Setting up a local consignment route

Has anyone had any success, or lack of success doing consignment deals with small to medium sized local businesses? Specifically, any problems placing items, best kinds of businesses to work with, best types of items to consign, problems or pitfalls getting paid or getting your merchandise back, etc. What type of markup is usually needed to entice merchants to let you leave things with them. I can see a very cheap distribution channel to sell items, but lots of potential problems if the merchants try to rip you off. Would it seem to make sense to make your first approach simply as an intro to get a feel for the business owner and his honesty, and not even try to place any items at first. I remember as a kid my folks ran independent drug stores and there was a guy who used to sell all kinds of seasonal and sundry items from the back of his car. He could also provide larger quantity by order. My folks are long dead now, so I can't ask them about this character, but I do recall my folks saying the guy was very wealthy even back in the day. Not just some "joe" selling crap out of his trunk. Looking for any and all ideas, suggestions, pitfalls to avoid. Thanks in advance.

[GordonJ]

YES, I have "rack jobbed". And know that 98% of the business people you deal with won't rip you off, why would they?

7-11's and Circle K convenience stores operate mostly by "rack jobbers", everything from their beer and milk, to the chips, candy, etc. etc.

A lot of stores have "racks" or displays in them. I used to sell KRISTEE products this way, my best seller was The DEFENDER OF WOMEN, a pepper spray. And another hot item, although to this day I don't know why, was a little kitchen spatula that sold like nuts. Other products I have "consigned" have been Victory Miralce Polishing Cloths and Dyna-Glaze.

The way it works is you have a set number of products, just like the HOSTESS cupcake people...

10 cupcakes, 24 twinkies, 10 donuts, etc.

Then when you make your stop, you count up how many have been sold, replace them and submit your invoice. There are a FEW that still pay you that day. MOST that I've seen now a days want a float time, maybe every other week, and if it is a corporation, like Circle K, then they may cut checks from the "home office" or something like that.

What sells off racks? Well, snacks, candy, trinkets-especially little toys and LIGHTERS, any 'impulse' item. And it depends where they let you set your "rack" up in the store too.

NOVELTY Co. is one of the larger "consignment" placement places. If you have secured your source, you simply approach the owner/manager with your offer...and they aren't in business to rip people off. MAYBE you will bring them some fresh profits.

Yes, some of your products could be stolen and the store won't pay you for loss...it depends on the store you are dealing with.

As for profits, most want 40 to 50% profit. But it varies. And you get to test out which price sells best and how much of it goes to the host.

The guy your parents dealt with was one of these "rack jobbers"...and they are still out there. Some still selling from the back of their cars even.

You'll need an agreement form of somekind. Insurance on your own, but you'll find that if you have a good line of products that your customers can sell, they will welcome you back week after week after week.

But HONESTLY, you have to get your mind right. IF you go into it with the idea there are LOTS OF POTENTIAL problems, chances are you'll find a lot of problems.

Now the downside might be an investment on your part to your supplier, unless you can get credit for say, 30 days, and if you collect from your distributors every other week, or once a week, the supplier "float" on your merchandise will help you out.

At KRISTEE, I got to the point where I got an extra CASH discount...the old boy really liked me...I'd pay him in cash, and drove away. He didn't have to repack, ship or bother. And I was young and strong, didn't even need any help putting the boxes in my car. I was paying far less than people who were buying through the mail...and KRISTEE had plenty of customers back then too. PLENTY.

Check when your local store gets the "TRADER PUBS" in...and be there and talk to that guy who works on commission, on CONSIGNMENT, and get a feel for how hard it is...of course, he has an advantage, a well known disposable product that people keep coming in for week after week.

Start with ONE. Figure out how to do it. A simple invoice and an agreement work for most of these people. Heck, I still see people using the old carbon copy receipt book.

Don't overcomplicate it, do your due diligence, make sure you're legal (biz license, wholesale lic. etc) whatever your city or state requires from you and go get em. Thar's money in them thar racks.

Gordon

Sorry, didn't mean to offend. Thank you for your guidance.

[GordonJ]

Your original post had a lot of "fear" written into it, or so it felt. I could be wrong.

OF course you want to do your homework, and you want to work with people who will pay their bills...but :

"I can see a very cheap distribution channel to sell items, but lots of potential problems if the merchants try to rip you off. Would it seem to make sense to make your first approach simply as an intro to get a feel for the business owner and his honesty, and not even try to place any items at first."

Most merchants that I know (and I don't know them all)...don't have the time to fiddle fart around getting to know you...and they are guarded against being sold anything too...check out their stores...do they have other "racks" in there?

Start with places where you are a customer first. Do business with people who do business with you.

Really, I took no offense...just trying to save you worry and time.

You might want to send Jim Straw a note, I'm pretty sure he wrote (and therefore DID) about rack jobbing way back when, he might have some insights to help you too.

gjabiz

[GordonJ]

OK, here are a couple of sites to look at.

ONE has so many opportunities, it will make your head spin, and you could find a complementary product to what you will be offering. Check out:
http://www.cmw.net/2001/directory/dr...s/default.html

And here is a general idea of the differences between some of these type of call upon biz opportunities...

http://www.entrepreneur.com/bizoppor...le42940-2.html

Entrepreneur.com is a good starting point for almost all biz-ops.

Let us know how you are progressing with this good old fashion biz-op.

gjabiz

http://www.flylowcollectdough.com