Key Terms: Consignor, Consignee, Inventory, Payouts

Consignment Shop Vocabulary: The Terms You Must Know

Understanding the language of consignment is vital for new shoppers, consignors, and especially store owners. Below is a practical glossary, with examples, to make you comfortable navigating consignment agreements, software, and daily business. Bookmark this resource it’ll make starting and running your store much less intimidating!

Essential Consignment Terms (With Examples)

• Consignor: The individual or business who owns the items being sold. Example: Maria is a consignor when she brings in her handbags to the shop for sale.
• Consignee: The agent/store that sells the item on behalf of the consignor. They display, market, and sell the goods collecting a commission only after the sale. Example: “Downtown Resale” is the consignee for Maria’s bags.
• Inventory: All the goods on hand, in the shop, or accepted for sale. In consignment, inventory includes both shop-owned items (if any) and consigned goods tracked per consignor.
• Intake: The process of evaluating, tagging, and documenting new items as they enter the shop. Good intake systems ensure nothing gets lost or mixed up!
• Tag/Label: Every item receives a tag with price, item description, and sometimes owner ID or inventory number for accurate tracking and payouts.
• Consignment Agreement: A written or digital contract spelling out item terms, split, payment schedule, period, and policies for unsold items or disputes.
• Consignment Period: The set time (often 30, 60, or 90 days) the store keeps the item on the floor or website before returning, donating, or discounting it.
• Commission Split: The percentage division of each sale; the most common split is 40/60 or 50/50. Example: if a dress sells for $40 at a 50/50 split, the consignor receives $20.
• Payout: The consignor’s share of the sale proceeds, paid as cash, check, or store credit. Payouts may occur monthly, quarterly, or by-request at some shops.
• Markdown: A timed, agreed reduction in price to help sell older inventory. Example: After 30 days, items may be marked down 20%.
• Unsold Inventory: Goods that do not sell within the consignment period. The agreement covers what happens next return or donation.
• Store Credit: Some shops allow consignors to spend their earnings in-store, often for a slightly higher credit than cash.
• Sales Report: Summary of each consignor’s items, sales, and payouts crucial for accurate business and confident consignors!
• Adjustment/Settlement: The act of finalizing consignor accounts, including payout, returned goods, or other status updates.

Consignment Contract Terms New Owners Should Watch

• Minimum Sale Price: The lowest amount an item can be sold for (if negotiated by the consignor), or the lowest markdown level.
• Loss/Damage Clause: States if the shop is responsible if goods are lost in a fire, flood, theft, etc. many shops are not without separate insurance.
• Abandoned Goods: If unsold items are not picked up, shops may claim them as property or donate them always honor the agreement for good relationships and compliance.

Visual: Who’s Who in a Consignment Shop Transaction?

FAQ: Consignment Shop Key Terms for Beginners