If you're on eBay and you're not consignment selling, you may be missing out on easy profits that are well within your grasp.
How It WorksConsignment selling is an easy process to tackle, and in its most basic form, it looks something like this:
- Person (not you) has extra goods they'd like to sell, but they don't know how to use eBay or don't have the time to invest.
- Person brings item to you.
- You take photos, place item for sale on eBay, and accept payment when it sells.
- You take a cut from the total and pay the rest to the person whose item you sold.
How to Get Consignment Goods to SellNaturally you'll need goods to sell in order to do this, which means you'll need to find people that have things they'd like to sell. There are several ways to go about finding them:
- Word of mouth. Inform family, friends, and social contacts that you now sell consignment goods on eBay. Add this line to your business card and email signature.
- Advertise locally. Post a notice on public bulletin boards in your area and/or in local newspapers or other circulars identifying yourself as a consignment seller on eBay. Direct readers to contact you if they have goods they'd like to sell online.
- Drum up business. Visit local flea markets, art fairs, and classifieds ads. Touch base with or respond to those that have goods you'd be interested in selling. Tell them that you're an eBay consignment seller and can help them to move products.
Consignment Dos and Don'tsIf this all sounds too simple to be true to you, you're right, there are several caveats to keep in mind as you begin to tackle consignment selling:
- Have a written contract. Require your clients to sign a written contract that irreversibly leaves the entirety of the selling process in your hands (including sale price), that prevents them from selling an item elsewhere while on consignment, and that keeps the consignment contract in place in the event of death or any other change in legal status.
- Require custody of the item. Don't sell items on consignment without having the actual item(s) in question in your continuous custody. Otherwise, you may find that clients damage the item or sell it elsewhere without telling you, leaving you high and dry.
- Be careful about large-value items. Avoid taking on very high value items unless you have expertise in the item type in question and in selling and liability in relation to such items. In particular, it's unlikely that your home or business insurance covers items in inventory on consignment, so you'll be left holding the bill if anything terrible happens.
- Get SSN/EIN numbers and keep meticulous paperwork. If you're a U.S.-based consignment seller, the IRS requires you to submit a 1099 form for any client to whom you've paid more than $600 over the course of the tax year. No form is needed if they don't get this much from you for their item(s) or they are a nonprofit or a corporation.