Consignment Software: Settling With Consignors

What makes consignment different from retail

In retail, buying stock and selling it are two sides of one margin. In consignment the shop never owns the goods, so every sale creates a liability to a third party, and the platform has to carry that liability per item rather than per month.

The consequence is that a normal point-of-sale system is not enough, even though it takes the money correctly. What is missing is the ownership flag on the item, the agreed split, and a payout record that ties a specific sale to a specific consignor.

• Ownership: each item is marked as shop stock or consignor stock, and the split is stored on the item rather than in a spreadsheet.
• Settlement: a sale creates a payable to a named consignor, which stays open until it is paid on a payout run.
• Aging: an item has a term, and the platform has to say when that term ends rather than relying on someone remembering.
• Reversibility: a returned item has to reopen the payable and put the item back on the floor without breaking the payout history.

The data every consigned item has to carry

Every dispute about a consignment payout traces back to a field nobody captured at intake. The list is short, and it costs nothing to capture at the counter and a lot to reconstruct later.

• Consignor identity, with a contact that can be paid and a record of how they were verified.
• An intake reference and intake date, so an item can be found by the number on its tag.
• The agreed split, stored on the item: the split is often negotiated per consignor and sometimes per category.
• The agreed sale price or price band, and who may change it - markdowns are where consignor expectations are set.
• Condition at intake, with photos, because condition is the argument at the end of the term.
• The intake term and what happens at its end: return, reduce, donate or dispose, and any handling fee that applies.
• Status, moving in one direction: intake, listed, sold, paid, or returned to the consignor.

What a settlement run has to reconcile

A payout run is a statement, not a payment. The consignor should be able to read it line by line and agree with it, and the shop should be able to prove every line back to a sale, a split and a fee.

Two failures are worth designing against. The first is a sold item that never appears on a payout, which happens when the split is missing or the item was recorded as shop stock. The second is a payout paid without a matching sale record, which happens when adjustments are made outside the platform.

• One line per sold item: description, sale date, sale price, split and the resulting share.
• Fees itemised separately, including any payment processing the shop passes on and any handling fee.
• Adjustments (returns, corrections, agreed deductions) shown with the date and the reason.
• A carried-forward balance, so a partial payout leaves an auditable remainder rather than a rounded-off total.
• A frozen statement per run: a saved export of what was paid, which is what you produce when a consignor queries a number months later.

Splits, fees and rounding

The split percentage is a commercial decision; the calculation is a technical one, and it is where pennies turn into arguments. Decide three things before launch and publish them: whether the split applies to the sale price or to the amount after processing fees, who bears the fee, and which way a fraction of a cent rounds.

Rounding is the one people skip. With hundreds of small items the difference between rounding in the shop's favour and rounding in the consignor's favour is trivial in money and significant in complaints, because consignors check the arithmetic on their largest item first.

Aging, returns and unsold stock

Consignment is a time-limited arrangement, and the platform is what stops the term quietly running on forever. The report that matters is the aging list, grouped by consignor and by days on the floor.

The rule to write down is what happens on the last day of the term. However you resolve it, the decision has to be visible to the consignor before the day arrives, so a notice that goes out ahead of the deadline is part of the product rather than a courtesy.

• Aging report by consignor, so a single call can clear a whole term.
• Notice ahead of the intake deadline, generated from the item record rather than from memory.
• Return handling that records the date and condition the item left in, since that record resolves the next dispute too.
• A stated position on uncollected items, including any storage or disposal fee, agreed at intake.

What to check before you buy a consignment platform

The questions that separate a storefront with a split field from a system that can run a consignment business are all about the settlement side. Ask them before the demo, and ask for the payout statement itself rather than a screenshot of the catalogue.

• Can a split be set per consignor and per item, and changed later without rewriting history?
• Does a return reopen the payable automatically, or does that happen by hand?
• Can you export every payout by consignor and by year, on demand, without the vendor running a query for you?
• Are sold items ever excluded from a payout run without a visible reason? Ask to see the exceptions list.
• Does the platform keep shop stock and consigned stock reportable separately, so margin and commission are never mixed?
• If the item is a one-off - jewellery, furniture, art - does the platform handle single-quantity inventory properly?

Where consignment fits on ShopDango

A consignment business needs the commerce side to handle a mixed catalogue where some items are one of one, and a payout side that can settle with a third party per item. ShopDango models both on one storefront, so the consigned and owned stock share a checkout without sharing an ownership record.

That combination is the same one auctions and commission sales need, which is why the two related pages below are the closest fit: the commerce page covers the catalogue and checkout, and the auctions page covers the settlement mechanics that consignment borrows.