Consignment Opportunity

[Jeffrey Fusaro]

Two weeks ago, I had to go pick up an item that I had ordered at a local jewelry shop. I have been buying from this store for several years, now and have gotten to know most of the folks on a first name basis.

I had just finished making these four pens that I am donating to my daughter’s school fund raiser. On a whim, I took the pens with me to see if the store owners would be interested in selling similar pens on consignment.

I showed the pens to the sales clerks and to the owners and made my pitch for the consignment deal. They seemed impressed with my work. They said that they would discuss it and call me back.

Today, there was a message on our answering machine that the owner would like me to come in and discuss the consignment arrangement.

Needless to say, I have a thousand questions running thru my mind….

I have searched the forum for the word “consignment” and read comments from all of the posters. Lots of good advice in the responses.

I think I have a firm idea on what the retail price of the pens should be. I am basing this on the 3X cost formula. I have included the cost of kits, blanks, adhesives, sandpaper, finish, shipping charges, etc.. Right now, I am focusing on high-end pens like those shown in the photos.

For those of you who have sold items thru shops on consignment, do you have a formal ‘contract’ between the shop owner and yourself? Or are you working on a ‘handshake’ deal?

I have purchased many items from this store in the past, and I am usually given a discount (20% off of retail) on my purchases. I am preparing to be asked if they will be able to offer a discount on my pens to other customers, as well. My inclination is to agree to this and adjust my suggested retail accordingly. The resulting sale price would be split between us according to the pre-arranged consignment agreement. Any thoughts or suggestions on this?

What about consigned items that get lost, stolen, damaged, etc. while on display in the shop?

Any additional advice would be appreciated.

[Dick Strauss]

Jeffrey,
Make sure you have a signed contract before the time of the first delivery. You should make it clear to them that they are responsible for all theft, damage, and loss (they are more likely to treat your pens with respect if they are responsible for them). You may want to list an amount of time for the consignment and you definitely want to put the financial terms in writing so that both parties are clear on the arrangement.

Every time you bring pens to the store, make sure that you have an authorized person sign for the inventory. I would include the pen kit type/finish and wood type for recordkeeping (along with any other noted you think are important).

Just my initial thoughts...

[Richard Madison]

Jeffrey,
Good advice from Dick. If your pens are on consignment, you own them and can set the retail price. As discussed, you and the store owner should agree in advance on the financial arrangements, including when does he/she pay? In my limited experience as a retailer and as an "artist", the usual split with a beginning artist is 50%. Have been told (one data point only) that an artist that sells well and regularly may negotiate his/her way to as much as a 70% split to the artist. Unlikely, I think. Meanwhile had some of my stuff in a store of some good friends for a while, and their split was 100% to the artist. Did not actually sell much, but they just liked my work and thought that it added a bit to the overall look of their place.

Note that you will probably want to retain possession of any display fixtures you provide, and may want to ask that no competitive products be displayed in your fixtures.

So, good luck and hope you do well. We could all use a few extra dollars to help support the addiction.

[Greg Savage]

I'm not a big fan of consignment. The usual split is 60/40, with the artist getting 60%. At a 50/50 arrangement the shop or gallery better be buying your work. I've been offered up 80% but still don't want to deal with consignment. You are taking all of the risk. The shop or gallery has no financial investment. Let's say that you do have a contract with a shop and they suddenly close due to a bankruptcy or other financial or family situation. Your items are considered their inventory until their mess issorted out. Sure, you can get your stuff back.....eventually......but not without a struggle. Ask the artists who were consigning their work to People's Pottery a few years back. PP filed for bankruptcy and a lot of artists lost a lot of money.



There are plenty of free contracts available on line. Here is a consignment contract .....

