The Big Problem With
Sale Or Return

Here’s what I think you should know. There’s a big problem with sale or return and it might be killing your business.

Let me explain.

Sale or return, or consignment, is the practice of loaning your work to a stockist. No money changes hands at the time of the loan. If your items sell, you get a percentage of the retail price – usually a split of around 50/50 or 60/40 in your favour.

So what’s my problem?

As a retailer I have no problem at all with this arrangement.

But you do.

Let’s pretend we’re explaining sale or return to an alien. Or a six year old. Or a six year old alien.

Here’s the first thing little Oob-Noob would say:

“Let me get this straight. You use your money, skills, experience, training, imagination and unique perspective on the human condition to make these precious items. Then you give them to a shopkeeper for free?”

“Silly Oob-Noob. It’s not for free. When my item sells I’ll get a percentage of the retail price.”

“So you definitely know your stuff’s going to sell?”

“Um, no. But it probably will. And then I get paid!”

“You get paid for all the items you handed over?”

“No, just the ones that sold that month.”

“Well, correct me if I’m wrong, but doesn’t that mean you could hand over goods that cost you, say, $100 to make, but only get $20 back? Or get nothing back? For months on end?”

“…”

“And what about if your stuff gets nicked or the business goes bust? What if the shopkeeper just forgets to pay you? What happens if I blast the shop with my Scorch Gun and all that’s left is a pool of bubbling rock? Do you still get paid then?”

“Shut up Oob-Noob. Isn’t there an episode of Paw Patrol you should be watching?”

The problem with sale or return is that all the risk is on you.

You’re taking it on trust that your goods will sell and that the shopkeeper will deal with you fairly. The retailer is in the sweet position of getting stock to sell with no initial outlay and, potentially, a large measure of control over when and how they pay you.

You’re essentially giving the store an unsecured loan.

So sale or return is great for shopkeepers. It’s sometimes not so great for artists.

To balance this out, most artists and designers rely on a sale or return agreement. This is a document which sets out the conditions under which you’re offering your work and it covers:

1. The items you’ve supplied, their quantities, descriptions and selling price.

2. How long you’ve agreed to supply the goods for.

3. Who’s responsible for insuring the goods.

4. What happens if your items are stolen or damaged while at the shop.

5. How, when and how much you want to be paid for each item.

6. A statement of ownership, which says the goods remain yours until you’re paid for them.

Is it just me, or is all this a giving you a headache too?

Regardless of how scrupulous your consignment agreement is or how trust-worthy your stockists, that’s a lot of caveats and small print. It’s also a lot of waiting and hoping that your stuff sells and nothing goes wrong.

So let me ask you this:

Wouldn’t it be better if you just got paid upfront?

This way of doing things is called wholesale. If the retailer wants to stock your work, they either pay for it before it leaves your sight, or within an agreed time frame of your choosing – usually 30 days after delivery.

Doesn’t that sound pretty good?

Compared to sale or return, wholesale is clean and simple. If you set a decent minimum order, you’ll get paid in big blocks of cash rather than dribs and drabs.

And once you’ve waved it off at the post office, you can strike each order from your to-do list. There’s no checking in to see if your stuff has sold. That’s not your problem – it’s the shopkeeper’s.

But now it’s time for some caveats and addendums of my own.

It’s a horses for courses situation. Despite the risk problem with sale or return, it might still work very nicely for you – particularly if your items have a high selling price and stocking even one or two would involve a very large outlay for the retailer, or if you’re in an early, fact-finding stage.

If you’re not sure if you’ve got a business or a hobby, sale or return might allow you to dip your toe in the water and get some valuable feedback

Bottom line, though?

If you’re offering sale or return and nothing much is happening, it might be time for a re-think.

PS – If you want to switch from sale or return to getting paid upfront, there’s a script for telling your retailers right here.