In a wholesale deal the shop buys your stock and owns it. In a consignment deal the shop takes your stock, sells what it can, keeps a cut, and gives back or holds what does not sell. Wholesale pays you sooner and at a lower price. Consignment pays you later at a higher price, and leaves the risk of unsold stock exactly where it already is, which is with you.
For a Shopify brand putting product into physical shops for the first time, this choice usually shows up as an offer, not a decision: a boutique says they would love to try the candles on consignment. This is how to think about that offer.
The two deals, on the same candle
Say the candle retails at twenty-four dollars and costs you six to make.
Wholesale. The shop buys a case of six at twelve dollars a unit. You invoice seventy-two dollars. You banked thirty-six dollars of margin on the day you shipped, whether the candles sell in a week or sit until spring. If they sell, the shop reorders. If they do not, the shop learned something and you still got paid.
Consignment. You place twelve candles in the shop. Nothing changes hands. Over ten weeks, seven sell at twenty-four dollars, which is one hundred and sixty-eight dollars of retail. The shop keeps its agreed share, commonly forty cents of each retail dollar for consignment, and remits the rest. You receive around one hundred dollars for seven candles, roughly fourteen dollars each, and you get five candles back that have been handled for ten weeks.
Fourteen dollars a unit beats twelve, which is why consignment looks attractive on the surface. The comparison is not fourteen against twelve, though. It is fourteen dollars in ten weeks on seven units, plus five slightly shopworn units and the cost of making twelve, against thirty-six dollars in hand at the point of shipping.
What you are actually trading
Three things move between the two deals.
Inventory risk. In wholesale, the risk moves to the shop the moment they pay. In consignment, it never leaves you. That matters for a candle and matters enormously for anything seasonal, perishable or fashion-dated, where returned stock is worth less than it cost.
Cash timing. Wholesale cash arrives on an invoice, immediately for a prepaid first order or in thirty days on terms. Consignment cash arrives after the product sells, which might be two months or might be never, and the reconciliation is monthly and manual.
Motivation. This is the one brands underweight. A shop that spent its own money on forty candles has a strong reason to put them where people see them and to tell customers about them. A shop holding consignment stock has nothing at stake. Your product goes on a shelf near the back, and if it does not move, nobody in the shop notices for a quarter.
That last point is why experienced brands treat wholesale as the default and consignment as the exception, even when the per-unit number looks worse.
When consignment is genuinely the right deal
There are real cases, and they usually have a common shape: the product is expensive, unproven in that setting, or difficult for a shop to judge.
High ticket items. A four hundred dollar piece of furniture or a two hundred dollar piece of jewellery is a lot for a small shop to buy on spec. Consignment gets it in front of customers when no reasonable buyer would place a cash order.
A shop you really want, that is nervous. If a well-known local store will take your candles only on consignment, taking the deal to get the shelf, the photographs and the reference is often worth it. Treat it as a paid trial with a defined end.
Galleries, museum shops and craft spaces. In some categories consignment is simply how the sector works, and arguing about it marks you as new.
Testing a format. A limited run, a new size, or a seasonal set where you genuinely do not know if it sells. The stock comes back and you learn something for the price of some scuffed boxes.
Outside those, consignment usually means the shop is not convinced, and a shop that is not convinced will not sell much either way.
If you say yes, write it down
A consignment arrangement with no paperwork is how brands lose stock. Put four things in an email and have the shop reply to confirm, which is enough for a small arrangement.
- What is there and what it is worth. An itemised list with quantities and your retail price. Both sides sign or acknowledge it.
- The split and when you get paid. The shop's share of each retail sale and a fixed remittance date, monthly on a specific day, with a statement showing what sold.
- The term. Ninety days is a sensible default, after which stock is either bought, returned at the shop's cost, or the arrangement is renewed.
- Who carries loss and damage. The shop should cover stock that is damaged, stolen or unaccounted for in their care. Without this clause, missing stock becomes your problem.
Count the stock yourself when you place it and when it comes back. Not because shop owners are dishonest, but because nobody's memory of an informal arrangement survives a busy December.
Converting consignment into wholesale
The useful way to treat a consignment deal is as the first step of a wholesale relationship, with an explicit path out.
Say it up front, plainly: happy to start on consignment for ninety days, and once we know it sells, we move to a standard wholesale order. Then, when the first batch sells through, present the numbers back to the shop. Seven candles in ten weeks is a case every ten weeks, and a case at twelve dollars a unit gives them a better margin per unit than the consignment split did on the same shelf space.
That last part is true and it is your whole argument. Under consignment the shop kept nine or ten dollars of a twenty-four dollar sale. Buying at twelve, they keep twelve. A shop that has seen the product sell will usually take the better margin and the ownership that comes with it, because their risk has already been retired by the trial.
The mechanics of setting up that first real order, from case packs to terms, are in how to start wholesale, and the price ladder that makes the margin argument land is in wholesale vs retail price.
What this does to your books and your stock count
One practical wrinkle that catches Shopify brands out: consigned stock is still yours, so it is still your inventory, sitting in someone else's building. If you count it as sold, your stock numbers are wrong and your direct store will oversell.
Keep a separate location or tag for consigned units so the number in your system matches the number in your spare room plus the number on shop shelves. Reconcile after every remittance. When stock comes back, inspect it before it goes back into sellable inventory, because boxes that have been handled for three months are not new.
Which one for a brand with its first three shops
Default to wholesale. Ask for a small opening order, two cases rather than ten, which makes the yes easy without asking a shop to gamble. Accept consignment when the shop is one you specifically want, when the product is expensive, or when you are genuinely testing, and put a ninety day limit on it.
And if the honest reason a shop wants consignment is that they do not believe the product will sell, take that seriously. The answer is usually packaging, price or the fact that they cannot picture where it goes on their shelf, which is the subject of retail placement.
If you are not sure which shops would buy outright in your category, paste your product link into WholesalePilot and look at the preview of retailers and distributors stocking comparable products before you agree to anything.
Questions about wholesale and consignment
Is a consignment split always forty cents on the dollar? It varies by category and by shop, and it is negotiable. Galleries take more. Shops that also stock wholesale brands often take less.
Can I charge a shop for stock they damaged? Yes, if the agreement says so. Which is why the agreement should say so.
Does consignment hurt my brand? Not in itself. What hurts is unsold stock sitting unloved at the back of a shop for a year, which is exactly what a term limit prevents.
Can I do both with the same shop? Yes, and it is common: core products on wholesale, a new or expensive line on consignment. Keep the paperwork separate so the stock count stays honest.