The Design Doctor: Can anyone give advice on Sale or Return?

I need some advice about ‘sale or return’.  I currently have some of my bags on sale in an independent boutique who will be taking a commission on goods sold.  They will not take any responsibility on any damages caused by customers viewing the goods.  I was a bit uneasy about this but still went ahead.  Yes, I am aware that if anything happens to my goods that I would loose out.  Do you know if I should have some sort of insurance cover to protect myself against any loss or damage? I feel that it is very difficult for small craft businesses to get a footing into retail without taking any risk.

Advice provided by Patricia van den Akker, Director of The Design Trust:

‘Sale or return’ or ‘in consignment’ is done mostly by galleries whereby the designer maker provides products or stock for nothing, the gallery will showcase the work, and the designer maker will get paid when they sell.

The main issue here is that most of the (financial) risk is with you as the designer maker.

You have invested time and money into making the pieces, and there is no guarantee that your work is sold or even safe. On the other hand, if you select the right gallery to work with then you get some exposure (which is better than sitting in your attic!) and even sales.

In your particular case, I would be really careful with a boutique taking on your work who doesn’t want to take any responsibility for damage or loss. What if they would be stolen? Any product handled by clients or staff might get damaged? You seriously need to consider how to protect your work for example to have one bag on display and available for handling, and to keep the others in stock wrapped up only to be taken out if somebody is seriously interested. I am concerned that the boutique doesn’t want to take any responsibility, and I doubt very much that any insurance company would cover this.

To make ‘sale or return’ work for you, you need to look out for the following:

Select the galleries you work with very carefully. Can you trust them, how will they be presenting your work, how knowledgeable and interested are the staff? Go and visit them anonymously and find out for yourself.  Ask around with your peers. Ask how the gallery will be promoting and showing your work when you are discussing the options to show and sell your work.

Agree with the gallery the terms and conditions: how many pieces, for how long will they stay, when will you get paid, are they insured, what happens when work is damaged.

Make sure that you create a Sale-or-Return Record or Consignment Note, which is a form that you create whereby the gallery acknowledges that they have taken your work on a sale-or-return basis. Make two copies, get them signed by yourself and the gallery owner, and keep one for your own records. Make sure this form is dated, state the retailer’s name, quanitities of each item, description and price of each item.

Include also the following two sentences (which will ensure that you can recover the work if it is unsold if the gallery goes out of business): ‘Supplied on consignment – The maker remains owner of the work until sold and the maker is paid in full’, and include the sentence ‘(name of gallery) shall reimburse the maker (xx) for any loss or damage to the goods from whatever cause while in their possession.’ This will cover any potential problems when work is damaged.

Stay regularly in contact with the gallery (every two weeks or so) to check if the work has been sold. Try to visit some time to see how the work is presented. If work has been sold, send an invoice immediately for the right product and amount, and make a note on your own Sale-Or-Return Record.

Before accepting sale-or-return you might want to consider to negotiate on the following:

What extra promotion can they do? For example present your work in the shopwindow, do a press release with local press, have a small exhibition.

Could they at least buy some of your products outright?

Could they decrease the markup on the sale-or-return items? Then your wholesale price to them can increase, and you make a bit more money that way.

If selling now would be successful, can next time the work be sold?

Once you have been going for a while and become more successful in selling it becomes easier to negotiate a better deal.

My main tip is:

Stay alert, keep an eye on your work and be pro-active in helping the gallery sell your work in the best possible way.

 

What are your positive or negative experience with Sale or Return?  Are you a gallery who works with Sale or Return and want to share your side?  Please add your comments or additional tips below.

18 Responses to “The Design Doctor: Can anyone give advice on Sale or Return?”

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  1. For artists, designers and makers I would thoroughly recommend joining A-N,
    https://www.a-n.co.uk/join_in
    The membership only costs around 30 pounds per year, and includes artists insurance. http://www.a-n.co.uk/air/article/460147/43735

    I’ve had a look at my policy and my work is covered while in exhibition/display, so I would be covered should it get damaged in transit, on display or while being stored.

    It’s well worth the small investment!

