My lesson on consignment: be proactive and ask questions –
Writing a blog is a slightly odd activity. For the most part, I try to imagine what you, the reader, might find interesting or useful on the topics of feltmaking and millinery. Once in a while, there’s another reason for writing. At the moment, I feel the need to examine a recent experience in order to understand it. Hopefully, you may find my lesson on consignment educational.
Here’s the story:
Last autumn, I was contacted by a retail shop in another state. Would I be interested in having my hats at their shop? Would I? Of course!! How exciting to think that my work would be seen and appreciated by people so far away. And hopefully, my hats would then find appreciative owners. After all, hats only come into its happiness when worn. (Hats have much in common with toys. You can keep them in the box, but they are more fun when taken out and played with).
Why would I want to sell my wet felted hats in a shop?
Since moving back to the USA (from the UK) my sales on Etsy have slowed down. This slowdown puzzles me: my shipping within the USA is now much less expensive and my hats are just as compelling — to me. I’ve heard from other sellers that Etsy ‘has grown and changed’ and it is a lot harder to get ‘found’ because there are now so many shops/competition. While I didn’t previously sell a huge number of hats, I could see healthy views on my Etsy Stats. If no one sees one’s work, there’s limited possibility of it selling. Hence, having my hats be available in busy ‘brick and mortar’ retail shop would be an opportunity to try something new. And hopefully, find a receptive audience.
My first lesson on consignment
Chatting with the friendly shop owner via Facebook and email, I learned that the hats would be taken on as consignment. Hmm what did consignment actually mean? According to Wikipedia “Consignment is the act of consigning, the act of giving over to another person or agent’s charge, custody or care any material or goods but retaining legal ownership until the material or goods are sold.” Did some additional research and spoke with some online pals and learned that some makers disliked consignment because all the risk was on the artist. Other makers said that consignment worked just fine and that’s how one establishes oneself. Here’s an article that reiterates this – sort of. But, needing better footing in the USA, I boldly took the leap, figured out the wholesale pricing of what the shop would owe me, signed an electronic contract, and packed up a big box full of my ‘babies’ – 19 hats and 7 headbands. The hats nest nicely so they actually fit in this box.
I nervously tracked the parcel as it travelled halfway across the country. Whew- they safely arrived! Always a worry that a one-of-a-kind piece may get lost in shipping. Let alone 26 of them.
Felt super-chuffed when the owner contacted me to say that the hats were ‘museum quality’ and looked even better in person! (Felted hats are so challenging to photograph!)
Second lesson on consignment
During the holiday season, out of consideration (or timidity), I didn’t bother to do followup with the shop owner, figuring that December is busy and November was similar. I’ve worked in retail in some lovely flower shops, so I know how the holidays are crazy-hectic! Instead, I emailed her in January and was surprised to learn that no hats had been sold. 🙁
Persevering a bit more
The shop manager explained that the weather had been unseasonably adverse in their part of the country. Nonetheless, there were some upcoming festivals that would bring lots of visitors to their city. How about sending in some promotional photographs of the hats being worn and also some behind-the-scenes of how the hats are made? This could aid sales. So I emailed these helpful materials.
Tick, tick, tick…ding. Time’s up
This time my timidity was overcome and I promptly followed up. Had the festival attendees been hat shoppers? Disappointingly, none of my hats had sold. At this point, the shop owner kindly agreed to mail back my hats and they returned quickly. I opened the box with nervous anticipation: how would my babies be? Becoming ‘shop worn’ is one of the risks of consignment, my online advice colleagues had warned. Thankfully, this was not true. The shop had taken excellent care of the hats; what a great relief! At the very bottom of the box I found this cool Biltmore Hats pin.
Being a glutton for punishment
However, while waiting for my hats, I felt a bit unsettled. Is there another lesson on consignment? Politely, I emailed the shop owner asking for feedback on the lack of sales. Why did I do this? I knew about the unusual weather, but it must be something else. I just needed more information. Did I think she would actually say the hats were ugly or something else? I’m not sure.
