In the logistics industry, “consignment” is a process where one party (the consignor) sends goods to another party (the consignee) to sell or distribute. Here are the main points to understand.
Ownership
The consignor keeps ownership of the goods until they are sold. The consignee does not own the goods but sells them for the consignor.
Responsibility
The consignee is responsible for storing, handling, and selling the goods. They must take care of the goods and present them well to potential buyers.
Payment
After the goods are sold, the consignee takes a commission or fee and then pays the remaining amount to the consignor.
Risk
If the goods do not sell, the consignor usually takes them back and bears the loss.
Documentation
Specific documents, like a consignment agreement or consignment note, outline the terms of the arrangement.
Inventory Management
Consignees must keep accurate records of the consigned goods and regularly report sales to the consignor.
Returns
Unsold goods can be returned to the consignor if they don’t sell within a certain time or under certain conditions.
Consignment is useful in many industries, such as retail and manufacturing, where businesses want to reach new markets without investing heavily in inventory. It allows consignors to expand their sales channels, while consignees can offer products without upfront costs.