( Deleted because I think that the mods would yank this due to the fact that it was a link from another turning forum..........SEE NEXT POST)

[Greg Savage]

Here is a copy of the contract




CONSIGNMENT CONTRACT

Agreement made this _________ day of the month of __________ 20___ by and between
Artist: _____________________________________
located at : _____________________________________
_______________________________________________ and _______________________
the "Gallery", located at __________________________________________________ ___.
Recitals
Gallery exhibits and sells artwork; artist has created and owns the artwork listed in the List of Inventory (the "Artwork") and desires to exhibit and sell the same. Therefore, the parties agree as follows:
1. Scope of Agency. The artist appoints the gallery to act as artist’s nonexclusive agent for the exhibition and sale of the Artist’s work. This agency shall cover only artwork submitted by the artist while this agreement is in force. The gallery shall document receipt of all artworks consigned.
2. Consignment of Inventory. Gallery accepts on consignment, the artworks listed on the List of Inventory attached to this agreement. Additional lists may be incorporated into this agreement if signed by both parties.
3. Pricing and Terms of Payment. The gallery shall sell the artworks only at the retail price specified on the List of Inventory. The gallery and the artist agree that the gallery's commission is to be ___ percent of the retail price of the artwork. Both parties must agree to any change to the retail price or the gallery’s commission in advance.
4. Discounts.
In the case of discount sales, the discount shall be deducted from the gallery's commission. The artist will be given the full artist’s share of the retail price as agreed.
5. Payment.
The gallery shall pay the artist all proceeds due to the artist within 10 days of the last day of the month in which the piece was sold. No "sales on approval" or "on credit" shall be made without the written consent of the artist. All installment proceeds received by the gallery shall first be paid to the artist until the artist has been paid in full.
6. Accounting. The Gallery shall furnish the artist with an accounting every 3 months. The first such accounting to be given on the __________day of __________ , 200___.
Accounting shall identify each artwork sold during the accounting period and the location of all artworks consigned to the gallery that have not been sold. A complete and final accounting shall be provided by the gallery to the artist in the event of termination of this agreement.

7. Approval Sales. The gallery shall not permit any artwork to remain in the possession of client for a period exceeding seven days unless such artwork is purchased and fully paid for by client, or unless artist provides prior written approval.
8. Fiduciary Responsibilities. Title to each of the artworks shall remain in the artist’s name until the artist has been paid in full. Upon payment, title then passes to the purchaser. All proceeds from the sale of the artworks shall be held in trust for the artist until the artist is fully paid. The gallery shall pay all amounts due to the artist before any proceeds of sales can be made available to any and all creditors of the gallery.
8. Loss or Damage. The gallery shall be strictly liable for loss or damage to any consigned artwork from the date of delivery to the gallery until the artwork is returned to the artist or delivered to a purchaser. In the event of loss or damage that cannot be restored, the artist shall be paid the same amount as if the artwork had been sold at the retail price. If restoration is suggested or pursued by the gallery, the artist shall have veto power over the choice of the restorer. The artist shall be responsible for all repairs to artwork necessitated by artist’s faulty workmanship.
9. Insurance. The gallery shall insure the artwork for its full wholesale price. In the event an insurance claim is made, the gallery shall pay all deductibles.
10. Transportation of Artwork. Packing and shipping charges, insurance costs, other handling expenses, and risk of loss or damage incurred in the delivery of the artworks:
A. From the artist to gallery shall be borne by the artist
B. From the gallery to the artist shall be borne by the gallery
C. From the gallery to any point other than the artist shall be borne by the gallery
The gallery is also responsible for storing and using appropriate boxes and shipping containers.
11. Commission. If the artist sells any artwork directly to a purchaser through contacts established initially through the gallery, then the gallery shall be entitled to a commission of ___ percent of the selling price.

