What Makes Consignment Software Different?

The Nature of Consignment

In a consignment arrangement owners of merchandise place items in the custody of consignees who are charged with the safekeeping and sale of the inventory.

The management of this peculiar arrangement and relationship calls for specialized software with unconventional features addressing special requirements.

Consignment Inventory

The ownership of consigned products remains with the consignor but the items are entered into the shop's inventory records:

  • Stock is organized and can be categorized for quick retrieval.
  • Aged inventory can be marked down automatically according to predefined discount schedules.
  • Products can be labeled or tagged with barcodes for quick checkout.
  • Individual things are removed from inventory when they are sold or disposed of after the consignment period.

Secondhand wares are usually held for a limited amount of time - to keep new inventory in the store to entice return visits. At the end of the holding period, inventory can be destroyed, donated, returned to owners or transferred to shop ownership.

A specialized software program is needed to facilitate such records and transactions, so 'inventory management' is one aspect of such applications.

A robust program allows assignment of taxation and discounts by category as well as detailed descriptions and identifications of supply.

Client Relationships

A store operator will have several groups of contacts:

  • Consignors who place items for sale on consignment.
  • Customers who make purchases at the business.
  • Suppliers (other entities) from whom resale items are purchased, like manufacturers, wholesalers, craftsmen, etc.
  • Renters of floor space (market trade-show booths, shopping center units)
  • Renters of merchandise

Each group will be managed differently, requiring separate 'work areas' within a software program for records and means of communication (phone, email, text, mailings, etc.)

A fully-featured program will have provision for variable commission rates on consignment sales in addition to unique ways of communicating with and reporting on clients.

Special Point-of-Sale Aspects

Perhaps the primary uniqueness of 'consignment software' is the automatic division of sales proceeds per line item on the sales invoice.

Of course when a shopper comes to checkout her or she may have a variety of items belonging to various consignors (owners). It's the specialization of the software to know of each item and its owner and what percent of the sales proceeds are to be credited to each consignor's account balance.

Such software has the common functions of allowing discounts by dollar amount or percentage, per item or per invoice, making entire invoices tax free, and printing sales receipts.

Dedicated resale software would also allow designating a sale as a layaway with the ability to schedule future payment dates and amounts as well as tracking outstanding layaways and closing out finalized layaways. Here again the software would know to remove layaways from inventory with the first payment.

A truly versatile application allows merchants to use any credit-card processing available. Limited programs require stores to use their 'integrated processor' largely because the purveyors of such software get kickbacks on every store sale.


The crowning distinction of software for consignment is the settling with consignors of sales. Anyone who has attempted by hand to keep track of consignors, inventory, sales, amounts owed and payment appreciates the time saved and frustrations avoided by automating the entire consignment process with software.

A 'wishlist' is a list of items (kept by the store) in which shoppers have expressed an interest. In practice it's difficult for software to be useful in that the software must search for specific sequences of letters so if a shopper is interested in a 'black sweater' and the description of an item is 'blk sweater', the item won't be found.

Best Consignment Shop Software does every mentioned in this article and more for a one sum ranging from $295 to $795, depending upon the extent of features. A demo can be performed remotely on your computer and please be assured that this a software demonstration and not a sales pitch - 888-427-5779. Here's a video overview.

Consigning Merchandise

The consignment store probably has a 'consignment agreement' to be signed by a store representative and the consignor. It outlines the agreements between consignee and consignor and should be read so as to avoid misunderstandings. Often in smaller stores any undesirable aspect might be negotiable.

Since 2001 we've seen many entrepreneurs drive their businesses to failure by attempting to increase profit by adding on deductions from sales settlements. It seems best practice to stick to the agreed-upon split and look elsewhere to pad the bottom line. A good place to start is to avoid software programs that require a monthly fee or an annual support fee. Heads up: Vendors with 'optional support plans' have strategies in place to force participation.