  2. Nicola hurst says:

    Hello. I run a gallery and also have my jewellery out in other galleries on sale or return.
    I have all my stock insured, so if there is any damage to SOR items, or any items, they are covered.
    I certainly wouldn’t send my work anywhere where it would not be insured.
    One of my rings was recently stolen from another shop and I was paid the full amount.

    I hope that helps.

  3. Dickie Wilkinson says:

    Totally agree with the above advice re a-n insurance, it is good cover.

    I would also emphasise what Patricia has said about upping your wholesale price. I offer two prices to galleries and shops (though not always out loud as it were). My wholesale price is significantly more generous than my Sale Or Return price and I also state clearly my RRP which of course is up to the retailer but if they want to remain competitive….
    By going into a store with this in mind already it a) puts you in a stronger position as you appear organised and professional and b) you then know your bottom line for negotiating.

    However I would say you mentioned that you felt ‘uneasy’ about the deal, so walk away. Is it really worth dealing with people you have a ‘niggling feeling’ about?

    Dickie

    • Patricia says:

      Hi Dickie
      Interesting point you make about indeed having 2 ‘whole sale’ prices: one for retailers who buy straight away, and a higher one for those buying on ‘Sale or Return’ – good point, have seen various crafts people do that, to encourage galleries especially to buy instead of SOR.
      And thanks for emphasising the importance of being prepared and feeling confident when you go into negotiations!

  4. Louise says:

    Hi
    As everyone else has already pointed out it is actually very easy to obtain insurance should you feel that it is necessary. I’ve sold my worked over the last 20 years in galleries throughout the UK and internationally and have never had anything damaged or stolen, so the chances of it happening are very low.
    I’d also like to make the point that for a lot of galleries they simply do not have the budgets to buy work and so sale or return is their only viable option. It can also work very well in your favour too, in that if a particular design isn’t selling you can replace it with something else and save the embarrassment of being put in the sale or sitting on the shelf for months looking tired, which is very off putting for regular customers.
    Good luck!

    • Patricia says:

      Good points here Louise, thanks.
      I have to say that ‘Sale or Return’ does seem to be more prevalent in the UK than internationally and that even some of the department stores sometimes try to go this route. But often the more your profile and confidence growth the easier it is to negotiate on getting some sales or additional promotion though.

  5. Julia says:

    Unfortunately, I’ve only had bad experiences with Sale or Return and no longer do it at all. Having to chase down payments and deal with damaged merchandise, despite the shop owners having signed contracts, hasn’t been worth the hassle. I only do wholesale now, but negotiate with smaller shops who are hesitant to buy at my usual wholesale minimums. If you do go the consignment route, I wish you much better luck than I’ve had!

  6. Sale or Return is a very tricky topic, it’s a great way when you’re starting out to get your work seen and into retail channels that goes without saying, but it’s also a terrible business model if you think about it.
    Use it to your advantage if you can and have the confidence to start negotiating with the retailer, for instance the first lot of work is on SOR but if things sell then they buy the next replacement or purchase the next lot of stock. If it isn’t selling there then take it out and try somewhere else, make the money you have invested in the stock work for you and it’s not just keeping someone else’s shelves looking lovely and full for free!

    Good luck and be creative with you’re selling technique.

    • Patricia says:

      Hi Georgia
      Thanks for sharing your experience. It is a tricky one, but really agree what you are saying. I would be cautious, and only use it at the start of your career and or relationship with a gallery.