12. Promotion. The gallery shall use its best efforts to promote, display and sell artworks. The gallery shall clearly identify the artist’s name with all artworks and shall include the artist’s name on the bill of sale for any artwork sold by the gallery.
13. Reproduction. The artist reserves all copyrights to the reproduction of the artworks except as noted in writing to the contrary. The gallery may arrange to have the artworks photographed to publicize and promote the artworks through means to be agreed by both parties. In every such use, the artist shall be acknowledged as the creator and copyright owner of the artwork. The gallery shall include on each bill of sale of any artwork the following legend: "All copyrights to reproduction of the artwork(s) identified herein are retained by the artist."
14. Copyright. The gallery shall take all steps necessary to insure that the artist’s copyright in the consigned artworks is protected in the artist’s name.
15. Security Interest. Title to and a security interest in any artworks consigned or proceeds of sale under this agreement are reserved to the artist. The artworks shall not be subject to claims by the gallery's creditors. The gallery agrees to execute and deliver to the artist, in the form requested by the artist, a financial statement and such other documents, which the artist may require to perfect its security interest in the artworks. In the event of the purchase of any artwork by a party other than the gallery, title shall pass directly from the artist to the purchasing party. In the event of a purchase of any artwork by the gallery, title shall pass only upon full payment to the artist of all sums due hereunder. The gallery acknowledges that it has no right to and shall not pledge or encumber any artworks in its possession nor incur any charge or obligation for which the artist may be liable.
16. Duration and Termination of Consignment. The artist and the gallery agree that the initial term of consignment for the artwork shall continue until _________, 20__, and that the artist will not ask for return of the artwork prior to this date unless the agreement is breached by the gallery. Thereafter, this agreement shall continue until written notification of termination from either party to the other. Within thirty days of the termination notification, all accounts shall be settled and all unsold artwork shall be returned to the artist at the gallery’s expense. The agreement shall automatically terminate with the death of the artist or if the gallery becomes bankrupt or insolvent, or breaches the agreement.
17. Miscellany. All modifications, deletions or additions to this agreement must be in writing and signed by both parties. This agreement constitutes the entire understanding between the parties hereto.
18. Governing Law. This agreement shall be governed by and in accordance with the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have signed this agreement as of the date below.
Artist: __________________________________________(print)
Company Name (if any): ___________________________________
Authorized Signature: ______________________________________
Title: _______________________
Date: _______________________

Gallery: ________________________________________(print)
Authorized Signature: ______________________________________
Title: _______________________
Date: _______________________



APPENDIX A: LIST OF INVENTORY ON CONSIGNMENT
This is to acknowledge receipt of the following artworks on consignment.


Title


Description
Retail Price
# of Items
1




2




3




4




5




6




7




8




9




10





Gallery acknowledges receipt of artwork listed above:
Authorized Signature ________________________________________
Title ___________________Date____________
Artist:
Address:

Telephone:
e-Mail:

[Jeffrey Fusaro]

Jeffrey,
Make sure you have a signed contract before the time of the first delivery. You should make it clear to them that they are responsible for all theft, damage, and loss (they are more likely to treat your pens with respect if they are responsible for them).

Every time you bring pens to the store, make sure that you have an authorized person sign for the inventory.
Just my initial thoughts...


good advice, dick! thanks!


Jeffrey,

Note that you will probably want to retain possession of any display fixtures you provide, and may want to ask that no competitive products be displayed in your fixtures.



definitely. i am going to supply a small leather/suede display tray that will hold six to ten pens. one of their initial concerns was the limited display cabinet space that they have right now. i'm sure this will only get worse as christmas approaches. i am going to ask them to keep my pens inside the display case, rather than out on the open shelves. i figure that i have a better chance of this happening if i keep my display small.


I'm not a big fan of consignment. You are taking all of the risk. The shop or gallery has no financial investment. Let's say that you do have a contract with a shop and they suddenly close due to a bankruptcy or other financial or family situation. Your items are considered their inventory until their mess is sorted out. Sure, you can get your stuff back.....eventually......but not without a struggle. Ask the artists who were consigning their work to People's Pottery a few years back. PP filed for bankruptcy and a lot of artists lost a lot of money.



greg-- some very good points. but, i would be assuming all of the financial risk if i made several pens and tried to sell them at my own table at a show. i am not sure that i would even attempt to sell more expensive pens like this at an art/craft show. i think the number of folks that would be seriously interested would be extremely small.

on the other hand, this is a very high-end store. there are only a few display cases that i even bother looking in when i am shopping there. some of the items on display in their store cost more than my truck did. it is unlikely that i would be able to get better exposure any place else. plus, they are an established, family-owned store that has two generations currently running the store.

i am still in disbelief that i actually had the gumption to approach them with the idea in the first the place, let alone that they are considering this arrangement. when i asked my friend, the sales clerk, if they sold items on consignment, she didn't hesitate with a "NO" response. then, just out curiosity she asked what i had in mind. i showed her the pens, and she called one of the owners over to have a look. that got the whole thing rolling....

thanks, again to everyone for their responses, and especially for the sample contract.

keep 'em comin'!

