Consignment
The retail arrangement where the store pays you only after your product sells. How consignment works, why boutiques love it, and the risk it puts on you, the brand.
Consignment is a retail arrangement where a store displays and sells your product but does not buy it upfront. You keep ownership, the retailer pays you only after a unit sells, and anything that does not sell comes back to you. It is a common way for new brands and boutiques to work together, because it removes the retailer’s risk. That same feature puts the risk on you.
How it works
Under consignment, you keep ownership of the inventory the whole time it sits on the retailer’s shelf. The store pays you only for what actually sells, keeping an agreed percentage of each sale as its cut (a consignment split, often somewhere around 40 to 60% to the store) instead of buying the goods from you at a wholesale price. Whatever has not sold by the end of the term comes back to you.
Contrast that with a normal wholesale order, where the retailer buys the inventory upfront and owns the risk of it not selling. Consignment flips that: the store risks only its shelf space, and you finance the inventory.
When it makes sense
Getting into boutiques. Small independent shops often can only take new brands on consignment, so it is a realistic first door.
Testing a store or a product. It is a low-commitment way to see whether a location moves your product before either side commits to a wholesale relationship.
Alongside a pop-up or a shop-in-shop. A retailer can host your product in a pop-up or a shop-in-shop without buying it.
The risk to weigh
You carry the inventory cost the whole time, you get paid slowly (only as units sell), and you take back whatever does not move, often after its best selling window. Track sell-through closely, agree on the split and the term in writing, and do not tie up so much inventory on consignment that you cannot fund the rest of your business. Treat a consignment deal as a test, and convert the stores that sell into proper wholesale accounts.
Frequently Asked Questions
What is consignment in retail?
Consignment is an arrangement where a retailer sells your product without buying it first. You keep ownership, the store pays you only after each unit sells and keeps a percentage, and any unsold product is returned to you. It lowers the retailer’s risk and is common for new brands entering boutiques.
What is a typical consignment split?
It varies, but the retailer commonly keeps somewhere around 40 to 60% of the sale price, with the rest paid to the brand. The exact split, along with the length of the term and who covers unsold returns, should be agreed in writing before you hand over any inventory.
Is consignment better than wholesale?
Neither is simply better, they shift risk differently. Wholesale gets you paid upfront but requires the retailer to commit to buying, while consignment is easier to get into but leaves you financing the inventory and getting paid only as it sells. Consignment is a good first step or test; wholesale is the stronger long-term deal once a store proves it can sell your product.
Sources
- Wikipedia, “Consignment”. Definition of consignment and how ownership and payment work.
- Shopify, “DTC to Brick-and-Mortar,” 2026. How brands use consignment and other low-commitment arrangements to enter physical retail.