Comment by BobAliceInATree
17 hours ago
The problem with consignment is that the consignor wants the maximum price but the consignee wants a quick sale because 10% of a few bucks more means very little and they have to hold the inventory.
17 hours ago
The problem with consignment is that the consignor wants the maximum price but the consignee wants a quick sale because 10% of a few bucks more means very little and they have to hold the inventory.
Selling on consignment can be an absolutely great deal for shops, under the right conditions.
If I'm a lego trader and I buy your set for $900 hoping to sell it later for $1000, in the meantime that's $900 I can't invest in anything else. And maybe I guessed the set's value wrong and I end up unloading it for $800, taking a loss.
On the other hand, if I agree to sell that same set on consignment? Zero capital outlay, zero risk of me taking a loss - just some shelf space and admin work.
> just some shelf space
Unless the store owns its building and has too little inventory to cover the shelves, the cost of not filling the shelves with the right goods is quite serious. In a low-margin business like retail, "just some shelf space" reads almost like "just some gold bars".
This is definitely not uniform. I worked on inventory management at Target, and stores had quite a lot of shelf space—to the point where we'd hold large amounts of cheap, non-perishable stuff like cat litter because, well, we had the space for it.
Stores also wanted to look full. We actually had parameters in our inventory management logic to increase inventory just for presentation reasons. If inventory is expensive, having some free, quality inventory can be valuable in and of itself even if it moves slowly.
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If you have no shelf space, of course you can refuse the consignment. And this was a really big one, but the shop was initially very happy with it. Advertised widely with it. Brought in more shelves to display it all. From what I understand, it was a very large part of what was for sale in that shop.
But the shelf space is part of it either way... It's not like consignment stores take everything offered. Most of them are incredibly selective.
My wife owns a retail business where some part of their sales is consignment. Taking anything in with only a 10% consignment fee would be laughable, there’s no way that’s a money making deal when you account for all the overhead of a small retail store. My suspicion is the original store owner made a bad consignment deal to sell the Star Wars stuff with only a 10% commission and the new owner didn’t want to live up to it. Of course, at that point they should have just given it all back, but it turns out they’d rather be evil.
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> In a low-margin business like retail, "just some shelf space" reads almost like "just some gold bars".
However, in this particular case, the legos were initially displayed as a customer attraction, and then kept in storage. Presumably there's still some inventory cost in storage, but the shelves are clear.
>> The collection will be on display in the store's party room from 10am till 6pm on Saturday, November 11th, and 11am till 6pm on Sunday. The collection will be available for sale immediately, so the best time for pictures will be Saturday morning. The collection will not be stored on-site after hours for security reasons, and after Sunday the sets will be available for purchase but stored elsewhere.
Much better deal for a diamond ring than a giant kayak, then. Gotta pay rent to sit on the shelf!
"Holding inventory" is only problem if the store is full.
It isn't - deprecation of held goods is always a risk and if you're working on consignment then that comes with weird financial liabilities. If there's a flood and you lose your inventory it sucks - if there's a flood and you lose an inventory of consigned values then suddenly you're potentially exposed to paying market value for a number of items in addition to all the site damage you'll need to address. Capacity is one aspect of the costs of holding inventory - but breakage is the much more expensive consideration and consignment just makes it even more expensive.
I believe in this case the consignment contract requires the store to hold insurance on the consigned merchandise, which I assume is intended to address this concern.
None of this is a risk with Lego.
Depreciation: not going to happen on Star Wars sets that are not longer in production.
Water damage: Lego is water proof.
Breakage: being easy to take apart and put back together is Lego’s core principle.
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Yup, if I worked in a field where consignment was an option I'd refuse to do it - it's a huge headache. So I'd absolutely believe that the corporation has a policy against accepting consignment offers and might have a case to recover damages or something against the original franchisee. But the way they've handled this situation still appears to be atrocious. Lets say you consigned 200k at a 10% commission, 50k sold under the original franchisee and you were paid 30k already. If the franchise transferred and the company wanted out there should be an exit[1] in the contract to pay the additional 15k and then return the goods to the original owner. I think it's important to remember this sort of an option was always on the table.
1. Even if the original consignment contract was poorly drawn up without a clear exit clause I think it'd be reasonable to expect a resolution somewhere close to this in mediation.
The original contract very specifically allows consignment. It's published.
So you "absolutely believe" something that was already proven false, and which you would know if you had even _skimmed_ the facts.
You clearly didn't read the article. The original franchisee's contract allows consignement.
I have read that article and a few other sources since the first few ways I heard about this story were heavily biased. I have not yet seen B&M confirm that the contract that was leaked is genuine - it is incredibly unlikely that they would, of course, but it still remains one the facts in this case that I tenatively believe but have some reservations around.
I thought it was interesting to, from the assumption that the corporation actually banned consignments, still work through how it doesn't free them from wrong doing. Even in the best light B&M has acted in bad faith.
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