I was just swapping consignment horror stories with a friend this morning and I decided that maybe it’s time I shared mine. I wanted it to not sting as much before I went and said something publicly, for fear I’d say too much, but the burn is never going to go away. Let’s just ease into this with a brief lesson on retail and some definitions. Besides selling at events or online, there are a few ways people can get their crafts into the clutching hands of the masses:
1. Wholesale–This is when the crafter sells their product(s) to a retail store owner (aka the wholesaler) at a 50% discount off the retail price. Then the retail store owner marks up the product(s) by 50% (or whatever they wish). The retail store owner usually pays the crafter for the products upfront so this is usually a desirable scenario for the crafter. The only downfall being that they only make 50% of their potential retail sales. That’s why it’s always best to cultivate those personal sales and vending opportunities.
2. Space Rental–This seems to be rare but this is the deal I had at The Treehouse and I loved it. Every four months I signed a rental agreement and was responsible for paying a set sum of money each month. This set sum of money was put towards the cost of running the store and with 30+ crafters pitching in, the system worked. At first we all paid the same amount in rent but over time it was adjusted to more accurately reflect a small percentage of each crafters sales. For example, selling five bars of soap each month at $5 each doesn’t come close to a fine artist selling a painting for $200 or a jewelry maker selling ten pairs of earrings for $35 each. (Truth be told, anywhere you go, the soaper will usually make the least because they’re selling $5 items instead of $30 t-shirts or $50 necklaces. Each crafter could sell 10 of each and there’d be a huge difference in profit. It makes me chuckle sometimes because I think a lot of folks assume I’m making bank by selling soap but that’s soooooo faaaaaar from the truth. I’d do a million times better if I just focused on selling jewelry or handbags but I’m too in love to give it up [Soap, I can’t quit you!].) So the only drawback I’ve experienced from this system is having all crafters pay equal rent. If you find yourself in that situation either get out or renegotiate.
3. Consignment–This is where my cautionary tale begins. Consignment is where a crafter places their products in a shop and waits for them to sell. Once something sells, the crafter usually gets 60% of the retail price and the shop owner gets 40%. You can see this is a better deal than the 50% with wholesaling. However, with consignment you don’t get paid until something sells whereas wholesaling you get paid right from the start and your worries are over. Usually people go for the wholesaling deal because that 10% difference is worth not having to worry about what happens to your product after it leaves you.
I very, very rarely will do consignment now and if I do it’s only in very small batches that I can stand to lose…because there’s a chance I will lose! For over a year I had my products in a soap shop in the Hudson Valley. The shop owner made her own bath and body care products but approached me about helping her fill in the gaps. For example, she didn’t make shampoo, cleaning sprays, liquid soaps, beer soaps… and she wanted to offer those products to her customers. Everything was fantastic for over a year. I was paid every month, she contacted me as soon as I was low on something, and I even made extra money by watching the store for her on occasion. I was building a great customer base out of that store.
Then things went south for her and her business when she completed an extremely large wholesale order and the buyer decided that she was going to pursue a refund through Paypal because she wasn’t in love with the fragrance. Places like Ebay, Etsy and Paypal believe that the customer is always right so they allowed the wholesaler to remove the money from her account. She made a several thousand dollar order and never got paid for it and none of it was ever returned. So let her story caution you! There is very little online protection for sellers and a ton for buyers. It’s an extremely unfair, one-sided system. Seller beware! Her story only gets worse but I won’t go there. Let’s just say that you should always be wary of large wholesale orders unless you know the person. At least send them a sample of the exact thing you’re going to make for them so if something goes wrong you’ll be able to say that they knew exactly what they were getting.
From there things began to spin out of control for her and she couldn’t keep up. To put this in time perspective, I had completely filled her store when I left for Yellowstone in May, she even had extra stock in the back. We were all square at that point. When I returned from Yellowstone in August, she was, unbeknownst to me, in the throes of all this drama. I went to visit her and the store to see if anything needed restocking AND to ask her why I hadn’t been paid since April. She told me I hadn’t been paid because nothing of mine had really sold. Humm, from April to August nothing had sold? I was onto her.
Soon after that she had lost the store and became impossible to contact. Over the next few months she became extremely slippery. Eventually, I sent her a very legalese email saying that I, in the very least, wanted my products returned to me by such and such date or I’d take her to small claims court. I even was kind enough to state that this wasn’t about the money she owed me, we could work that out at a later date–perhaps a payment plan–I just wanted my products back. She responded by saying that she’d “mail” them to me. Now, she lives just a few minutes from my house and I offered time and again to pick them up. Why spend money you don’t have to ship stuff across town? Seems kinda dumb…or devious? Calling her bluff, I said okay, but that I’d require a tracking number so that I could make sure the packages didn’t get lost. Well, I heard nothing back. Shocking!
I went to an event where I knew she was vending to confront her. (She was there with all my beer soap so at least I was able to get that back.) Right there in the middle of the farmers market she broke down while recounting what she’d been through in the last few months. I felt awful for her but told her that she had to remain in contact with me so we could get this all sorted out. At the time she thankfully agreed and was glad that I wasn’t going to pursue small claims court. Well, long story short, soon after she took the rest of my stuff and moved across the country. I still see Facebook posts on how she had a great day vending at such and such market and how she made a lot of money. What people don’t know is that she’s made a lot of money off of me and is still doing so. I wish I could reveal her but she is sooooo litigious that I can see her suing me for harassment or defamation so I don’t want to go there.
I hope by telling this story you don’t make the same mistake I did. In hindsight, I should have pulled out of the store when I returned in August. As soon as I saw that ship was sinking, I should have bailed. I wish I could say that having a contract with her would have made a difference, but I know that she’d have just as easily broken it. At least maybe this will save someone else. It was my first retail experience and it definitely was a lesson and luckily I’m wiser for it.