If you’re wondering what consignment selling is, it’s an arrangement where you give your items to a seller who handles the listing, pricing, marketing, and shipping, and you get paid once the item sells. It’s one of the easiest ways to make money from your belongings without doing the work yourself—and it’s equally valuable for resellers who want to grow their business with free, commission-based inventory.
Consignment works because both sides benefit: clients can offload the entire selling process, while consignment sellers gain inventory without sourcing trips or upfront costs. In this guide, we break down how consignment selling works, the roles of consignor and consignee, the advantages for both parties, and how to start consigning your items for cash.
How to Consign Items as a Client
As a client, you hand off your items to someone else to sell on your behalf. You can work with a local consignment store, partner with a reseller who offers consignment services, or use online companies that specialize in clothing consignment, such as The RealReal, ThredUp, or Vestiaire Collective.
The seller handles the work of processing, photographing, listing, managing listings, and shipping while you collect your share once the item sells. This is a simple way to earn money from your items without spending all the time and effort required to sell them yourself.
How to Consign Items as a Reseller
Taking on consignment clients is an effective way to grow your reselling business. Instead of sourcing all of your own inventory, you accept items from others and sell them under a commission split.
This allows you to increase your shop’s inventory, generate profit without upfront costs, and build a steady client base. Many resellers focus on categories they know best, such as luxury clothing, furniture, or sneakers, to maximize results. To be successful, consignment selling also requires organized recordkeeping, clear communication about payouts, and formal agreements to prevent misunderstandings.
💡Tip: In 2024, Poshmark launched the Poshmark Consignment Network to introduce consigners with consignees to sell through the Poshmark app!
Finding Consignment Clients
It can be difficult to find clients, but there is a huge community of online resellers. You can connect with other sellers on Facebook Groups, Instagram, Reddit, TikTok, and more! You might consider sharing a post that explains that you are seeking someone to sell your items under a consignment model. Consignment can be mutually beneficial if you find another seller who does not have time to source or access to inventory with a decent resale value.
If you are the seller acting as a consignee, you can also advertise your services as a "consignment seller." Many people in your community have valuable wardrobes or items they don't want to list themselves, but would be happy to share a profit with someone who does the work.
When entering a consignment arrangement, just make sure that you choose someone that you have vetted. Make sure they are legitimate and established. Check out their shops and stores to be sure that their listings, sales, and reviews look good, and the partnership will be lucrative.
Do I Need a Consignment Contract?
Yes, you need a consignment contract. In business, always have a contract. Even (especially) if a friend is selling your items, it is a good idea to have a contract that outlines all terms. A consignment contract can be very simple, but should include:
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Names of the parties involved in the agreement
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The date and length of the consignment term, clearly stating how long the reseller will keep the items
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A breakdown of fees, including who is responsible for selling and shipping costs
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Payment terms, outlining how often payouts will be made and the method of payment
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Pricing discretion, clarifying that the reseller retains the right to set prices and accept offers
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Return terms, explaining how unsold items will be returned to the client (and who bears the expense)
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Fraud disclaimer, releasing the reseller from liability in the event of scams or fraudulent buyers (for example, if a buyer damages an item and opens a case)
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An attached schedule of inventory, listing each item and its agreed value for insurance purposes in case of loss (and also to provide the seller with the "bottom line" pricing to entertain incoming offers).
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Signatures of both parties, finalizing the agreement
Contracts can be awkward, but remember that they protect both parties. Whether you're the consignor or the consignee, you should insist on a contract. As an attorney, I always tell clients that “good fences make good neighbors.”
Ready to level up your reselling game? Don’t miss our list of Top Rated Online Marketplaces
Is Consignment Worth It?
Consignment can be lucrative for both parties, provided that both parties receive adequate payment, meaning:
- The consignor receives enough to yield a profitable return on investment (ROI) in consideration of their cost of goods (COG);
- And, the consignee receives enough to yield an appropriate amount in return for their work in processing, listing, shipping, and the bookkeeping entailed with consignment selling. Don't forget that sellers pay taxes on their profits from online marketplaces.
Basically, this means that the inventory has to be good for consignment to be worth it. The higher the resale value, the more likely that both parties can benefit from the arrangement (especially after the marketplace fees).
Consignment Example:
A consignor and a consignee agree to a 60/40 consignment structure, where the consignee (seller) gets 60% as a commission and the consigner (owner) gets 40% of the sale price after selling fees.
Here is the breakdown:
Consignee sold this IZOD puffer vest for $25 on Poshmark.
- Sale Price: $25
- Poshmark Fee: $5
- Profit: $20
- Consignee Commission: $12
- Consigner Payment: $8
Here, the consignee makes a $12 commission, which isn't great in consideration of the time it took to steam, photograph, price, list, ship, do bookkeeping, and process payment and reporting to the consigner. Don't forget, sellers also pay taxes on profits from the resale apps. The consigner here was only paid $8 for her item.
💡Tip: Some consignment commission agreements are very creative. For example, the split might be 60/40 (in favor of the seller) for items that sell under $50, 50/50 for items that sell between $50-$99, and 40/60 for items that sell for $100 or more.
