Consignment Selling: How to Consign Your Items for Cash

There are many benefits of selling your items through consignment rather than listing and selling them yourself.

Consignment is a great option for anyone who wants to simplify the selling process. As a client, you can hand off your items and let someone else take care of the hard work while you get paid when they sell. As a reseller, consignment is a smart way to gain free inventory and earn profit by selling items for people who do not want to sell on their own.

In fact, many resellers have adopted consignment selling as a part of their business model. Consignment is a win-win model with benefits for both sides of the arrangement. As a consignment client, it is the easiest way to make money from your items without the hassle of listing and selling them yourself. You simply hand your pieces to a consignment seller, and they take care of the processing, photographing, managing, listing, pricing, and shipping while you collect the payout once your items sell.

On the other side, consignment is also a smart strategy for consignment sellers. By taking on clients and selling their items, resellers can grow their businesses with free inventory, reduce sourcing time, earn commission-based profits, and build long-term relationships with repeat clients.

Let’s explore how Consignment works, and how you can consign your items.

What is Consignment Selling?

Consignment refers to an agreement in which one party (the consignor, “client”) provides items to another party (the consignee, “seller”) to sell. In return, the seller receives a portion of the sale price as a commission for their work in selling the item.

Consignment is a great way to make money on your items without all the work entailed in processing, listing, managing, storing, selling, and shipping them yourself. This is especially beneficial if you can source inventory inexpensively, and then have someone else do all the work, and still make a profit after the fee you pay to the consignee seller. 

Consignment is an opportunity that broadens your sourcing; you might come into contact with decent and well-priced inventory all the time that you don’t want to sell, but someone else specializes in!

This is also a great avenue for your stale inventory that just won’t sell, as a last effort to recoup any small amount that you can, rather than donating or discarding it. 

From the other side, consignment is also a profitable way for resellers to build their business. Acting as a consignee means you can acquire inventory without sourcing trips or upfront costs. You profit through commission when the items sell. With the right inventory, this model can be extremely lucrative.

💡Tip: In 2024, Poshmark launched the Poshmark Consignment Network to introduce consigners with consignees to sell through the Poshmark app! 

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.

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:

• Names of the parties involved in the agreement

• The date and length of the consignment term, clearly stating how long the reseller will keep the items

• A breakdown of fees, including who is responsible for selling and shipping costs

• Payment terms, outlining how often payouts will be made and the method of payment

• Pricing discretion, clarifying that the reseller retains the right to set prices and accept offers

• Return terms, explaining how unsold items will be returned to the client (and who bears the expense)

• 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)

• 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).

• 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

1. Have a contract. Draft and sign an agreement with clear terms about payouts, commission, deadlines, and an addendum of inventory.
   
   
2. Do your research. You should have an idea of what items will sell for so you can determine if consignment makes financial sense.
   
   
3. 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. 
   
   

4. Do your research. Know the resale value of your items so you can decide if consignment makes financial sense.

5. Be patient. Selling takes time to process and time to move once listed, so set realistic expectations from the start.

6. 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.

7. Consider Niched Specialties. Consignees should work with consignment sellers who focus on your type of inventory, such as luxury clothing, furniture, or electronics.

8. Stay organized with bookkeeping. Consignees, make sure you provide the details and documentation for payouts and tax purposes.

9. Get proof of donation. If unsold items are donated, request or provide a donation receipt.

10. 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!