If you’re seeking a low-risk strategy to launch or expand your business in Nigeria, consignment selling could be your ideal solution. This approach is gaining significant traction in the retail industry, particularly as the second-hand market experiences a surge in popularity.
Here’s a compelling fact: nearly 10% of Nigerians purchase second-hand items weekly, and almost 20% do so monthly. This presents a substantial opportunity for astute entrepreneurs. In this article, we will delve into everything you need to know about consignment selling.
What is Consignment?
Traditional sales involve a straightforward process: a seller, distributor, or retailer purchases products from a supplier or manufacturer, takes ownership of the merchandise, and stores it before selling. However, consignment sales operate differently.
Consignment is a business model where a retailer (the consignee) sells products on behalf of the owner (the consignor). As a consignor, you provide your goods to the retailer, who manages storage, inventory, and sales. In return, they receive a percentage of each sale or a flat-rate fee.
How Does Consignment Work?
A consignment agreement is established between the consignor, who retains ownership of the merchandise until it’s sold, and the consignee. This agreement should cover several key clauses, including:
Payment terms
Delivery costs
Duration of the agreement
Insurance, covering shoplifting and damaged goods
In consignment sales, the consignor maintains ownership of the stock until it’s sold by the consignee. The consignee pays for the merchandise only after a sale is made and must remit the sales revenue to the consignor concurrently. Unsold products can be returned, sparing the consignee from costs associated with unsold inventory.
The consignor retains the right to request the return of their products at any time. Consignees must store consigned goods separately from their inventory. Additionally, the consignee’s creditors cannot seize these products since they belong to the consignor.
What Can You Consign?
Consignment shops are always in search of high-demand, quality items. However, they typically have limited space and aim to keep inventory moving. Here’s what they usually consider:
Specialty: Shops often focus on specific product niches, lines, or brands.
Hot Sellers: Items that are likely to sell quickly.
Quality: Some shops only accept items in excellent condition, while others may take pieces needing minor upgrades.
- Seasonal Appeal: Savvy consignees adjust their inventory based on seasonal demand.
Expanding Your Reach with E-commerce
While traditional consignment focuses on physical stores, the digital revolution has opened new avenues for this business model. E-commerce platforms and global shipping solutions have extended the potential reach of consignment sellers from local markets to international audiences. This expansion is facilitated by modern e-commerce and logistics solutions, such as DHL Express Commerce, which streamline the process of selling and shipping products internationally.
DHL Express Commerce is an intuitive e-commerce solution compatible with popular platforms and software. It enables businesses to ship globally, choose flexible delivery options, track shipments in real-time, and use custom packing solutions. It’s ideal for brands seeking a user-friendly solution without needing technical expertise to customize their shipping options. Elevate your business to a global scale by opening a business account today.
