Do you love sale or return or are you struggling with it? Sale or return (or ‘in consignment’) can be a fabulous way to get into craft galleries and boutiques, but there are also some sale or return problems to look out for!
What is sale or return?
‘Sale or return’ or ‘in consignment’ is a common way of working between UK craft galleries/shops and their creative suppliers, whereby the retailer pays only for goods sold, returning those that are unsold to the creative. So, the gallery showcases the work, and if it sells then the creative gets paid. If it doesn’t sell then the work will be returned to the maker.
The main Sale or Return problem is that the financial risk is with the creative rather than the gallery.
You have invested time and money into making the work, but there is no guarantee that your work will be sold or kept safe. Will you get paid if your work is damaged or lost?
The other big Sale or Return problem is that the process is often not well managed on either side leaving creatives often just hoping for the best.
We think that Sale or Return can be very useful, especially for new designers and makers, but you do need to actively manage the relationship and contract:
Tip 1: Consider carefully when to do sale or return
Sale or Return can be a really great way to start working with a gallery, especially if you are a new designer maker and it can be that crucial ‘foot in the door’.
We recommend that you set some clear boundaries to avoid the most common Sale or Return problems.
ONLY do Sale or Return if …
- Your work is relatively expensive (over £100,-)
- It’s a statement piece rather than a commercial item that would sell easily
- It’s for a special exhibition
- You are new to the gallery
For example, a pair of earrings selling at £24 is NOT a sale or return item, the gallery should purchase commercial products like that. Don’t let shops take advantage of you!
Sale or return can work well for new makers so that a gallery or boutique can try you out. But if you have been in business for more than three years you really need to start negotiating better to get (at least part of) your products purchased by the gallery. Also if you have been selling for more than a year with the same gallery then it’s time to start discussing with them that they should purchase (at least part of) their next order.
Tip 2: Select the galleries you want to work with carefully
Sale or Return is strongly based on trust because you have to rely on the gallery to inform you about the sale and to keep your work safe while it is in their shop. Can you trust this gallery?
To avoid any potential Sale or Return problems it’s crucial that before you start working with a gallery, you ask the following questions:
- What’s the reputation of this gallery? Watch out for warning signs! Be extremely careful with galleries that are struggling and who might be close to going into administration.
- How will they present your work? Both in the gallery and in terms of creating a special display, but also how will they promote your work on their website, newsletter and social media?
- How safe will your work be? Is it protected against damage and loss? Have they got insurance in place?
- How knowledgeable and interested are the staff? Are they professional? Do they attract the right clients for your kind of work?
We always strongly advise that you try and visit the shop (anonymously) and find out for yourself. Ask your peers. It might be worthwhile checking out their financial situation on the Companies House website too.
When you are getting in touch with the gallery who have shown interest in your work, don’t be shy to ask questions about the display, their marketing, insurance, and payment terms and conditions. In fact, you can negotiate that you only will do sale or return if they create a special display of your work and also promote you through their newsletter and social media.
Tip 3: Have a written sale or return agreement
You will need a written agreement which should include your own terms & conditions, stating exactly how many pieces you have given the shop, your wholesale prices, how long the pieces will stay, what the shop’s commission rate is, when and how you will get paid, are the pieces insured, what happens is work is damaged or stolen.
To avoid the biggest Sale or Return problems it’s crucial that you create a Sale or Return record or consignment note and keep it up to date.
This is a written agreement that you create whereby the gallery acknowledges that they have taken your work on a Sale or Return basis, together with a clear product list of what they now have in consignment.
Make two copies, sign them both yourself and by the gallery owner and keep one for your own records. Make sure this form is dated, states the retailer’s name, quantities of each item, description, and the price of each item.
Include also the following two sentences (which will ensure that you can recover the work if it is unsold or if the gallery goes out of business, which is extremely important in the current economic climate!):
- ‘Supplied on consignment – the maker remains the owner of the work until sold and the maker is paid in full’
- ‘(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 the most common sale or return problems when work is damaged or stolen, or if the gallery doesn’t pay up.
ALWAYS keep an up-to-date list of the sale or return stock outstanding and stay in touch regularly with the gallery!
