How Jewelry Consignment Works.
Consignment lets one party sell jewelry that another party still owns, and share the proceeds when it sells. It is a way to carry more stock with less money tied up — if the terms and the records are clear.
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The Basics
In a consignment, the owner of the goods (the consignor) places them with a seller (the consignee). The consignee displays and sells them; when a piece sells, the consignee keeps a commission or margin and pays the rest to the consignor. Pieces that do not sell go back.
Designers consign to boutiques, estate owners consign to jewelers, and businesses consign to each other. The mechanics are the same.
Two Ways To Split The Money
Most consignments use one of two arrangements. Whichever you use, write it down.
- Commission: the consignee keeps an agreed percentage of the actual selling price and pays the rest to the consignor.
- Fixed payout: the consignor is owed an agreed amount per piece, and the consignee keeps whatever it sells above that.
| Arrangement | Consignee keeps | Consignor receives |
|---|---|---|
| 40% commission | $800 | $1,200 |
| Fixed payout of $1,300 | $700 | $1,300 |
What The Agreement Should Cover
A consignment works only as well as its agreement. It should state:
- Every piece, with a description, SKU and agreed price or payout
- The commission or payout, and whether the consignee may discount
- How long the pieces stay, and what happens to unsold pieces
- When the consignor is paid after a sale
- Who insures the pieces and who is responsible for loss or damage
- That ownership stays with the consignor until sale
Keeping Records
Consigned goods must never be confused with goods the seller owns. The consignee should record each consigned piece separately, by consignor, and report regularly on what has sold, at what price, and what is owed. The consignor should keep the same list from its side and reconcile against each report.
Because the consignee does not own the goods, they are generally not its inventory or its cost of goods. How consigned sales are recorded for accounting and sales tax depends on your jurisdiction — ask your accountant.
Consignment vs Memo
Both leave ownership with the original owner until a sale. Memo usually means goods lent for a short, fixed period to be bought or returned at an agreed price; consignment more often means goods left with a seller to sell on the owner's behalf for a commission. In practice the words are used loosely — the agreement matters more than the label.