There are a lot of business types which you can choose from. You can do partnerships, go solo, or even do reselling. One of the most prominent business ideas today is the rise of consignment stores. Haven’t you heard of it? Well, in this blog, we’ll introduce to you everything you need to know about what is a consignment shop.

First stop, let’s get to know what does consignment means.

Definition of Consignment

The word consign has been continuously evolving as the years go by. But, in simpler words, consignment refers to giving something over to another person’s care. There has been a long discussion as to where the word consignment came from. Some said it came from the French word “consigner”, while some believe it originated from the Latin word “consignare” which translates to “mark with a seal”.

So now, what is a consignment shop and how does it work?

A consignment shop is a kind of resale business that displays products and goods for percentages of the product’s sale price. Here, an owner basically brings in his item to the consignment shop and gets paid when it sells. Every consigned shop has its own rules and regulations when it comes to applying what is consignment. But, on a usual basis, the process goes like this:


Once a person gives his item to a consigned store to sell it, the consignment shop will hold the specific product for an arranged number of days. Once the product got sold within that period, the owner of the item gets about 40 to 60% of the sale.

Before items are placed for consignment, it needs to be in a good condition for consignment stores to consider it as a consigned product. Being clean and in a good selling condition is important in understanding what is a consignment shop and how does consignment works.

While this type of business operation is mostly recognized as a kind of resale, consignment also lets any retail space do their own inventory without taking on a great consignment shop financial burden. This is commonly what a consignment shop practices and is also used in instances of smaller stores and boutiques where merchants can sell their own items on consignment.


Image taken from Pair For Ideas

Getting to know what is a consignment shop comes with knowing what types of consignment shop products you can consider selling. To make things easier for you, here’s a list we’ve made of all the common products you can sell in your consignment shop.

  • Clothes
  • Bags
  • Musical instruments
  • Furniture or appliance
  • Equipment and gears
  • Baby furniture and accessories
  • Shoes
  • Antiques
  • Personal collectibles
  • Toys


Image taken from Beauty In U

Understanding Consignment Sales

Another idea you should know on what is a consignment shop is to understand how consignment sales work.

When the consignor sends his products and goods to his chosen consignee, there is no need for any journal entry. But, once the consignee has managed to sell products, he must pay the consignor the right amount they have talked about. Here, the consignor would now record a debit to his cash and a credit to the consignment shop sales. The consignment shop owner would also eliminate the related consignment amount of product inventory as a debit to the cost of consignment shop goods sold and a credit to inventory.

However, if the consignee fails to sell all consigned goods, they can choose to return all the consigned goods to the owner before the ending of a specified date they agreed upon. Therefore, the consignor bears the hazards and rewards of consigned product ownership, while the consignee is not required to pay for the goods only until they are sold to the market.


Image taken from Nomad

Are Thrift Stores the Same as What Is a Consignment Shop?

One common misconception about knowing what is a consignment shop is that they are the same as thrift stores. Unfortunately, there is a huge difference between a thrift store and what is a consignment shop.

Both of them are considered second hand stores but thrift stores are more donation-based. Consignment stores on the other hand pay the owner of the consigned product for each sale it gets. There is also a huge difference between the ownership of the consigned item in a thrift store and what is consignment shop.

In most thrift stores, the owner gives up all his rights to the items towards the consignment shop owner. On the other, when it is consignment, the ownership of products like clothing stays with the consignor. The consignment store is basically only offering up his consignment space or a platform from which a product owner can sell his item.

Another huge difference between thrift stores and what is a consignment shop is their kind of business mission. Thrift stores are mostly made for non-profit business ventures. On the other hand, consignment stores always seek business profit. For example, when consigning a product like clothing, the consignor is given the convenience of earning a sum of money while keeping their closet clean and their unwanted clothes out of the garbage. Consignees are also able to only pay for consigned items they sell and keep an inventory of store items with tiny overhead for the products themselves.

When is the Right Time to Do Consignment?

One idea you should also understand in getting to know what is a consignment shop is the right time when to start them. Unlike other businesses where you can start it immediately once you have the resources, consignment is quite complex. There are factors you must know and understand first about what is a consignment shop before you could actually do it.

