Consignment stock is a supply chain model in which a supplier sends goods to a retailer for sale, but retains ownership of the goods until the retailer sells them to customers. The retailer does not actually buy the inventory until it sells the products, so unsold products can be returned. This model is especially beneficial to retailers when customer demand is uncertain, as it allows the retailer to offer customers a greater variety of products and place a greater emphasis on sales. By carrying the product on consignment, the retailer takes a smaller financial risk since they do not pay for the product unless it is sold.

A consignment stock contract, or consignment agreement, is a legal document outlining the agreement between a consignee (the retailer) and a consignor (the supplier) in regard to consignment goods. This contract outlines the requirements for storing, transferring, and selling the consignment inventory, and includes the amount of profits received by each party when the goods are sold.

Consigned goods should be recorded in inventory management systems that specifically support consignment inventory. Consignment inventory can be used to test out new products and get feedback from a larger audience, providing valuable insight into how well the product is received and can give consignors the confidence to move forward with distribution. However, consignment inventory can be risky for suppliers because they do not receive payment until retailers sell their inventory.

Below are some common questions about consignment stock:

• What is a consignment item? A consignment item is any product that has been transferred from a supplier to a retailer with the intent of being sold to a customer.
• Do you include consignment in inventory? Goods held on consignment are included in the inventory of the supplier, not the retailer.
• How do you handle consignment inventory? To handle consignment inventory, a supplier (the consignor) and a retailer (the consignee) should have a well-structured consignor-consignee agreement that outlines the requirements for storing, transferring, and selling the consignment inventory.
• What is consignment stock? Consignment stock refers to inventory that a vendor sends to a retailer for sale. The retailer takes responsibility for selling the goods and when they do, the retailer pays the vendor for the inventory. For this to occur, a consignment agreement will generally be drawn u...