[Jeffrey Fusaro]

i met with the jewelry store owner yesterday afternoon.

i brought the pens back in to show them once more. and, i also brought a copy of the contract that greg offered.

to make a long story short, the meeting was very casual and it ended in an agreement for me to sell pens thru their store on a 60/40 consignment arrangement. i set the retail price, and the proceeds are split accordingly. the owner agreed not to offer any discounts on my pens.

the owner chuckled when i showed him the contract. he said that we can work with the contract, or we can work with a handshake, whatever i preferred. i think that i still prefer to have a written agreement and list of inventory and retail prices, etc. maybe it doesn't have to be quite as formal as the contract shown. i just want to make sure that the responsibilties like liability and terms of payment are clearly expressed and agreed upon.

his attitude was surprisingly casual. i was kinda taken by surprise. he pretty much let me put my ideas on the table and said that he was fine with whatever i wanted to do.

i proposed to supply six to eight pens, with a wooden presentation case for each pen and a small leather/suede display case that can used inside the glass jewelry display case. as the pens sell, i will bring another in to keep my display replenished.

he said that he will put the pens in the display case with the men's watches, figuring that would give them the most exposure to the appropriate audience. he was glad to have something other than watches to offer to his male customers. and, he said that women often come in looking to buy gifts for their men, and do not have much of a selection of ideas.

hopefully, this will work out well for both of us.

thanks to all who took time to offer advice.

p.s. a close friend of my wife was admiring the pen that i made for my wife. so, i gave her friend a similar pen. she liked it so much that she asked if was willing to make more as birthday and christmas gifts. i said that i would be glad to do that. earlier this week, she ordered three gift pens. my first sale! woo-hoo! :)

[Steve Schlumpf]

Congrats on the consignment opportunity Jeff! From the photos that you have posted - you do high-quality work and should have no problem what-so-ever selling your pens! I would have to think that this is a great time of year to be displaying your products! Best of luck to you!

[Jeffrey Fusaro]

Congrats on the consignment opportunity Jeff! From the photos that you have posted - you do high-quality work and should have no problem what-so-ever selling your pens! I would have to think that this is a great time of year to be displaying your products! Best of luck to you!


steve--

thanks for the kind words and the encouragement.

i hope to get the pens into the shop for the thanksgiving weekend, and the start of the christmas season. the store owner said their big christmas surge usually starts around december 10th.

[Brett Baldwin]

Congratulations on your sale and your potential new sideline. I know the contract is a bit cold but it really protects you both. And it can always be modified if things change. Good luck on the new venture.

[Greg Savage]

Jeffery, Glad to see that you made the deal on consignment. I'm a deal-on-a-handshake kinda guy, but I've been burned before by being to trusting. It never hurts to have a written agreement, that way you both are protected somewhat.

Good Luck with the pens.

[Bill Stevener]

Judge "Judy" knows. ;)

[John Hart]

Cool! Interesting discussion. Congratulations on what sounds like a pretty nice deal. I have a friend who got a consignment opportunity at a high-end cigar shop. His pens sold out quickly regularly and for a nice price. The same pens sold poorly at craft shows. Go figure.:rolleyes:

[Jeffrey Fusaro]

Cool! Interesting discussion. Congratulations on what sounds like a pretty nice deal. I have a friend who got a consignment opportunity at a high-end cigar shop. His pens sold out quickly regularly and for a nice price. The same pens sold poorly at craft shows. Go figure.:rolleyes:

i call that the "funnel cake effect".

craft show shopper mentality is sometimes, "i can buy a fancy do-dad, or i can buy a funnel cake. hmmm... i'm hungry..."

[Brett Baldwin]

The stomach rules all.

I was in a jewelry store and saw some handmade jewelry boxes made of medium grade woods and average to good workmanship but with a superglossy finish and they were going for a minimum of $200. It really does make a difference what sort of "neighborhood" your items are in.

[David Fried]

Got it! I'll set up my booth with a sign, "Buy a Pen - Get a Funnel Cake".

[robert hainstock]

I Put Twenty Or More Pens Into A Shop On A Handshake Deal About This Time Last Year And So Far The Results Have Been Mixed. Three Or Four Sold.
I Sold Fifteen To One Customer Sunday. So You Take Your Chances On The Selling Exposure Helping. The Shop Owner And I Had Great Expectations, But We've Had Mixed Results. Good Luck .;)
Bob