Consignment is a type of agreement where a person or company (the “consignor”) entrusts goods to another person or company (the “consignee”), who agrees to sell the goods on behalf of the consignor. The consignee acts as an agent for the consignor, and is responsible for displaying, marketing, and selling the goods. The consignor retains ownership of the goods until they are sold, and the consignee takes a commission or fee for their services.
In retail consignment, for example, the consignor is the supplier of goods and the consignee is the retail store. the supplier entrusts their goods to the retail store with the understanding that the store will try to sell the goods to customers.
Consignment can be a useful arrangement for both the consignor and the consignee. The consignor can offload some of the risk of unsold inventory, while the consignee can gain access to new products and increase the variety of goods available for sale without having to pay for them upfront.
