One of the most frequent questions we get here in the lab is how to use Stitch to track consignment sales. That’s what this post is all about. We want to take you through the process step by step so you have a better understanding of how Stitch can help you stay on top of your wares as they sell off the shelves of a consignment account.
First, put your contact information in the system.
We hear stories all the time about some consignment retailers “misplacing products” or not paying their vendors on time. These may be honest mistakes, but you should protect yourself by understanding the retailers' policies on lost or stolen goods and payment procedures. Get some type of written document that lays out their policies. You can keep that document or operating agreement right within Stitch in the files tab of your contact.
Next, you will be able to create orders for this specific customer. You can always create the order prior to adding the account into your contact list, but we recommend adding the contact information first if this is an account you plan on doing business with for the long run. It’s up to you though. You can create an order on the fly and go back to edit your contact information later.
Now you’ve essentially got an open order with your consignment retailer. Depending on how your relationship works with this retailer, you’ll want to keep track of what has been sold and what’s still outstanding on a regular basis. For example, if you check in with your retailer bi-weekly, you should find out exactly what sold so you know for future reference, and you can track what’s still outstanding. Here’s some more advice. If the retailer isn’t able to tell you what sold specifically and they just want to cut you a check, you might want to reconsider working with them. They should be keeping records as well as you are. That's just smart business.
Once you find out what was sold, you can create an invoice. You don’t necessarily have to give it to the retailer, but it's a best practice so they know what they've sold and been billed for. This is just another way to keep good records. You can see that you’ve only created an invoice for the items that have actually sold, leaving the rest on “open order.”
After this step there are still nine items outstanding with the retailer and they have asked you to replenish some of your products. All you need to do is edit your original order and add the replenishment amount to the original. This replenishment takes you back up to seventeen items outstanding.
The next time you speak with the retailer, you can easily create another invoice for the sales that have been made and repeat the process over and over until you have either sold everything or you want to close the order and start a new one.That brings me to a couple important points: 1. Until you complete your order in Stitch, the inventory you have in the open order will still show as “in stock.” It will be “committed to order” though so it won’t be “available” inventory to sell. This is important because you don’t want to oversell your inventory and Stitch will help keep you from doing that by showing you the state of inventory in all stages, especially as you sell through multiple channels. 2. You will want to mark a consignment order complete from time to time and open a new order with your account based on what it still outstanding. This is definitely a best practice as you close out a fiscal year and want to get a true picture of where your inventory stands.
Finally, you can see how your business is doing and where it's going with detailed reports generated from Stitch. This will really help you stay on top of your business and focus your limited resources where it makes the most sense.
That’s it for this week. This is a very important post that will hopefully help you be more organized with the challenging business of selling on consignment. If you have any questions or comments, please feel free to let us know. We are constantly thinking about how to better handle this difficult channel and we would love your feedback.Until next week, Stitch on!