment business model (I am sure there are sellers who are successful at it), but it just seems a like a lot of effort for minimal return and some higher risks than other forms of online selling.

  • Tornad0sRul April 30, 2013, 3:52 pm

    I get asked to sell things for people all the time. Even our jewelry store in town asked me to sell things for them. Everyone who asks you to sell something for them feels generous offering you 10%. LOL. They also think that they are doing me a favor by offering me something to sell (I usually have a room full of stuff to sell). They obviously have no clue. It gets really old explaining to people why you are not being rude declining their offer/request. I would lose tons of money and go out of business in short order if I listed things at a 10% profit. Not only that, it took me an entire year of working night and day to achieve “Top Rated Seller” status, so where do I get commission for having the ability to get them more money for their item than if they listed it themselves as a “NON Top-Rated Seller? I wish there was a more polite way to tell people “um, after spending hours photographing, cropping, editing, describing, researching prices, listing, and then bubble wrap and package for shipping, and then getting the package to the post office, I would be in the hole at the start.

  • MichelleS April 30, 2013, 4:16 pm

    I considered consignment selling once upon a time. I’m so glad there were people out there willing to share their experiences. I would’ve been out a lot of time and effort and no income to show for it. Thank you to everyone who is willing to tell it like it is. If a person still wants to go ahead and try consignment, more power to you and I wish you the best of luck, but it definitely does not sound like the business model for me.

  • George Nieves April 30, 2013, 11:07 pm

    I don’t think I would consider selling on consignment either. I’ve known a few people who do and they are usually complaining all the time about whoever they are selling the stuff for. It doesn’t seem worth the headaches.

  • Steven Burns May 1, 2013, 5:24 pm

    Jordan Once Again, you have ‘hit-the-nail-on-the-head’. I have been telling people no for selling stuff for them – for Years!

    I am a Professional Salesman with well over 40 years experience and I can attest it is much easier to sell someone a product than it is to talk them down from their over-inflated, emotionally charged position, from their high perceived value – of the baubles, trinkets, ‘family heirlooms’ and junk – they no long want! (I sware it came over with my parents and Columbus in 1492 and my uncle Waldo said Henry VII sat on it to sign the Magna Carta). Pooey!

    Even with a signed contract, it is an uphill road with little or no traction. I’ll pass, thank you!

    I work smarter not harder, thats Exactly why I use FBA Finds VIP.

  • Clayton Hay May 1, 2013, 6:31 pm

    I’ve done a few consignments on eBay in the past. It was really not worth my time and effort. The book keeping is a nightmare. Much better profit in selling your own stuff than selling someone else’s stuff.

    I totally agree with Jordan on this.

  • Tim May 3, 2013, 11:39 am

    Sometimes when people bring me stuff they want to consign, I find it better to just offer to buy whatever they want to sell. That way, if they choose to sell it to me for an agreed upon price there is no further involvement from them and I am free to sell the stuff however I want. Just make sure to pay an amount you can still make a margin on. If people have stuff they want to sell, and I know I can sell it, it’s far more profitable in the long run to just make them an offer like its a craigslist deal. This way, maybe they keep coming back. Basically, try to turn a “consignment” offer into a profitable purchase whenever they come up. Sometimes it works, sometimes they say no. Either way, you win.

  • Joe July 4, 2014, 2:43 pm

    I have a good sized fenced in storage lot and garage to clean up items. I considered consignment but having a daily storage charge until it sells. Has any one had experience trying it.

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