Wednesday, 10 January 2018

Should I Sell My Products in Consignment Basis?


Should i Sell My Product in Consignment? I got asked this question this morning so i thought of sharing this with you.


So what is consignment?

Consignment means putting your product for sale in 'shops' or pharmacies. 
Your product will be for sale in these shops and the shop owner is not required to pay you until they get to sell the product. 
If the product is sold they will pay u the product price minus their consignment fees (usually 30-40% of product price)


Whats the Pro's in Doing Consignment?

1) More Distribution Place

The good thing about doing in consignment is that you will be able to 'spread' your brand around. Means instead of selling in one shop; by consignment you can sell in more places depending on your budget. If budget is not a problem you can sell in 100-1000 shops one go!

2) Higher Chances of Shop Owner Keeping Your Product

Most shop owners don' t want to take the risk and 'purchase' new brand. When you put your product for consignment, the shop owner is more likely to 'keep' your product because there is no risk to them since they only pay if it is sold.


The Cons in doing Consignment?

1) Cashflow

 It will affect your cashflow. When you put your product for consignment, you have to make your product first. 
This would mean you have to take out money, make the product, put the product for sale and only get paid once its sold. 
It may look like every other product out there is doing the same but this also means that your will need a much higher capital (starting budget) to grow. 
Remember what i said before? Cashflow is the backbone of your business. No Cashflow = No Growth in Business!

2) Stolen

There is chances of product being spoilt and stolen. When this happens, usually the shop owner doesn't not pay for this but you have to.

3)No Promotion Done by Shop Owner

Consignment items are usually not aggressively promoted as compared to other items. 
if you are a shop owner; would you promote something that you already paid for and you have got no choice but to sell it since you cant return it; or would you promote something that you haven't paid and if the item is not sold the owner of the product will take it back (consignment item)? 
I was a pharmacy owner before. I didn't care much about consignment items as much as those products i had to purchase in wholesale.

4) Spoils Fast

Products that are on the shelfs needs something that is long expiry. 
Most natural products have short expiry and need to be stored at proper temperature and clean environment. 
When you put this product up for consignment; you no longer have the control on this. This would also mean your natural product will go bad faster. 
When this happens; the shop owner will return the product to you and you have got to bare the loses.

5) Own Marketing To Sell

You need to do your own marketing. 
Consignment is good if your product is well known which means that you have got to drive the traffic/ your own customers to the place where the product is sold. 
But if this is what you need to do; wouldn't it be better to drive the traffic to your own shop or website rather than doing the marketing for other shop owners?

6) Exposing Your Product To Authorities

Most natural handmade product owners do not have proper licensing and GMP certification since they are just starting out. 
If you are one of them; displaying your products in shops and pharmacies are basically exposing yourself to the authorities. 
Do this with caution. If you are not sure how to get the licensing and certification; you can watch our video on the steps here (in FB group. Join First to view!)

Now that you know the Pro's and Con's i hope its clearer to you on which path you want to take. For me; consignment is a good way to go if you have the budget; and you are online famous. 

Consignment method basically expands your distribution channel which makes it easy for your customers to purchase your products. If you do not have the budget; look for individual agents and do drop-shipping instead:-) 

Thank for reading;
Nisha

0 comments:

Post a Comment

Please leave a comment for any enquiries thank you. we will get back to you within 1 week.

 
Copyrigh: Soap Lab Malaysia LLP