Consignment or wholesale: which one to offer
Wholesale pays on delivery, consignment pays on what sold. The difference is who carries the risk — and what each is worth once you count the trips.
There are two ways a shop can take your work, and the difference between them is a single question: who owns the stock while it sits on the shelf?
On wholesale — also called firm sale, or buying outright — the shop buys it. The stock is theirs the moment it comes off your van, they have paid for it, and whether it sells is now their problem. On consignment, it stays yours. The shop is holding it for you, and pays only when a customer actually buys it.
Everything else follows from that one difference.
What each one costs you
The comparison people make is per-unit price, and it is the wrong one, because it leaves out the trip.
Say you make preserves. A shop will buy outright at MX$70 a jar, or take them on consignment at MX$100 a jar with the shop keeping the difference. Consignment looks like it pays 43% more.
Twelve jars still on the shelf
- On the shelf last visit
- 30
- Still there today
- 12
- Sold
- 18
- Price per jar
- MX$100
- Owed
- MX$1,800
Eighteen sold, so MX$1,800 — against MX$2,100 if the shop had bought all thirty outright on the day. The higher price per jar did not make up for the twelve that did not move.
Run it again with a shop that sells nearly everything and it flips completely:
The same thirty jars, in a shop that sells
- On the shelf last visit
- 30
- Still there today
- 3
- Sold
- 27
- Price per jar
- MX$100
- Owed
- MX$2,700
Sell-through is the whole variable. Below about 70% the outright price wins; above it consignment wins, and wins by more the better the shop is.
70%
Roughly where it flips
Sell-through, at these prices. It is not a universal number — work it with your own two prices — but it is the thing to know about a shop before deciding which arrangement to offer it.
The cost nobody counts
Consignment has a second price, and it is not money.
Wholesale is one visit: drop off, invoice, leave. Consignment is two — one to deliver, one to come back and count what sold — and the counting visit produces no stock movement at all. It exists purely to find out what you are owed.
For a shop on your route, that is nearly free. For the shop forty minutes the other side of town, the return trip can cost more than the margin it earns. That is a real reason to offer that shop wholesale even when its sell-through is excellent.
Who should be on which
Offer consignment when the shop does not know you. A shop that has never sold your product is being asked to gamble on it. Consignment takes the gamble away, which is why it is the arrangement that gets a new stockist to say yes at all.
Move to wholesale when the sales history exists. Once a shop has sold through six weeks of stock, it knows what it has. Buying outright is now a reasonable ask, and it is better for you: you are paid on delivery, you stop making counting trips, and your money stops sitting on somebody else’s shelf.
Expect a mix, including inside one shop. A cafe might buy the day’s bread outright — it is worthless to return — while your biscuits and granola stay on consignment. Both, at the same shop, on the same day.
That mix is exactly where a notebook stops coping. Two arrangements with one shop is two accounts, and the failure is not dramatic: the numbers quietly merge, and the bill you send is wrong in a way neither of you can reconstruct three weeks later.
What to actually do
- Ask any shop for its sell-through before you argue about price. Without it you are negotiating a per-unit number that means nothing.
- Count the trip. If the counting visit is a special journey rather than a stop on a route you already drive, price it in — or offer wholesale instead.
- Start new shops on consignment, and revisit at six weeks. By then you have the history that makes the wholesale conversation easy.
- Keep the two apart in your records from day one. Merging them is not a bookkeeping inconvenience; it is how you end up billing a shop for stock it still has on the shelf.
If you have not read how the consignment sum itself works, that is the place to start — this page assumes it.
Common questions
- What is the difference between consignment and wholesale?
- On wholesale the shop buys your stock outright and owns it from that moment, so you are paid on delivery whether it sells or not. On consignment the stock stays yours until a customer buys it, and the shop pays you only for what sold.
- Which one pays more?
- Wholesale pays less per unit but pays all of it, once. Consignment pays more per unit but only on what sells, and it costs you a return trip to count. Which is worth more depends on your sell-through rate and how far away the shop is.
- Can I offer both to the same shop?
- Yes, and many producers do. The day's bread might be bought outright while the shelf-stable line sits on consignment. They are two accounts with one shop, and the mistake is letting them become one number.
- Should a new shop start on consignment?
- Usually. A shop that has never sold your product does not know if it will move, and consignment removes the reason to say no. Moving to wholesale later is a conversation you can have once there is a sales history to point at.