If you operate on a consignment basis with other stores, managing inventory can be a bit tricky and it's important to have a clear and simple approach.
When you enter a consignment deal with other stores, you don’t get paid immediately. The store selling your products only pays you after they’ve sold the items. This means you need to track which products are out on consignment and which have been sold, so you can replenish stock as needed. Managing this in Neto requires a bit of setup, but it can be done in two main ways: either by setting a consignment period or by tracking sales in real time.
🌈 METHOD 1: SETTING A CONSIGNMENT PERIOD
To keep things simple, it basically means setting a specific period for each consignment deal.
- Start by creating a new order for the consignee (the store selling your products). List all the products you’re sending to them. Even though you’re not shipping via a carrier, you’ll still need to select a shipping method—consider creating a “consignment” shipping option just for this purpose.
- Move the order to On Hold status and leave it Unapproved. It marks the stock as committed, meaning it’s not available for sale on your webstore or other channels, but it’s also not finalized in the system.
- After the consignment period (say, two months) is over, review what’s been sold.
- Edit the order to reflect what was actually sold—remove unsold items and update quantities for items that were sold.
- Enter the payment you received from the consignee. The payment should match the updated order total.
- Finally, process the order through pick/pack/dispatch.
Example:
You run a small jewelry business and send 200 necklaces to a local boutique on a two-month consignment deal. You create a new order in Neto listing the 200 necklaces, put the order on hold, and leave it unapproved. After two months, the boutique reports that they sold 150 necklaces. You adjust the order in Neto to show the 150 sold necklaces, remove the unsold 50, and process the payment from the boutique for the 150 necklaces. At last, you process the order through pick/pack/dispatch to close it out.
– Advantages:
- You only need to update the order once that is at the end of the period.
- Since the order is unapproved, you can make changes as needed without raising an RMA.
- If you start a new consignment, you just create a new order, making it easier to track different consignments separately.
– Disadvantages:
- The products will still appear in your system as if they’re in the warehouse, which might cause issues during stocktaking.
- You won’t have an overall view of what items were on consignment if they didn’t sell.
🌈 METHOD 2: TRACKING SALES IN REAL-TIME
This method is for immediate tracking or if your consignment deal is ongoing without a fixed end date
- Just like in the first method, start by creating a new order for the consignee. Approve the order to reflect that the products are officially on consignment.
- Choose a suitable approach: You can either Move the order to “On Hold” status (Option 1) OR Process the entire order through pick/pack/dispatch to show that the products are no longer in your warehouse. (Option 2)
- When the consignee reports sales, you can either partially process the order (if you chose Option 1) or just update the system to reflect the sales.
- Once the consignee is done selling, process any unsold stock back through pick/pack/dispatch and raise an RMA to credit the return of unsold items.
Example:
Let’s say you send 200 pairs of shoes to a store on consignment with no fixed period, meaning the consignment is ongoing. You approve the order and mark it as On Hold. Each week, the store reports their sales, say they sold 50 pairs of shoes in the first week. You process these 50 pairs through Pick/Pack/Dispatch and enter the payment. The following week, they sell 30 more pairs, so you repeat the process. At the end of the consignment period or when you decide to end it, the remaining unsold pairs of shoes can be returned to you using an RMA.
– Advantages:
- The system reflects that consigned items are out of the warehouse, giving you a clearer picture of inventory.
- You can easily track the overall success of the consignment.
- If the consignment is ongoing, you can keep adding new products by merging new orders with the original one.
– Disadvantages:
- Once the order is created, it’s harder to make adjustments without issues.
- You’ll need to raise an RMA for any unsold inventory, which can be cumbersome.
- If the consignment keeps rolling, the order might become too large to manage easily.
Both methods offer distinct advantages, so choose the one that best fits your workflow. If you prefer less frequent adjustments and straightforward tracking, the end-of-period method might work best for you. If you need more flexibility and a clear view of real-time stock levels, consider the real-time recording approach.
If you have any other way on handling consignment deals, let us know your approach which will be beneficial for others too!
