What Is Consignment: How It Works (2026)

Learn how consignment works, typical payment splits, and whether this low-risk model fits your strategy— including examples and challenges.

Consignment is a business arrangement where one party sells goods—typically secondhand, though sometimes new—on behalf of another party for a fee or commission. 

The secondhand market is big business. For example, the global secondhand apparel market is set to reach $367 billion by 2029, growing at 2.7 times the rate of traditional retail clothing. 

Whether you’re thinking about starting a business through consignment or adding it as a revenue stream for your brand, this guide will teach you everything you need to know, from how consignment works to its pros and cons.

What is consignment?

Consignment is a business model where a shop or person (known as the consignee) sells products on behalf of the products’ owner (the consignor). Consignors provide their goods to the consignee, and the consignee handles the rest: storage, inventory management, and consignment sales. In return, the consignee takes a cut of each sale or a flat-rate fee.

Popular products in the consignment world

Consignment works well for unique or niche products, and those that hold value over time. Some hot consignment product categories include:

• Fashion: Clothing, shoes, and jewelry
• Home: Furniture, antiques, and art
• Hobby: Musical instruments, athletic gear, and collectibles
• Family: Toys and baby accessories

How consignment shops work

Think of consignment shops as sales partners. They showcase the consignor’s items, market them to potential buyers, and handle all the sales details. When an item sells, both parties celebrate—and split the profits based on their agreement.

By learning how a consignee’s process works, consignors can set realistic pricing expectations and track payouts accurately. 

What’s the typical split?

Most consignment shops offer a split between 20% 60%, but it depends on the store, item category, and price point. 

For example, Serendipity Boutique pays consignors 40% on regular items, while Revolver uses tiers that pay consignors 20% 60% depending on the item’s sale price (the higher the price, the more the consignor receives).

Online luxury platforms often pay out a higher percentage. For example, Fashionphile pays the consignor 70% of the sale price up to $3,000 and 85% above that threshold, which means they keep 15% 30%. Rebag pays out 75% 85% (meaning they keep 15% 25%), but they may pay out as high as 92%.

What can you consign?

Consignment shops are always on the lookout for in-demand, quality items. However, they usually have limited space and want to keep inventory moving. Here’s what they typically consider:

• Their specialty. Most shops focus on specific product niches, lines, or brands.
• Hot sellers. They want items that are likely to sell quickly.
• Quality. Some shops only take items in great condition, while others might accept pieces needing minor TLC.
• Seasonal appeal. Smart consignees adjust their inventory based on what’s in demand each season.

Who owns the goods?

In most consignment deals, the consignor keeps ownership of their items until they sell. In traditional retail that uses wholesale purchase, stores buy the product outright before selling it to customers.

Benefits of consignment

Consignment offers several benefits for both consignors and consignees:

Pros for consignors

• No storefront required. When you sell via consignment, you don’t need to create listings on marketplaces or maintain an online storefront.
• Marketing taken care of. Consignment businesses build their own audiences, so you can skip the step of creating a marketing strategy.
• Simplified logistics. Consignees usually handle shipping and delivery, and may even arrange the collection of your items.
• Lower risk. Selling on consignment offers lower risk than traditional selling since there are no listing fees or losses on unsold inventory.

Pros for consignees

• Improved cash flow. You don’t pay for inventory upfront, and any products that don’t sell can be returned to consignors. When items sell, you can make payments according to the terms of your agreement.
• Build a loyal customer base. If you develop a reputation for sourcing in-demand items, you will watch your clientele grow.
• Test new products. Learn what products or categories resonate with your audience without buying stock first, reducing the cost of starting a business. 

Consignment challenges to keep in mind

While consignment has its perks, it may also have these downsides:

Cons for consignors

• High fees. You might earn less than selling directly to buyers, as consignment shops sometimes charge high commissions.
• Delayed payment. Be prepared to agree to payment terms that can include lengthy waits for your money.
• Limited customer interaction. When consigning, you may miss out on collecting valuable customer information or sales data.

Cons for consignees

• Supply uncertainty. Your business depends on consignors for a steady stream of inventory.
• Complex inventory management. To prevent lost merchandise and payout disputes, you’ll need an inventory management system that distinguishes consigned goods from owned stock and tracks both ownership and consignment periods for every item.

Real-world consignment success stories

Consignment is popular in various industries including auction houses and import companies. Here are some businesses that have mastered the consignment model:

Art galleries

Art galleries are classic examples of consignment businesses. Artists (consignors) entrust their artwork to galleries (consignees). The galleries display the artwork, handle marketing and sales, and take a commission from each sale. The artist retains ownership of their work until it’s sold.

Rebag

Rebag is shaking up the luxury consignment world. Its flexible buying and selling features include advanced payouts, item trades, and a buyback scheme where shoppers can return products for credits toward their next purchase.

