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Consignment Selling Part Two: What Could Possibly Go Wrong?

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Danna Crawford

In Consignment Selling Part One: Contracts, Clients, and Records, I covered the basics of starting a consignment business: Protecting yourself with contracts, finding clients, and keeping detailed records. Now it’s time to expose a few of the things that can go wrong if you’re not diligent (oh how I wish someone had given me a heads-up like this when I first started):

1. Account for some instances of human error

Whether you’re selling your own items, or strictly working on consignment, accidents happen. For example, I recently listed and sold more than eighty vases for a client. Unfortunately, I dropped one before it got listed. To remedy the situation I did the following:

  • Called my client right away and revealed my mistake
  • Kept all of the pieces to prove that I hadn’t simply sold the item
  • Negotiated a replacement value with my client (in this instance it just turned out to be lunch)
All in all, if you break something, or an item goes missing, it’s a good idea to offer to pay the full value of the item. Depending on your history with the client, chances are they’ll cut you some slack.

2. Beware of clients overestimating the value of their items

People get attached to their stuff. Sometimes this emotional attachment can give them a false sense of what their items are really worth. That’s why it’s very important to reassure your client that it’s in your best interest—as well as theirs—to get the best possible price for your items. You’ll also want to be the one to make the call on the selling format, i.e. whether to go with a fixed price or auction-style listing. Remember: You’re the expert.

3. Have a zero-tolerance for shill bidding

What is shill bidding? It’s basically when someone bids on an eBay item only in an attempt to inflate the bid price. In other words, let’s say you’re selling an item for a client and they use their own eBay account to bid on the item—just to drive up the price. Not only is this completely unethical, but it’s also illegal, and a sure-fire way to get banned from selling on eBay. This doesn’t happen very often, but to discourage this from the outset I include verbiage disclosing my policy on shill bidding in my contract. Also, here’s a tutorial on eBay’s Shill Bidding Policy.

4. Be clear about how you’ll handle returns

Returns are just a regular part of doing business. But make sure that you cover the following scenarios with your client ahead of time so that there are no surprises along the way:

  • If a buyer initiates a return before you’ve paid your client, you should let your client know that the item is being returned, and that it will be re-listed
  • If a buyer initiates a return after you’ve paid your client, the item is now your property, and you’ll be free to list it on your own
If this last one happens to you, it’s still a good idea to let your client know that the item has been returned. You can’t communicate too much when it comes to consignment selling.

As you can see, none of these possible snags are deal-breakers. Most everything can be solved with good communication, both before you start selling for a new client (i.e. by covering everything in your contract), and along the way.

Also, as I mentioned in Part One, if you want to see a copy of the contract that I use with my clients, just email me directly. Then, look out for Part Three of this series where I’ll cover tips for creating and sustaining great customer service and client relationships.

In the meantime, have any consignment-selling words of wisdom of your own? I look forward to seeing your comments below.