However, what she responded with surprised me. She politely explained that there was great interest in the hats, but that it was the pricing: “Though people appreciate the skill, they have too many options these days online and seem to expect fine made goods to be competitive in price with manufactured pieces. This has become a recent great problem for retailers like ourselves. The world has changed and not for the better when it comes to offering artisan works.”
Well, feedback about pricing is quite useful information to learn. I had certainly seen ‘price resistance’ when doing my pop-up sidewalk shop in Pittsburgh – “This is not Paris” was quipped by a passerby! But, I had hoped that customers of a proper shop would have different attitudes towards price. Perhaps I’ve the maker’s delusion that my customers shop at Anthropologie or Ivey Abitz.
However there’s more to this lesson on consignment
Pricing for wholesale is a complicated matter that I’m beginning to learn about. There are various methods to figure out one’s wholesale price. Megan Auman and Etsy have very helpful blogposts on the topic. Being a less-is-more person when it comes to math, to calculate my wholesale pricing, I basically chopped my Etsy prices in half, made a bit of adjusting to get ‘pretty’ numbers and raised the prices of a few of the hats – both those going to the shop and those staying online at Etsy. A handmade felted hat takes several days to make and then there’s the cost of materials and overhead.
Interestingly, wholesale pricing is NOT necessarily consignment pricing. Some argue that consignment should be 40% to the maker, not 50%. Wish that I had seen this useful article beforehand.
In a world where customers price-check via smart phones, prices need to be the same or similar in shops and online. This is called Manufacturer’s Suggested Retail Price (MSRP). So I had set the wholesale prices so that they would fit in with my online ones. Unfortunately, I had incorrectly assumed that the shop had doubled my prices, what is called keystone markup. So, this was my error. I hadn’t understood or confirmed what the retail price would be.
When markup is not what you think
Instead, I could see from the hanging tags left on the returned hats that it wasn’t the 50% keystone markup. The shop had perhaps used a formula like one explained in AllBusiness, a website oriented at small business owners. AllBusiness states that ways for small businesses to stay competitive is to “Increase your prices. Sure, you may have competitors down the block that are carrying the same lines as you are in which case your customers will be more price conscious. But you may also be carrying lines exclusively and that’s where the opportunity to increase prices can take hold.”
Indeed, each of my hats is one of a kind, so the shop had exclusive rights; hence, there was NO risk of price checking down the block. And because each hat is unique, there was less risk of customers checking the rest of my shop on Etsy.
Another revelation / recommendation of AllBusiness is “Don’t apply the same margin to every product.” Oh! From the shop’s hang tags, I could see that this was true for my felted headbands, which had the highest markup margin. Hadn’t realized that this was something to ask about.
Having higher than expected markups resulted in my already not-inexpensive, handmade items, being even more expensive. While I wish that the shop used a 50% markup, it is my own ignorance of not asking the right questions nor being more proactive in following up which now irks me.
In trying to explain my lesson on consignment, I’ve come to accept and understand the experience. Thank you for letting me share and grow!
Have you sold anything via consignment? What was your experience?
Please let me know. You can leave your comment way down, below the photos.
She creates one of a kind, hand-dyed, cotton garments with minimalist silhouettes sewn into complex constructions. And she also teaches sewing.
She responded that “I used to consign clothing for years, and I would keep my prices consistent throughout all venues- stores to my own website. If a dress was a 100, that’s what it would be everywhere. When I sold consignment, I would make sure I retained 70 to 85% to cover my trouble and shipping. I would never go less than those percentages. Wholesale I kept at 50%. When I sold on my site, it’s at full retail prices so that I can have consistent pricing.”
She also explained that she would only do consignment when she “had have extra inventory.” Adding that “consignment has not been profitable for me when I have to produce inventory upfront for the store, then I’m taking a lot of risk and putting too much upfront…😭😭😭. Strong boundaries and defined expectations are also critical for avoiding tissue moments.”
Do, go and visit her Fairfit and read her blog. She has a helpful series on purposeful sewing titled “Six Steps and Start Sewing.”
Thank you Andrea, again for all your wise advice!