The retailer sells the goods on behalf of the supplier and earns a commission or agreed margin on each sale .
In essence, consignment allows brands to place inventory in retail locations without transferring ownership upfront, while retailers expand assortments without purchasing stock in advance.
For fashion brands and retailers, consignment can support expansion and experimentation but requires careful operational control.
It is commonly used for new brands, premium categories, or uncertain demand scenarios.
- Lower upfront risk for retailers
- Easier market entry for brands
- Wider assortment availability without wholesale purchase
- Inventory risk remains with the supplier
- More complex inventory tracking and reconciliation
- Slower cash flow for brands
In practice
Imagine a fashion brand launching in a department store.
With a consignment model, they can:
- Place selected styles in-store without transferring ownership
- Track sell-through and stock levels regularly
- Receive payment only for units sold
- Retrieve or redistribute unsold inventory at the end of the period
Consignment enables brands to test retail performance while maintaining control over inventory.
Consignment often connects with:
- Sale or Return (SoR): To define alternative risk-sharing models
- Assortment Planning: To decide which products are suitable for consignment
- Sell-Through Rate: To evaluate performance and replenishment decisions
How it fits together
Together, these systems help brands manage inventory risk while scaling retail presence responsibly.