Consignment / Consignor / Consignee
In a consignment process, it encompasses the sending of goods from a consignor to a consignee. The person who ships the goods is the consignor (exporter), while the receiver is the consignee (importer).
For example, when an artist arranges with an art gallery to sell his paintings to a third party, the artist becomes the consignor, and the latter becomes the consignee. The artist is the initial owner of the goods and retains ownership until the gallery processes a purchasing transaction with a buyer.
The art gallery, on the other hand, is merely an agent and does not have ownership over the goods. Once the buyer pays for the painting, the art gallery takes its commission and forwards the rest to the artist. Depending on the agreement, goods not sold may be returned to the exporter at a cost.
For the exporter, a consignment may appear like a risky venture. They are not guaranteed a sale, and their goods are stored with a foreign business. However, consignment has its benefits, including giving exporters the ability to better compete with locally produced items, and reducing the costs of storage and managing inventory. Plus, the goods are closer to the end buyer, which allows for faster deliveries.
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