Consignment Inventory Policies
Consignment stores, or resale stores, primarily accept used merchandise for sale on a consignment basis. Each item's sale results in a commission percentage for both the store and the consignor. A workable inventory system provides the foundation for a successful consignment store. Operating a consignment store without predefined inventory procedures, and with merchandise cycling through the store on a daily basis, provides a recipe for disaster.
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Merchandise Acceptance
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Good inventory management begins with quality merchandise. Establish and maintain high standards for your consigned items. For example, do not accept clothing with stains, rips or other defects. Reject furniture with chips, delamination or animal-chewed legs. If you cannot immediately evaluate the merchandise, tag it with the consignor's name and review it when time permits. Provide the consignor with an accepted merchandise receipt that serves as your initial inventory record.
Inventory Designations
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Separate your store's inventory into subsets of the general merchandise categories. For example, a ladies' clothing consignment store often includes categories such as tops, slacks, skirts and shoes. The tops category might include casual, professional and dressy tops. A furnishings consignment outlet frequently sells sofas, chairs, occasional furniture pieces and lamps. You might find sectionals, loveseats and sleeper sofas within the sofa category. Designated merchandise categories should include all items in the store. Each item should exhibit a unique identification number tied to the merchandise type and consignor name.
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Inventory Turnover
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Many consignment shops encourage inventory turnover by systematically reducing prices on aging merchandise. For example, a clothing consignment store owner often sets an item's price at the beginning of the season, and gradually reduces that price as the season progresses. This offers new shoppers first-time bargains and may spur a returning shopper to purchase an item she has been eying in hopes of a price reduction. This policy helps keep merchandise fresher and often reduces the amount of merchandise the shop owner must resolve at the consignment period's end.
Merchandise Dissolution
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Shop owners must decide what to do with unsold merchandise at the end of the season or consignment period. Some shops allow owners to retrieve consigned merchandise at no charge, while other stores charge a fee for this service. A shop owner might donate the remaining merchandise to a charity and ask the nonprofit to provide each consignor with an itemized donation receipt. This represents extra work for the shop owner but often helps foster goodwill with her consignors.
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