It’s a question we get every day: what is your commission? Or sometimes: “what is the split?” While it’s obviously important to know before you consign your valuable items, the commission rate is only one of several factors to consider.
Here I’d like to argue why a focus on commissions alone isn’t necessarily going to get you the biggest payout from a consignment shop.
Let’s look at two hypothetical consignment stores:
Shop A: charges a 50% commission
Shop A works hard to present your items attractively. They maintain reasonable pricing, and they have the knowledge required to price items accurately (and higher when appropriate). With a loyal following of customers, they’re able to sell many items at the original asking price.
You consign 100 designer clothing items at Shop A. The average price per item sold is $98 for a gross total of $9,800 for your collection. After 50% commission you receive $4,900.
Shop B: charges a low 30% commission
At Shop B, the staff spends an average of 5 minutes on each item, mainly tagging them and putting them on a sales floor. If online, they hastily take poor quality photos and then measure the garment (nothing more). To generate quick sales, they mark down items aggressively, regardless of the item’s market value.
You bring your 100 items to Shop B. When the consignment is over, the average price per item sold is $64 for a total of $6,400 for your collection. After 30% commission, you receive $4480.
Consignment Shop A paid you $420 more, despite their higher commission rate.
Which is the better store? Neither shop is a “bad” store, but they do work with different strategies.
Because Shop B has a low commission, they must sell a larger volume of product to generate revenue. This means they cannot spend extra time to handle your rare and special items with care. They might be hasty to price things, and mark them down quickly.
The point is that a variety of factors matter just as much as commission. The shop that “pays the most” must do so with their sales performance first and foremost. So before you choose a shop, it’s smart to consider the bigger picture.
If I were tasked with selling a large and valuable wardrobe, here are some questions I’d ask to consignment store staff or owner.
What is the your average sale price for [X brand] in [X] category?
If the shop has sold it before, that’s a good sign. Ask them for a typical sale price on your item. You can also simply view their store for similar pieces.
How many items do you typically return to the seller?
This is important, as it speaks to their flexibility. If the shop is unwilling to work on your slightly imperfect item – even if it holds value – that’s going to be a drag on your overall earnings. Don’t expect any shop to accept soiled, destroyed, or worn out items. But it’s OK to ask: Is your shop willing to work on items that aren’t 100% perfect?
Do you have experience with [X brand] in my collection?
The staff should have a breadth of knowledge regarding fashion labels (or furniture, antiques, whatever). If they don’t know what makes an item special, they won’t be able to communicate that to a buyer. Don’t judge too quickly, however. Sometimes a dealer needs to do their own research and get up to speed. You may never find a shop who is familiar with your favorite obscure Japanese jewelry designer from the late ’90s.
One last word of advice: it’s not always productive to analyze the particulars when it comes to consignment. The main questions to answer are 1) can they sell it? and 2) will I get a reasonable price?