Consignment
What Is Consignment?
Consignment is a retail model where products are placed with a retailer but remain owned by the supplier or brand until they are sold.
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.
Why Consignment Matters for Brands
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.
Key benefits:
Lower upfront risk for retailers
Easier market entry for brands
Wider assortment availability without wholesale purchase
Key risks:
Inventory risk remains with the supplier
More complex inventory tracking and reconciliation
Slower cash flow for brands
Examples of Consignment in Action
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.
How Consignment Fits into the Ecosystem
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
Together, these systems help brands manage inventory risk while scaling retail presence responsibly.
Related Terms
Sale or Return (SoR)
Assortment Planning
Sell-Through Rate
Inventory Ownership
