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Reviewed by Anjaneyulu | Updated on Jan 29, 2021



Consignment is a commercial agreement where a company, often called a consignee, agrees to pay a seller or consignor for selling products. Usually, consignment companies are discount stores specializing in a particular form of a consumer product. The company purchases items for sale and agrees to pay a share of the proceeds to the retailer when they sell goods.

Consignor and Consignee

When the owner sends the goods to agents at another location, the goods sent are called consignment and the sender as the consignor.

The purchaser of the products is called the consignee in a consignment. A consignee is just a purchaser, not the proprietor of the products. Ownership shall only be passed after the consignee has paid the consignor for the goods in full. A consignee is, in most cases, simply an entity purchasing the product from the consignor.

How it Works

Consignment refers to an agreement where the items are put in-store care before a customer purchases the item. The consignor is the purchaser of the products maintains possession of the items until they sell. If the item is sold, the shop or individual who sold the commodity the consignee will pay the owner an agreed percentage/portion of the selling proceeds.


A standard consignment arrangement has the following basic features:

  • Two parties are involved: the consignor and the consignee.

  • Consignor entrusts the consignor with the custody of his goods.

  • Ownership of merchandise remains with the consignor until it is sold.

  • Consignee shall be responsible for the protection of the products of the consignor.

  • The consignor shall bear the costs of shipping and selling goods unless otherwise decided.

  • With any fee on the selling of goods, the consignor pays the consignor for his services.

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