What is Consignment Sales? Consignment Process for Businesses


Consignment sales is a commercial model where a seller, who owns goods, allows a buyer to sell them or make payment once the goods are sold, without having sold them yet. This practice involves the seller keeping the goods in another business, at a point of sale, or in a warehouse. In other words, the ownership of the goods remains with the seller, who delivers the goods to the buyer.

The owner of the goods, the seller, is referred to as the consignor, while the party receiving the goods is referred to as the consignee. Consignment sales can be thought of more like a consignment transaction. This is because the ownership of the goods remains with the consignor until they are sold by the consignee. The consignee's main task is to facilitate the sale of the goods until they are sold. This model is commonly preferred in sectors where retail sales are conducted. Reducing risks associated with the product by the seller and reaching broader markets are essential in consignment sales. The details of the agreement between the parties and payment processes, as well as the condition of the goods, should be clearly defined..

What Does the Consignment Process Entail?

The consignment process involves reaching an agreement, delivering the goods, making sales by the buyer, and later making payment. The workflow of the consignment process is as follows:

  • An agreement is reached between the buyer and the seller. The seller delivers the goods to the buyer, but the payment stage has not yet been completed.
  • The buyer, who offers the goods for sale in their own business, is not obligated to make payment until all the goods are sold.
  • Payment to the consignor who sold the goods to the buyer (consignee) is made from the income obtained by the consignee from selling the goods, usually within a specified timeframe.

The consignment process provides an opportunity for the consignor to expand their goods into broader markets and allows the consignee to sell the products without purchasing them upfront. However, it's essential to discuss and clarify the details of the process at the outset to avoid issues if the agreement is not adhered to later on.

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What Does Consignment Consulting Serve for Businesses?

Consignment consulting for businesses is essential for the efficient and effective management of the consignment process. This service provides businesses with a better understanding of the consignment model and facilitates optimization during the implementation phase. Additionally, consignment consulting offers the following advantages for businesses:

  • Planning options for businesses regarding this trading model are provided through consignment consulting. Support is offered for decisions on which products will be offered on consignment, where sales will be made, and how the system will be sustained.
  • Due to the complexity of consignment processes, legal support can also be provided within the scope of consulting. Businesses are informed about relevant legal issues, contributing to optimization of necessary legal arrangements.
  • Services can be provided in various areas such as order processes, inventory management, and payment processes, which are essential for consignment sales in businesses.
  • Consignment consulting can be highly beneficial for businesses to avoid payment issues in consignment sales, which is a risky trading model.
  • Consignment sales consulting services can also include market research to determine which markets would be more effective for sales, educating staff about such trading practices, and ensuring that the procedures are carried out correctly.

Consignment Process: What Does It Mean?

The consignment process involves sending goods from a seller, who owns the goods, to a consignee for sale at a predetermined price or based on the conditions of the day, even though the goods have not been sold yet. In this process, the sent goods or products are presented in accordance with the prevailing market conditions. Consignment transactions may include various items such as clothing, accessories, books, vehicles, or other products..

Example of Consignment Sales

A consignor enters into an agreement with a consignee, who is a retail operator and store owner, to sell the textile products they have designed. The consignor agrees to pay the consignee a certain percentage for each sale in exchange for the right to display and sell their products in the consignee's store.

Another example is where a consignor entrusts a vehicle to a seller within the framework of consignment sales, and the seller completes the sale. When a buyer is found for the vehicle and the sale is completed, communication is made with the consignor, and the intermediary receives their commission from the sale they facilitated.

What Does Consignment Vehicle Mean?

A consignment vehicle refers to the transfer of ownership of a vehicle owned by an individual or company to another person or company for sale or use. In this case, the consignor owns the consignment vehicle but has entered into an agreement with a consignee for the use or sale of this vehicle. Consignment vehicles are commonly used for purposes such as display, sale, promotion, etc. This system ensures that the consignor, who owns the goods, is exposed to less risk.

What Does Consignment Product Mean?

A consignment product refers to a product that is offered for sale to another individual or company by a seller before it is sold. In this case, the consignor does not transfer ownership of the product but agrees with the consignee to sell the products and generate income from them.

What Does Consignment Delivery Mean?

Consignment delivery refers to the practice of a seller delivering goods to another person or company before they are sold. In such a situation, the consignor retains ownership of the product but enters into a consignment agreement to sell the products or generate income from them. Consignment delivery is commonly used in the retail sector, where sellers transfer their goods to a consignee to avoid storage and stocking costs. During this process, goods are received, and sales are made by the consignee in exchange for a commission or an agreed fee.

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Is the Consignment System Advantageous?

The consignment system is particularly advantageous for the owner of the goods. Without the need to stock or store products, the seller reduces costs and does not have to transfer ownership to the consignee until the goods are sold. Thus, the seller, or consignor, can offer their goods to customers at prices that are suitable for the prevailing conditions of the day, minimizing the risk associated with products or income.

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