The example above shows the importance of choosing the right items for consignment. Items with a low resale value can drain both sides and simply might not be worth it.
In the example below, the 60/40 commission is the same, but the sale price for the Shoshanna Dress is much higher.
Here is the breakdown:
Consignee sold the dress for $80 on Poshmark.
Sale Price: $80 Poshmark Fee: $16 Profit: $64 Consignee Commission: $38.4 Consigner Payment: $25.6
In this example, the consignee earns a $38.40 commission, which is a solid return. While it may be slightly lower than the seller’s average profit per unit (APU), it comes with no upfront cost and far less risk than purchasing inventory that could sit unsold or sell at a loss. On the other side, the consignor receives $25.60, which is a decent payout considering they did not have to do any of the work.
While consignment makes the most sense for higher value inventory, do what works for you (and the consigners you work with). Everyone’s ability to source, access to inventory, time, and business model are different. This example might be very attractive to a new reseller, but might not be worth it to a seasoned seller, and that’s okay.
Consignees, do not forget to consider the time it takes you to process items (even if they don't sell and you have to return them) and the taxes you pay on your profits per the 1099s the marketplaces send at tax time.
Consigners, do not forget that if you want more profits, you can always sell yourself. Apps like Poshmark, Mercari, and Depop are very beginner-friendly, and reselling is for everyone!
Consignment Shops and Thrift Stores
There are many commercial consignment stores and brick-and-mortar thrift stores that accept items on consignment. This means that you will bring in your items, they will sell them, and they will pay you a portion of the sale price as a commission.
This can be even easier than trying to find and vet another reseller, especially if you are consigning with a well-known business.
Find local consignment opportunities and private thrift stores by searching for “consignment stores near me” on Google! Make sure to check the reviews.
Also, make sure you understand how the process works. You should get answers to all of the questions above, and a written contract (or at least a receipt).
Consignment Tips
- Have a contract. Draft and sign an agreement with clear terms about payouts, commission, deadlines, and an addendum of inventory.
- Do your research. You should have an idea of what items will sell for so you can determine if consignment makes financial sense.
- Be patient. Selling takes time; both time to process items and time to sell once listed. Reasonable expectations from the onset make for a better transaction.
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Do your research. Know the resale value of your items so you can decide if consignment makes financial sense.
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Be patient. Selling takes time to process and time to move once listed, so set realistic expectations from the start.
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Discuss payout options. Some consignors offer upfront buyout or payout arrangements. The consignor may earn less overall, but they leave with instant cash and avoid the risk of unsold items. The consignee may also take a smaller profit, but the guarantee ensures their time and effort in processing the items is not wasted, since nothing has to be returned.
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Consider Niched Specialties. Consignees should work with consignment sellers who focus on your type of inventory, such as luxury clothing, furniture, or electronics.
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Stay organized with bookkeeping. Consignees, make sure you provide the details and documentation for payouts and tax purposes.
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Get proof of donation. If unsold items are donated, request or provide a donation receipt.
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Communicate clearly. Regular updates and clear agreements prevent confusion and help build long-term trust between consignor and consignee.
Consignment vs. Cross-Listing
Consignment is great for those with unwanted items that don’t have time to sell their own clothing. It's also great for sellers who don't have a ton of time to source or profits to invest in inventory upfront.
Of course, the best way to maximize profit on an item is to sell it yourself. Did you know that you can cross-list to multiple marketplaces with just a few clicks using Vendoo?
You might also be interested in the article Consignment vs. Cross-listing
Consignment Selling Online
Consignment offers unique opportunities for both sides of the resale equation. As a client, it lets you make money from your items without the work of listing and shipping. As a seller, you can grow your business by providing steady inventory and income without upfront costs.
The key to success is picking the right items, drafting clear contracts, and setting realistic expectations. Done right, consignment can create a win-win for both consignor and consignee.
Have you sold items via consignment? Tell us about it below!
FAQs
1. What does consignment mean in selling?
Consignment in selling means you give your items to a seller or store (the consignee) who lists, markets, and sells them for you. You keep ownership until the item sells, and the consignee earns a commission from the final sale price. It’s a hands-off way to sell without doing the work yourself.
2. Is selling on consignment a good idea?
Selling on consignment is a good idea if you want to make money from your items without handling listing, pricing, storage, or shipping. It’s ideal for people with limited time or experience. You earn less per sale due to commissions, but you save effort and can move items you wouldn’t sell otherwise.
3. What percentage does consignment take?
Consignment fees typically range from 20% to 60% of the sale price, depending on the shop, item category, and selling price. Higher-end or designer consignment stores often take a smaller percentage, while general thrift or resale shops may take more. Always review the store’s specific commission structure before consigning.
4. What is an example of a consignment sale?
An example of a consignment sale is giving your designer handbag to a consignment shop that photographs, lists, and sells it for you. If the bag sells for $200 and the shop takes a 40% commission, you receive $120. You only get paid after the item sells.