REAL LIFE STORY: I worked with a jeweller once who was very heavily in debt. She had kept very few records and hadn’t been in touch with some galleries for over a year. It turned out that she had sale or return stock worth more than £50,000 outstanding in various galleries!
We asked for all the jewellery to be returned to her immediately. Some work had been sold already (some months ago!)so we could invoice straight away. Unfortunately, we had to sell some of her work to be sold for the gold (luckily the gold price had changed dramatically). She managed to clear her debts over a 12 months period as she had so much stock and we worked on a very focused marketing campaign – mostly to consumers to increase her profit margins.
Tip 4: What if something goes wrong?
There are two common Sale or Return problems that you need to be particularly aware of:
- What happens if your work gets damaged or stolen? Because the gallery won’t have received any payment, but they can’t return the work to you either. Who is going to be responsible for insurance? Also consider how the gallery will limit damage to your products, especially if they are precious? Make sure that this is clarified in your written agreement.
- What happens if the gallery goes bust? Recently I had three emails in one week from makers who were all very concerned because a gallery had gone into receivership but none of them had any up to date Sale or Return contracts with the gallery. Each had terrible difficulties getting their products returned.
If you have a good relationship with the gallery and have an up to date contract, this will minimise these common sale or return problems.
Tip 5: Stay in touch with the gallery
Make sure that you manage any sale or return projects proactively and stay in touch to check if the work has been sold:
- Phone them every month or so (more frequent in busy periods such as the run up to Christmas!). This might sound a little scary but is actually a great way to turn strangers into clients by building up a relationship with the gallery and their staff. On the phone, it is much easier and friendlier to ask for specific feedback. Especially if you sell mostly through middlemen (such as galleries) then it’s really important to find out what’s selling, what the interest or comments are, and who is particularly interested. Contact them at times when the gallery is quiet e.g. early in the morning when they have just opened. Be inquisitive, rather than confrontational so that you will be able to learn from these regular conversations! (and you might get new orders too!)
- Regularly move your stock around. Our advice would be every three to six months or so. That keeps the display fresh and the galleries have got something new to show to their clients – in the gallery and also online.
- Be pro-active in giving the gallery additional marketing materials and images for their newsletter, website or online. Think about how you can both work together to sell your work. Are you giving extra information to the staff about your work, your ideas and techniques so that it’s easier for them to sell your work? Retailers will really appreciate it if you promote them on your own website, in your newsletter or social media.
- Try to visit your galleries to see how the work is presented. Make an appointment to make sure that the right staff member is available. Have they got any useful feedback for you and are there other ways that you can help? Creating collections or showing your work together as a group will make it stand out more.
- If you find out that your work has been sold, then send an invoice immediately for the right product and amount, and keep your sale or return records up to date at all times.
Tip 6: Negotiate before accepting sale or return
Often new makers are not very pro-active with their negotiations and that will mean that they lose out. Sale or return can be a brilliant opportunity to negotiate a better deal in terms of promotion and commission rates. Think about the following:
- What extra promotion can the gallery do for you? Can they present your work in the shop window, promote it to local press, have a small exhibition or display with your name and extra info, or mention you on social media or in their newsletter?
- Could they buy some of your (cheaper) products outright?
- Could they decrease the markup on the sale or return items? Your wholesale price to them can then increase and you make a bit more money.
- If this is your first time with the gallery when would you review the situation so that they would buy outright? Once you have been going for a while and become more successful in selling it becomes easier to negotiate a better deal.
Tip 7: Stay on top of sale or return
I often find that sale or return problems occur because the process isn’t managed very well.
Don’t just ‘hope for the best’ … that’s asking for trouble!
You need to take charge of sale or return relationships.
It’s YOUR work and therefore YOUR responsibility to stay alert and keep an eye on what’s going on.
- Be selective with who you work with. Ask around and check social media for the reputation of the gallery and how they treat their makers.
- Have a written contract and keep clear up-to-date records of what work is with which gallery and what has been sold.
- Be pro-active in helping the gallery display, promote and sell your work in the best possible way.
If you take yourself seriously, then the gallery will too.
What are your (positive or negative) experiences 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 in the comments box.