  7. Robert Large says:

    I have come late to this topic but for anyone who picks it up from this point here is my penniesworth.
    My background is business based and being made redundant during the credit crunch decided that I would turn my hobby into a business, in my previous life I came across “Sale or Return”, “consignment Stock” call it what you will is the worst way to do business or sell your product;
    1. your stock is at risk and cannot be insured, the customer doesn’t own it so their insurance doesn’t cover it, it’s not at your premises so your insurance won’t cover it.
    2. you are being exploited because you need to sell and all outlets know this.
    3. alternatively the outlet you are talking to has no money to invest in a new product or just no money at all, either way your little bits of paper listing all your items on SOR and signed by them will carry no legal weight with a receiver or administrator who siezes the assets of a failing business. you will have a monumental battle trying to get your goods released.
    4. you will have to provide, from your own cash flow, stock for their outlet, you take your money and sit it on their shelf until they manage to sell something they have no expertise in.
    5. if they do sell something you still will have to wait for your money and they want the item replaced now so you are even more committed.
    6 stock turn, the value of your stock, at cost, should divide into your sales a minimum of four times a year, lower than this and you will run out of money, higher than this and you should have a progressively bigger smile.
    in order to make a short story long I’ll cut to the chase! SOR is a high risk gamble, avoid at all costs.
    Do I do it, sadly I have tried it and it’s everything I knew and have explained here. Although the gallery concerned wanted a commission of 40% and SOR, I said no if you want 40% discount buy the stock outright, if it’s SOR then you will only have 20%. you will pay within 7 days of each sale at which point I will replace the item sold.
    I visit regularly to check what has been sold and make sure they are still trading! Do not give them stock and leave them to it or you’ll turn up one day and find the place deserted.
    Limit your risk don’t be tempted to let them have all the stock they ask for, it also helps them become expert on a few items. I put £500 worth of stock into the gallery at Cost, in 12 months they sold £360 worth. Take my earlier comment re stock turn and multiply this scenario by the number of outlets you might put stock in and you can see it’s a recipe for disaster.
    AVOID SOR AT ALL COSTS but if you have to do it control it and make them work for you, me I pulled my stock out and sold it all in one weekend at a county show….

    • Patricia says:

      Dear Robert
      It seems that you have had some very negative experiences with Sale or Return. For some people (especially at the beginning of their careers) it might be ‘a good way in’ with a gallery, but indeed I would review this on a case-by-case basis regularly.

  8. Cathy says:

    I’m new in this whole thing and my main question is if Sale or return prices are based on retail price or wholesale price?
    So for instance if a product costs £3 to produce and it’s being sold to the public on my own website for £4.5, and I’m willing to sell wholesale for £3 then what would be the SoR advisable price?

  9. Charlotte says:

    I sell my jewellery SOR. It’s very tough as each retailer needs a decent sized collection, so I have to provide approx £1000 retail price of stock. The initial outlay for me is huge, and the money can dribble very slowly back to me, sometimes after lots of chasing.
    I fully understand that many galleries and small shops could not afford to have the stock if it wasn’t on an SOR basis, and I appreciate the costs and work of them having the retail outlet. I have some stockists that report sales; pay without being chased, those that need a nudge, and some that need chasing.
    If it is very hard work getting payment, I would suggest its time to ask for your work back. If you agree a selling period first (say 3 months) then you can ask for your work back without feeling embarrassed.
    So, if I could I would never do SOR and have my stock tied up, cash out producing, but no cash in. But the reality is SOR means my stock can go into shops. It is nice exposure and gives me something to write about, and some sales. I just try to chose wisely who I work with, and I also restrict the number of places I stock so I don’t have too much stock out there at one time.

    • Patricia says:

      Hi Charlotte
      Thank you so much for adding some great real-life and practical tips to the discussion. Indeed manage it for yourself so that it works for you.
      Patricia

  10. Jane says:

    I have had mixed experience with SOR. As someone already said, a lot of galleries will only do SOR in these hard times. I have always had a written agreement stating the conditions, such as when the gallery will pay etc. However I have found that some galleries are fine – pay on time and communicate well and others are very unprofessional and don’t stick to the agreement and repeatedly fail to pay on time etc. Usually there’s no way of knowing which galleries are professional and reliable (or not) in advance, unless you know other makers who have sold through them.

    • Patricia says:

      Dear Jane
      Thank you for your comments here. I think it is really important that you check in advance with other makers about a gallery – not just about SOR, but also in general about the gallery, the staff and how the operate. It’s not that difficult to find out who sells there (check out their website!). Check with a couple of them, and be very careful if other makers are less than impressed by the gallery.
      As I said in the main article, it’s important to set YOUR own boundaries when it comes to SOR. You need to pro-actively manage SOR, and limit it to certain pieces, and at the beginning of your career only. Look around as there are many galleries (and shops!) out there who will be very happy to negotiate when it comes to SOR.

      Patricia

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