Consignment 101
First off, I can’t overemphasize that this is such a privilege. We are so fortunate to be with a company that “gets it” – they know we can’t pay for thousands of dollars of books out of pocket so consignment was created. What this means is that books are essentially loaned to us to sell then we pay them off after the event or book fair. Incredible, right?!
Who can take out consignment?
You are eligible for consignment when you’re out of your incentive period (after your first 12 weeks in the business) and have $500 in sales in the last 3 months. If you are not eligible right now, don’t fret – you can still have a very successful order-only booth, sell books from your inventory, work the booth to book parties and generate leads or partner up with a teammate out of their incentive period. There are plenty of options so don’t quite rule out booths and book fairs yet!
How much consignment are you eligible to order?
Your consignment levels increase based on how long you’ve been in the business. If you have been in the business for 3-5 months, you are eligible for $1000. This increases to $1500 after 6-11 months in the business. After one year, you are eligible for $2000. If you need to request an increase because you have a large event or multiple events booked, you can put in a support ticket. When you place an inventory / consignment order in OrderPro, it needs to always be a minimum order of $500.
Here are some quick do’s and dont’s of consignment:
- DO use consignment to have books available for purchase at booth events and book fairs.
- DO use consignment if you cannot afford to purchase inventory on your own.
- DO use consignment if you don’t need inventory over the long-term.
- DO use consignment if you have several events lined up before requesting consignment.
- DO be prepared to reconcile consignment within 30 days. Extensions can be given, but don’t count on it.
- DO order consignment in advance. Nobody likes to scramble. Plan ahead and place your order early.
- DON’T take advantage of home office’s generosity to offer consignment.
- DON’T use consignment for small events like a home party.
- DON’T use consignment if you only have just one event booked.
- DON’T take out consignment unless you are prepared to sell all the books.
- DON’T order sets, supplies, collections or subscriptions with any consignment order.
What if I don’t sell it all?
The short answer is, find a way to sell it! There are so many ways to sell your inventory. This might be a booth event, preschool book fair, cash & carry home party or an inventory sale. Home office highly prefers you find a way to sell your inventory, rather than sending it back. If you need an extension beyond the 30 days, submit a support ticket. Worst case – if for some crazy reason, you can’t sell the books, you need to ship them back to home office. You’ll pay a 5% restocking fee with a $10 minimum on full retail books returned. Before you jump to this conclusion, make sure to do the math. Depending on the type of event you did (booth event or book fair), you may only need to have sold a little over half of the inventory to break even and pay off your consignment. Here’s a short example:
You took out $1000 in consignment. When you reconcile as a book fair, you will include 2/3 in full retail and 1/3 in free books. That means, you pay $667 to pay off your $1000 of inventory. With $667 in full retail sales, you make a 17% commission of $113. Meaning, you really just need to sell $667-113= $554 of your $1000 consignment to break even. Just make sure if you are doing a book fair and the school was promised 50% back in free books, they are picking from your inventory. If you used your consignment for a booth event, there’s no need to return the 50% back in free books to an organization so that increases your profit margin. It is just often offset by the expense of a booth fee.
How much consignment should I order?
The minimum order for consignment is $500. You don’t want to make an excessive order and be scrambling to pay it off. It is important to do your research and get an idea of the expected sales. If you’re doing a book fair, ask the school about how much they’ve sold in the past. If you’re doing an event, ask other vendors from previous years about their sales. Know the venue, average attendance and the demographics of who is attending to estimate how much inventory to order.
How to order inventory?
Placing an inventory order is easy and FUN! You get to pick out a ton of books and not pay for them yet, right?! ???? Head over to OrderPro. Enter your information in Step 1. Select “Inventory” in Step 2. Select the books you plan to order in Step 3. No need to enter payment information and submit. That’s it! Here is a quick 3-minute video tutorial if you’re a visual person!
How to reconcile consignment?
Reconciling consignment requires a bit of math and some practice. To make it easier for you, we created a consignment calculator and a video walking you through the process of reconciling. Hop on over to Reconcile Consignment once you’ve sold your books!
How do you determine which titles that you are going to order?
I usually go with what my favorites are (you sell what you love) and then go off the Best Sellers. You can find the Top Sellers list on E-commerce under the categories!
Hello! How much would I need to sell of $1498.21 consignment to break even if reconciled as a book fair?
Hey Kristin! You would need to sell $1000 at full retail. That would give you $500 in free books. The total off your consignment balance would be $1500 (rounding up for easy math here… I know you said $1498.21). If you wanted to get real technical, let’s say you’re making 17% commission on the $1000 full retail so that’s about $170 in your pocket. So, you’re actually making a little this way, versus just breaking even. Hope that helps!
I was planning on taking out $500 in consignment for a book fair and a vendor show in November, however, I can pay upfront for the books now so would it be more beneficial to place an order when I close my October VIP eshow? That route I’ll receive the 25% discount and double free books for October.
Hi Jessica! You’d have to do the math on that one! It may be a close call with the double free books. On a consignment order, you’re going to reconcile as a book fair which gets you free shipping, 50% back in free books, but 17% commission (rather than the 25% from an eShow / party). It might end up being close to the same since there’s double free books in October.
I know we are supposed to charge sales tax for vendor events, but what about tax exceptions. For examples schools and or churches and so on?
Hi Melissa – You will need to get the organization’s tax exemption form and file it with home office through OrderPro. Then when you put an order in for that organization home office will set the tax to $0. Note in California even a non-profit is required to pay sales tax (there is no such thing as a sales tax exemption).
Can you take out more then one consignment at a time? I have a lot of events over the next few months and want to make sure I have enough for each event.
Hi Melissa! Yes, you can take out multiple consignments as long as they are within your consignment limit. Example: Your limit is $1000. You can take out 2 orders of consignment at $500 each.
Thank you for doing this video! Do we charge sales tax at vendor events?
Yes, you will charge sales tax at vendor events to reimburse yourself for the sales tax you pay when you purchase the books for your inventory.
How long do you have to reconcile after you take out consignment? I have 3 events over the next month and a half that I want to take consignment out on.
Hi Beca – You have 30 days to reconcile but you can ask for an extension if you need more time.
I have a friend who no longer wants to be a consultant and I want to buy her inventory of books. It is about $2,000 worth of books. She does not have any consignment out and owns the books. What is a fair price to give her for the books?
Hi Sherry. Here are my thoughts on your question – if you were to purchase $2k worth of books on your own, you would enter it as a book fair and spend about $1300 (not including shipping, etc). So, I wouldn’t pay more than about $1365. That being said, if she is just sitting on the books, offering 50%/$1000 is more than fair.
While it’s nice to help out a friend, keep in mind, make sure you are making the best business decision you can for you. Could these funds be better spent elsewhere for growing your business and meeting your business goals? You won’t be able to count any of these towards your trip points or HOC challenges. Ultimately, you know what is best for your business and if purchasing the inventory is going to help you meet your goals, I think anything between $1000 and $1365 is a fair offer!