What a brilliant article. I am just starting out in this area and this has given a great insight. Where can I find a template for a sale or return terms and conditions
Is there a general rule of thumb for minimum order quantities? I’d like to avoid gallery owners just buying cheaply to stock their Christmas present cupboard. They are given a discount to allow it to be shown in a gallery for many people to see, online etc. If they don’t do this for you then they should not be given such a hefty discount. To avoid this a minimum order can be set but how to do this would be useful
Hi Matt
It depends on what you sell but often a min. order is either based on quantity as much as total invoice amount. By the way they don’t get a ‘discount’, it’s a commission they charge to cover their own costs. And if they would use it for their own benefit then they officially have to pay the extra into the till (my mum had a gift shop when I grew up and she once was queried about this when the tax inspector called and noticed products in our house that were also for sale in the shop!
This is something I am just learning about and this article was very helpful! It would be great if there was a template for the sale or return agreement that we could use which includes everything mentioned above.
If a boutique has lost a sale or return item but we had no written contract, can I still claim for it? I know I was starting out and silly!
Hi Jodi
Do you want to claim it from the insurance or from the retailer? I doubt that an insurance company would agree to this, and it would really depend on your relationship with the retailer. I would definitely try, and indeed in the future make sure that everything is in writing.
This is an eye opener to SOR. I have learnt alot reading this article. Please where can I find a good template for SOR?
Thank you
There is not one template, and I always suggest to be very careful with using legal templates as they might not be suitable at all for your circumstances! The main thing is that it’s in writing, that it clarifies exactly which pieces are on SOR and at what price, how and when to invoice and payment terms, how the work will be insured, how long the pieces will be with the gallery, what else the gallery will do for you (e.g in terms of promotion) and who will insure the pieces (e.g. what happens if they are damaged or stolen in the gallery?) Also make it clear that these pieces will remain in your ownership till paid for. Hope this helps.
I am a designer/maker of homewares (cushions, teatowels, coaster etc) and have the opportunity, for the first time, of selling via a small craft/art shop locally. (I have sold online via Etsy till now.) They want me to agree to sell through them for a minimum of 6 months and pay them £50 per month and then they will also take 15% commission of anything sold. I don’t think any of the items I sell will retail for more than £40/45. Do you think this is a bad deal or worth a shot? I would be grateful for any advice. The gallery/shop is a new business and I suspect the owner is, herself, inexperienced
Hi Jenny
Thanks for sharing here with us. I think you need to do some forecasting here. How many items would you be able to show for the £50,- per month. Let’s say 20 items of let’s say £30 on average. Then the big question is how many she expects to sell each month, in December she might sell say 5 items at £30, but in January it might just be 2 items at £30 each. That would mean that in December she sells 5 x £30,- = £150 – £50 monthly charge and £22.50 (15% of £150), so you would earn £77.50. But in January she would sell £60,- and your fees are £50 – £9 = £1,-.
So a lot depends on if she can sell enough items each month for you (at least £60 worth each month).
Bigger questions for you too are:
* Do you want to sell in this place? Do you think there is enough clientele and potential? Don’t just think about the immediate financial gain, but longer term in terms of exposure.
* Have you included in your own prices the mark up. Do you know what your cost price, wholesale price and retail price needs to be? You can find a blog post about that here. If she is selling your work in her shop for £40,- then you need to charge the same when you are selling at events or online too.
I hope this helps.
Really useful, Patricia. Thanks
I am creating original paintings. To create a market I am using the sale or return practice for the time being. I have several galleries who, either, are exhibiting my work, or are very interested in doing so. Your web page has been an inspiration. It it so informative. For example I wouldn’t have considered about insurance which is obviously very important. You detail key phrases which should be included in a “Sale or return” contract. What I need is a free typical “Sale or return ” contract. Any links would be really appreciated.
Kind regards
Keith
Dear Keith
Thanks for your comments. We are always a little cautious about ‘free legal documents’ that you can get online to be honest. What your SoR contract needs to include is some basic terms around payment terms, insurance/what happens if a product is stolen or damaged, and very important is to keep an up-to-date overview of what’s actually in stock and what’s sold.
Thank you this information is just what I needed today.