To give you a better view of the right time to master what is a consignment shop, here’s a list of situations for you.

You can definitely start your own consignment shop when:

  • You seek to offer merchandise in another specific area but do not want to open a separate store branch in that area.
  • You want to expand your consignment shop activities in other areas but at the same time, do not want to hire new store employees.
  • You find an opportunity for business in another specific location and already possess a built contact with other business setups in that target area.
  • There is a high temporary demand for specific products in a target location which might not happen again in the future.

What are the Advantages of Building a Consignment Shop?

Everything in this world has its own advantages and drawbacks. With knowing what is a consignment shop, here are the advantages you should learn about to help you understand this type of business on a deeper level.

In the consignment business,

  • There is no need to pay upfront for an inventory to sell, which most retailing stores are needed to.
  • Any consigned products which aren’t sold can still be returned to the owner instead of putting it at their disposal.
  • You can build some solid regulars who return regularly to look out for the changing consignment merchandise.
  • Store payments can be made for days or even weeks after the item is sold, which is one effective way of improving store cash flow.

Disadvantages of Consignment Stores

Though mastering what is a consignment shop sounds interesting to start your selling business career, it does have its own drawbacks which you should never miss out on.

  • Consignor is unable to have any control over the physical damage of products, goods as well as shopper abuse with the reason that the condition of the item is not in his physical control.
  • Once the consigned inventory is unable to sell well or the commission on its sale is not as high as expected, the consignee can have the choice to display his own product inventory in the most prominent and most advantageous places.
  • Another idea you should know about what is a consignment shop is the fact that even if the consigned goods are placed in the best areas of the consignment shop and get additional exposure, the consignor will still get no cash only until the goods are actually sold. His payment is also remitted to him by the consignee.
  • The product consignor cannot have full control over the expenses acquired by the consignee’s end.
  • Return on investment is always on top of whatever business type it is. This is another fact you should know in mastering what is a consignment shop. As the consignee has no initial investment on the consigned item, there would be chances that he'd rather present and promote his own store items where personal selling and revenue are more possible.

Set Up Your Simple Store with Us!

Businesses are meant to give you earnings. As the product owner, your primary aim is to get the revenue you deserve for every product you release on your market.

Here in Strikingly, we let our users create their own world through our Simple Store feature. Instead of getting hooked on what is a consignment shop, why not build your own? With our Simple Store feature, you can start selling your own products, and even set up different payment options for your target market.

Adding Your Product

When adding your product to your created Strikingly Simple Store, simply follow these steps.

  • Go to your Site Editor
  • Click the “Add New Product” button at the top
  • You can now start adding your products!

Free users can list one product on their website, five products for Limited users, and up to 300 products for PRO users.


Image taken from Strikingly

You can also edit your Simple Store product information. Unlike what most consignment stores do where your product’s exposure isn’t that secured. You can add your product’s name and even include a description. One pro-tip: We recommend keeping your product description short and simple for your customer’s convenience. After this, you can also start uploading your product images to make your simple store more awesome

Set Up Payment Options

Having a market means having different modes of payments available for each customer. In contrast to what is a consignment shop practices where you only get a percentage of the product’s total sales, you can do everything when you create your own online store. To make things easier for you Strikingly allows different payment options for your simple store. To edit this one, simply:

  • Go to the “Settings” panel
  • Click the “Payment” button
  • Connect your accounts!

To receive payments through your Stripe or Paypal account, you will just simply enter your email address. However, if you don't have any Stripe account yet, sign up for a Stripe account first and then enter your account email.


Image taken from Strikingly

Starting your own business could come in many ways. You can either take it slow as a beginner and learn what is a consignment shop or go all out if you already have a solid budget and business plan. Many businesses in the industry started from scratch before they reached their current position. Some of them even tried various businesses before finally coming up with the best business idea that fits them. What you just need to do is do your own research, analyze what best fits you, choose your target market, and start rocking your business career.

Got more questions? Chat with us, and let’s start working together.