So what is consignment? Stepping out of the book example and just a regular retail example consignment is when someone goes to a store and is able to sell their product or merchandise in the store. But let’s say the store isn’t open to the risk of paying for the merchandise upfront. I mean, what if it doesn’t sell? In the case of consignment the product owner will leave their item on the shelf and when a customer picks it up to purchase the store owner will reserve a portion of the sale to pay to the product owner. So no one makes any money until the item is purchased. Many of you may be familiar with this setup from places like Plato’s Closet or another clothing resale store. Now some of these stores have enough cash on hand that they will pay upfront for gently used designer clothes and just end the transaction there.
But, let’s go back to the example of doing this with your book at a bookstore. In this case, you will leave one copy of your book, of perhaps up to 5, for the store to put on their shelves. When a customer picks up the book to purchase it the store will complete the transaction and you get a portion of the sale. The store gets the rest. Everyone makes something on the sale.
So with consignment, you the author, are taking on all the financial risk. You have ordered copies of your book to sell (so you paid printing and shipping) and then you have inventory tied up at this store in the hopes someone will buy it there. In the examples of consignment deals I’ve seen the bookstore usually offers a 40/60 split. So the bookstore gets 40% of retail and you get 60% of retail.
Let’s say, for easy math, your book retails for $20.
After you paid for the printing and shipping the book cost you $5.
After the bookstore sells the book they get $8 and you get $12. But you only made $7 because you spent that $5 to order the book.
If your print and ship cost go up or the retail price needs to come down to get someone to purchase it, your margin gets even more slim.
So before you agree to any terms, you need to run the numbers. Yeah, this is the business part of your author business.
So, why even agree to this?
Well, your book is on the shelves at an actual store! This is the moment so many authors dream of. And for new authors, selling your book on consignment can be a great way to show the store that your book can move. If they see the book is selling they may agree to order a book from your distributor which means you have less math to worry about.
Ideally, you want the bookstore to buy your book from your distributor (IngramSpark or LuLu) at the wholesale discount. You don’t WANT to have to manage inventory and payments. But to get started, this is a good way for a bookstore to try you out before they put in the financial investment to stock your book.
Any other questions on consignment?
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