The RealReal

The RealReal is an online consignment powerhouse for authenticated luxury goods. They accept a wide range of high-end items from consignors, including designer clothing, jewelry, watches, and home décor. The RealReal handles everything: consignment agreements, pricing, and selling.

eBay consignment

While eBay is known for peer-to-peer sales, it also offers a consignment service for select products, such as luxury handbags. Sellers can send their items to the platform, which authenticates, lists, sells, and ships them. Once an item sells, the consignor receives a portion of the profits.

How consignment payments work

Here’s how a typical consignment arrangement works:

• The consignor brings their items to a consignment store.
• The store agrees to sell it on their behalf.
• Both parties sign an agreement outlining the terms of the sale.

Unlike traditional retail, the store doesn’t buy the items upfront. Instead, it displays and markets them to its customers. Both parties have a stake in the sale.

There are two key elements of the payment structure:

• Revenue split. You’ll agree on how to divide the sale price (e.g., 60% for the consignor, 40% for the store). For example, if the item sells for $100, the consignor would receive $60 and the store would keep $40.
• Payment timeline. Payment schedules vary by agreement. Some shops pay out on a monthly basis, while others issue payment within a set number of days after the sale.

If the item sells, the consignor earns money without the need to run a store, while the shop profits without risk of unsold inventory. If the item doesn’t sell, the consignor usually won’t owe anything, and the store returns the items.

Essential consignment agreement terms

Review the formal contract to understand how the partnership works. Look for these key terms:

• Consignment period: The duration a shop agrees to display and sell items.
• Commission split: The percentage of the final sale price the consignor keeps versus the amount the store retains.
• Pricing authority: Details on who sets the price and whether the shop can apply discounts.
• Damage and loss liability: A definition of who is responsible if items are damaged, lost, or stolen.
• Unsold item policy: The procedure for items that do not sell, including reclaiming instructions.
• Payment schedule: The timeframe and method for receiving money after a sale.

What “consignment only” means

“Consignment only” refers to a unique selling arrangement where the consignor retains ownership of the item until it sells. They entrust their goods to a store or platform (the consignee) to market and sell on their behalf.

This model is especially popular in fashion, art, and antiques. It allows a consignor to reach a wider audience without opening their own store, while consignees can offer a diverse inventory without the upfront investment.

Is consignment right for you?

In today’s dynamic economy, both individuals and businesses are turning to consignment to generate extra income or expand their offerings. While it’s not a one-size-fits-all solution, consignment can be an option if you:

• Don’t have a physical storefront
• Want to test new product lines without a large inventory investment
• Are looking to tap into the growing second-hand market

ThredUp’s 2025 report projects secondhand clothing sales to hit $74 billion by 2029 in the US, with online resale growing to $40 billion.

Whether you’re selling fashion, luxury goods, or other items, consignment offers an opportunity in today’s market. It’s a way to adapt to changing consumer preferences and potentially boost your bottom line.

Consignment: A flexible solution for changing times

Consignment gives store owners a practical way to participate in the growing resale market without taking on as much upfront inventory risk. It can be especially useful for businesses selling products with strong secondhand demand, such as fashion, furniture, and luxury goods.

Some brands have seen the success of traditional consignment and are adopting resale-as-a-service (RaaS) models, which let them run their own resale programs. For Sabai Design, that approach helps keep products in circulation while giving the brand more control over the customer experience.

“We wanted to make sure that we were really minimizing any opportunity for Sabai products to end up in a landfill ... it’s the repairability, but then it’s also the resale as well,” says founder Phantila Phataprasit. 

If you’re exploring starting a business that sells items on consignment, start by researching shops that specialize in your product category. Then compare commission rates, authentication or condition requirements, payout timelines, and how unsold items are handled. The right consignment partner can help you reach the right buyers and test resale demand with less risk.

Consignment FAQ

What are the risks associated with consignment selling?

While consignment selling can be lucrative, there are some potential downsides. Items might not sell as quickly as the consignor or shop would like, or they could be damaged while in the store’s care. Either party might also earn less than expected if market prices change.

How does a consignment shop differ from a thrift shop?

The key difference lies in their business models. Consignment stores are typically for-profit businesses that split sales revenue with consignors. Thrift shops, on the other hand, often operate as nonprofits and rely on donated items.

What’s the difference between resale and consignment?

With a resale business model, a store buys items outright and then sells them at a markup. With consignment, the consignor retains ownership until the item sells, and then shares revenue with the store.

What items sell best on consignment?

The RealReal’s 2025 report found that the best items to sell on consignment are:

• Fine jewelry
• Timeless handbags
• Watches
• Wedding dresses
• Wedding shoes
• Vintage engagement rings 

What if items don’t sell in a consignment store?

Most stores have a policy for unsold items. They’ll either return them to the consignor or, with permission, donate them to charity after a specified period.