What is Consignment?
A consignment is the method of delivery of products by the seller/agent (consignee) on behalf of the manufacturer/ wholesaler/exporter (consignor). The consignee gets a commission once the items are sold. However, they are not responsible for storing, shipping or promoting the products.
Significance of Consignment in an E-commerce Shipping and Delivery
Consignment helps in making e-commerce logistics smoother and more efficient. The benefits of consignment in an e-commerce setting as been listed and explained below:
- When a seller is required to ship several products to the same port, they can send a consignment with all the products at once. It decreases the cost by negating the requirement of sending products one by one.
- Suppliers have a greater chance of entering a broader and more competitive market. They get to test new markets and know which products are performing.
- Merchants or sellers have low risk and cost requirements to invest in consignment as they are not obligated to buy inventory in advance.
Prerequisites of Consignment and How It Works
The minimum requirement is to have a batch of products shipped to the same port. Once this requirement is sufficient, one should follow the steps mentioned below:
- Labeling: Once a consignment is assembled, for identification, one needs to attach a unique consignment label.
- Shipping: The consignment is then handed over to the shipping company, followed by the rest of the delivery lifecycle.
Use Case With Consignment
Some use cases of a consignment are listed below.
- A seller groups ten cosmetics and ten clothing products in one unit and delivers them to port X through a shipping company.
- A shipping company grouping 100 different shampoos from 7 unique sellers based on common delivery port Y, followed by their disbursal as a single unit/consignment.
In both these cases, the seller and shipping company are able to save money and time by combining the different products into one single consignment. Hence, delivery fulfillment becomes more time-efficient.