Is Consignment the Best Way to Sell Your Product as a Fashion Designer?

The Consignment Model in Fashion: A Double-Edged Sword

In the fast-paced and competitive world of fashion, every designer and brand is always seeking ways to increase their visibility and boost sales. One of the most popular methods for getting your products into retail stores is the consignment model. Essentially, consignment means you, as the brand owner, send your products to a retailer who will only pay you once the items are sold. While this model offers some immediate benefits, it also comes with significant drawbacks that can be detrimental to your business in the long run.

The Alluring Appeal of Consignment

At first glance, the consignment model can seem like an attractive option. For designers and small businesses, it offers a low-risk way to enter retail stores without the pressure of upfront payments. Retailers typically don’t buy the stock outright; instead, they only pay for the items that sell. This can be especially appealing for new brands looking to gain exposure and attract customers in competitive retail environments like New York City. After all, placing your products on the shelves of well-known stores provides visibility, access to a wider audience, and an automatic boost in credibility.

Additionally, consignment arrangements can help brands test the market. Retailers will often place your goods on consignment for a certain period, allowing you to gauge customer interest and determine whether your products are a good fit for the store. If they sell well, the retailer might want to carry your collection more permanently, which can open doors to more opportunities.

But the Drawbacks Can Be Hard to Ignore

However, while consignment may seem like a no-brainer in theory, the reality often proves more complicated, particularly for designers and businesses operating in the dynamic fashion landscape of New York City.

One of the most obvious challenges with consignment is cash flow. For small brands and emerging designers, cash flow is crucial. When you send your inventory on consignment, you don’t get paid until the items sell — and sometimes, that can take months. During this waiting period, you're not just sitting idly by; you're likely having to maintain other costs like production, marketing, and staffing. With consignment, those costs can quickly begin to mount, and the delayed payment can leave your brand in a financially precarious position. In a city like NYC, where the cost of doing business is high, any delay in income can be a substantial burden.

Moreover, unsold inventory is another significant drawback. Retailers don’t buy your products outright, meaning they have little incentive to push them to customers. If your items don’t sell quickly, they may sit on the shelves for weeks, if not months. Retailers often prefer to keep only the products that move fast, meaning your items might be relegated to the back of the store or replaced by newer collections. As a result, you could end up with a pile of unsold goods, all while bearing the burden of production costs that you’ve already incurred. Worse, some retailers may even return unsold items to you, leaving you with the cost of transportation and storage.

The lack of control over pricing and promotion is another potential pitfall. When your products are on consignment, you're essentially at the mercy of the retailer’s pricing strategies. Retailers may discount your items, bundle them with others, or even place them in sales, all of which can impact the perceived value of your brand. For fashion brands, especially those that position themselves in the luxury or high-end market, such devaluations can be detrimental to long-term brand image.

Moreover, the retailer has full control over how your products are marketed, which can sometimes mean your brand doesn't receive the kind of attention it deserves. While some retailers will place your items in prominent spots, others might not give your collection the same visibility or push they give to bigger brands, simply because they have more established relationships or larger profit margins.

The Dangers of Inconsistent Retailer Performance

Another problem with consignment is the variable reliability of retailers. Not all retailers are created equal, and some might be more committed to moving your products than others. In New York, where retail spaces are highly competitive and constantly changing, there's also the risk of retailers closing or going out of business unexpectedly. In these cases, brands may find themselves left with a stockpile of unsold merchandise and no avenue for recouping their investment. Since the retailer doesn’t pay for your goods upfront, they’re not liable for anything that doesn’t sell, leaving you to shoulder the full financial risk.

Additionally, consignment can be a logistical nightmare. Managing a consignment arrangement means tracking multiple stores, monitoring sales performance, and coordinating returns. This can quickly become cumbersome, especially if you're dealing with multiple retailers across different locations. It’s not just about sending inventory — you need to maintain an organized system for invoicing, tracking payments, and dealing with any disputes that may arise. For small brands, especially those operating out of small studios or with limited staff, the time and resources required for these tasks can detract from more important aspects of the business, like design and customer engagement.

The Emotional Toll

Finally, the emotional toll of working with consignment can’t be overlooked. As a designer or small business owner, seeing your products in a store without knowing if they’ll ever sell can be incredibly stressful. There’s always a sense of uncertainty, and with unsold goods, there’s the added pressure of having to potentially take back items that haven’t moved off the shelves. This ongoing uncertainty can affect not only your business's financial stability but also your own mental and emotional well-being, especially if you're passionate about your product and your vision.

So, What’s the Takeaway?

In theory, the consignment model can offer a way for emerging designers to get their products into retail stores with minimal upfront risk. However, the cons of consignment often outweigh the benefits. From cash flow challenges to unsold inventory and a lack of control over pricing and promotion, the consignment model can present significant hurdles that may stifle your growth rather than help it. For fashion businesses in NYC, where competition is fierce and the stakes are high, it's essential to carefully consider whether consignment is the best strategy or if alternative sales models might better align with your long-term goals.

While the Consigment model may have certain advantages, it is important to note that this lack of control extends beyond just the hard variables of price and promotion. This limitation is particularly disadvantageous for the designer. When discussing the lack of control and flexibility, it is also important to consider the lack of freedom of movement that brand owners face. They are unable to choose which products to showcase in their stores based on commercial insights, and may have to withdraw or modify items due to lack of interest or sales volume.

This added to the lack of customization and separation between brands and the difficulty of the consigment model to differentiate and highlight the comparative advantages of each brand, their personal nuances, in essence what makes them unique. Rather, in the consigment the only protagonist is the Retail itself, the emerging brand is transformed into a mere element that makes more bulk in the big bag of indifferentiation in which the consigment subjugates the independent designers who struggle so much to win the place of prominence, differentiation and exposure that they really deserve.

Fortunately, new paradigms and business models in fashion are emerging that are more flexible and have robust PR, social media, and media relations capabilities. These models are empowering independent designers by elevating them from anonymity to exposure, glory, and satisfaction. We will delve into the specifics and implications of these models shortly.

Picture Credits: Becca McHaffie - Unsplash