Jewelry Selling Policies for Wholesale and Consignment

Karen Meador, PhD

Some of us who engage in making and selling jewelry have little business background. When I started in this business, I erroneously assumed that people would treat me and my products the same way I treated my buyers. It didn’t take many months to learn that this is not always the case. Most store owners follow sound, ethical practices in dealing with vendors; yet there may be a few who do not.

Due to the above, it’s most helpful to develop a business policy that protects both you and the wholesale or consignment store. My policy development began with the question of “what could possibly go wrong?” and I developed these possibilities into questions that led to policies. So, let’s ponder the inevitable and make a list.

Wholesale

Following are the questions that I had about my jewelry after it is sold to a store and was in the possession of the store owner:

Breakage

• What will I do if a piece accidentally get’s broken?

• What will I do if a piece comes apart?

• What will I do if a piece of my jewelry results in a snag or tear on a garment owned by the store or a customer?

We certainly don’t plan for things to break after they are sold, but things do happen. When a store owner says “I dropped this, do you have any beads to replace it”, I usually just take the piece and fix it without charge. Yet, if this happens repeatedly, I may decide that this store may not be the right place for my pieces. For example, after repairing four similar necklaces, I learned that I couldn’t sell anything with large top-drilled and pointed beads to this particular store. When things are repeatedly broken in an establishment, I either move on or tell the store owner that I’m not able to fix broken pieces any longer without charging for the repair.

If one of my pieces of jewelry comes apart, I feel this is my fault. I take the piece and either fix it or replace it with something different. It’s my responsibility to put together a sound product and I do my best to avoid fallible technique.

Finally, I am extremely careful that none of my jewelry can snag or harm a person or a piece of clothing. I run my fingers over the entire piece checking for sharp edges and some even get the “white blouse” test before I sell them. The “white blouse” test is useful when you patina pieces and want to be sure nothing is going to rub off on the customer.

Alterations

• What will I do if a customer wants a piece altered?

I generally alter a piece if needed for a customer. If the piece needs to be shortened, I do not charge for this service, but am simply happy that the pieces sold. If the piece needs to be lengthened, I generally charge for the extra components required. You can and probably should charge a fee for your labor, but will want to inform the customer of this charge before starting the alteration. You will want the store to inform the customer of this at the point of sale. It’s also advisable for the store to get payment for the original price of the piece before you take it apart and work on it. Some of the stores with which I work pay the cost of the alteration for their good customers.

Item Returns

• Will I do anything if a piece doesn’t sell over a long period of time?

• Will I do anything if the store owner changes his/her mind about a piece previously purchased?

I want the store owners with which I work to make money. If one of my pieces sits in their store for too long it seems it needs a new home. I sometimes suggest they give it a new location in the store before we give up on it. For example, a belt I made for a store had not sold over a three month period. I suggested they put one it around the waist of a mannequin dressed in western wear. The piece sold the next day. As you know, it’s also a good idea for the sales people in the store to wear the jewelry piece. How many things have you sold right off your body - - we’re talking jewelry here!

Consignment

In addition to the above questions, I had some other concerns regarding placing my jewelry on consignment.

Money Matters

• What percentage markup will the store charge?

• How often will I get paid?

• Who will pay the tax on items purchased at the store?

• If one of my pieces needs to be mailed to the customer, who pays that shipping?

• What will I do if a piece is lost or stolen?

Why should we care about the percentage markup a consignment establishment takes for our pieces? Obviously, the markup determines the selling price of your designs and in some cases, affects how fast and whether or not the piece sells. Generally, the store doubles your wholesale price to create the selling price. When a store takes a larger percentage, it may inflate the product beyond what the customer will pay. Percentage markup is not always negotiable, but you need to know this information.

It is important to establish a timeline of payment for items sold. You and the store owner may decide that once a month works well or you may choose some other schedule. You just need to know what to expect. I work with one store that writes me a check when I ask for it. Yet, this is an establishment with which I have a pleasant history and I wouldn’t do this with any other store.

Since the store collects the full purchase price for your items, they should also collect and pay the sales tax. The payment the store makes to you is for the wholesale cost only.

If the store offers to mail one of your pieces to a customer, either the customer or the store should pay this cost.

The consignment store is in charge of your products when you leave them with the establishment. If a piece is lost or stolen, you should be compensated for it.

Inventory and Advertising

• Who monitors the inventory and decides when and if more is needed?

• Who is in charge of the way the jewelry is displayed?

• How will my name and business logo be used by the store?

You will want to discuss how to monitor your consignments items in a store. I have found that I like a system wherein the store owner has a method for this and I have records as well. This helps avoid unpleasant discussions regarding whether or not a piece was ever in the store. I give the store a copy of my records.

Find out what responsibilities you have for the display of your items and the use of your business name/logo. Are you supposed to maintain the display or will the store handle this?

Timing and Termination

• How long will a piece remain in the store?

• Can I get my products out of the location at any time?

• How do I terminate my agreement with the store?

It’s a good idea to set a time frame for consignment when you first begin working with a store. Will your pieces stay on display for six weeks, three months or some other length? I suggest that you try a minimum of three months and probably more is needed. It takes a while for customers to recognize your pieces. Often, a person goes home and thinks about a piece and comes back weeks later to purchase it.

Most store owners don’t want you taking your wares out for a show and then bringing some back for display. This makes it extremely difficult to keep the inventory straight and ruins the display. I don’t offer the pieces at a consignment location for sale anywhere else until their proposed time at the store has ended.

Your agreement with a consignment location can be terminated at the end of the consignment period. Remember, however, that the store has this same right.

You can probably think of many other questions, but I’m hoping this gives you a good start. It is unfortunate that other “how to handle it” conundrums may arise after you formulate your policy. Strange things that we never imagined possible do happen in business. Yet, they have to be dealt with and it’s helpful if you given these some thought ahead of time.

Written or Verbal Agreements

Do you want a formal written agreement with your store customers or will a verbal discussion of your policies suffice? Galleries are probably more used to written agreements than most consignment stores. In fact, a gallery may have its own written agreement for you to sign. I believe that whether to write or verbalize your policies is largely determined by your familiarity with the establishment and/or the amount of risk you are willing to take. While some store owners are turned off by a written agreement, others may be thankful for it. I believe you have more liability when consigning merchandise than when selling it wholesale and the former could be the place you want something in writing.

You may find the following online sources valuable if you choose to write your policies:

http://www.landofodds.com/store/owgconsign.htm

http://www.ganoksin.com/borisat/nenam/consignment-agree.htm

Some say that experience is the best teacher. Yet, we need not be naïve about business and can learn from the experiences of others. That’s why I’m hoping that this article will provide the impetus for you to make your own decisions about policies and procedures. It’s not all inclusive and what has worked for me may not be what is appropriate for you.

Over the years, I have stayed with the wholesale buyers who treat me as a professional and a friend. We have a mutual “you help me and I’ll help you” relationship that has yielded profits for both entities over time. They realize that if I don’t make a profit, I won’t be their supplier for very long and I realize that if they don’t make a profit, they won’t need me at all. I’ve stayed with the store owners who want to work amicably with me when problems arise. I’ve left those stores where I don’t find this attitude.

I remember starting my business and being so excited when a store wanted my products that I would agree to anything. I think the store owners saw me as a hobbyist. Through the years, I’ve had to help them see me as a business person. I think it would have been better to start that way rather than acting like the women laying on the railroad tracks awaiting the train. I hope you can start as a professional who becomes the store owner’s treasured colleague.

The opinions expressed herein are solely my own and not necessarily those of Magpie Gemstones.

Karen Meador

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