Almost 10 months in and we are still working to perfect the trade, which is why we made amendments that would protect and benefit both our consignors and customers. Further to this, we would like to share a few learnings with you ; our community, to enhance and better our trade for the benefit of the community.
Consignment is the act of giving something (a service/ a product) to an agent who in turn is in charge of selling it while the consignor retains the legal ownership of the good until it is sold.
If the consignee (the agent who received the goods) sold
the goods he/she has to payback the consignor as per the agreed price after
deducting the fees (Ranging between 15% to 40% based on the business model and
agreement signed), in case the goods were sold and the consignee kept the
proceeds of the sale, then this is a crime called embezzlement.
Learnings:
Now in our case, youbetterfly will always be the consignee and will always act as a seller to all their customers. In order for youbetterfly to accept consignment, the items have to be physically received in the store and reviewed by the staff for pricing and authenticity and followed by an agreement to be signed and approved by both parties to protect all the rights. Since the launch we have been receiving lot of requests to sell other people's inventory and post them on the website and our social media account and we were flexible about it since the business was just starting up and we really want to grow this community in a way or another. Throughout this process we had a lot of issues and as part of spreading awareness, we prepared some dos and don’ts:
1. You can't keep the item with you if you want to sell it on consignment.
< The reason why this can't work is because we faced a lot of incidents where we sold an
item that was with the consignor, and once we tried to manage the pickup it
turned out that the item is not available anymore for whatever reason (changed
his mind, sold already, flakers). This caused a negative experience with our
customers as we had to cancel the order or hustle our way and spend time trying
to source a replacement because our initial supply fell short.
2. The Consignor is responsible to
get the product to the store, whether sending it through delivery after
agreeing on the terms online or dropping it personally to the store for the
staff to review and agree on the terms. youbetterfly is responsible for
storing, marketing (through website and social media) and delivering the item
once it is sold but not for picking it up from the consignors, unless they pay
for delivery fee
3. Payments will be sent to the consignors 3 days after delivering and collecting the money.
4. We used to accept returns, refund and exchange within two weeks. But that was damaging our, inventory and hence our business model. Here's an example:
Ali bought a Jordan 1 Chicago size 8.5 US consigned by Jon at youbetterfly for 2,000 AED. 3 days after the transaction Youbetterfly paid Jon the fees - 15%. 1 week later Ali came through to exchange the shoe because the size was wrong and buy another Air Jordan 1 Chicago size 9 US consigned by Kika. Youbetterfly will have to pay kika in 3 days and take back the item that was already paid to Jon. This caused:
a- Hit on the inventory (item wasn't needed)
b- Hit on cash flow (had to pay Jon and kika)
Hence our Return policy has changed to 3 days with no
refund or exchange, you only take store credits if you plan to return the item
(and that is the cycle we have before preparing the payments).
5.
youbetterfly guarantees the items will
be stored in a secure shoe friendly environment (no sunlight, no
humidity).
6. In case the consignor wants to withdraw his items
within 7 days, there is a fee of 50 AED. After that it's 25 AED. Why?
Quick Math: At youbetterfly we accept the items, we check
them, we upload our inventory, we store them, we label them (authentic tag and
barcode), we display them, we update the website and create content, we design
the social media post. All of this cycle from item creation, to content to
inventory update takes time, and time is money. Some consignors drop the items
and come back the next day to withdraw them because they were able to sell them
outside the platform.
You are not selling from your house anymore.
7.
There is a difference between buyout
and consignment, and as soon as the word is out in the market, people tend to
sell you more stuff knowing that you are generally buying.
Now there is a very thin line between your own inventory
and consigned items. And inventory is your biggest enemy, investors and
financial institutes hate inventory. So when should you buyout and when should
you consign?
If you are buying out to resale for 10%-20% plus, the call
is not worth it and just go with consignment. You don't have to say yes to
everything and your consignment platform will most likely sell the shoes.
But if you are buying out a sought-after item (collector
item, art piece, limited edition sneakers) and you know the resale is going to
be higher by at least 30% then you are making the right call.
Don't say yes to everything, you can't maintain buyout if you don't have sellouts.
8.
An admin fee is needed when you charge
15% on organic pricing. An item priced 170 AED was sold online. Your cut is 25
AED, but the delivery charge is 30 AED, you are actually loosing on this item 5
AED. What if you run promotions in-store and online? (make sure it's never more
than the consignment fee, in our case it's a maximum of 10% off). Admin fee is
a must for the work and effort explained in point 6.
9. Don't do pre-orders unless you have the items, it's a tricky business, the supply might fall short anytime, or the item can turn out fake. And you are a middleman between the supplier and the client. Client following up with you, you following up with the supply. It's a hassle, an effort you don't need for one transaction. Eliminate that, your available products are in-store or online.
10. Don't accept exchange or swap if the item is not yours,
it's a hassle, you will have to call the seller to ask him if he can do the
swap or exchange. Now imagine doing this 10 - 20 times a day… Focus on your
business. If the item is yours, then make sure you are making right decision.
12. You want the product there are two ways to get it: in-store
or online and no other way. Once the product is given for free, consider it out
of the books as you will most likely never get the money back.
Genuine and we
act on it.
