Hi All, I started consigning pieces into four different galleries
about six months ago and am now starting to do okay. One of the
galleries approached me last week and asked if I would go wholesale.
My pieces are all 14K and many with rubies and sapphires, and my
pricing is structured for a 50/50 split, so I was most interested.
They placed an order for 12 pieces and then asked what my exchange
policy was. I really hadn’t given it a thought. What they wanted
was the ability to exchange pieces that don’t sell “within a year or
so” for others. They are not asking for their money back, just
credit toward something that may sell. They stated that other
artists were doing this for them, and in some cases exchanging pieces
that have been in the store for three years. I contacted another
gallery yesterday, and was asked that same question, with the manager
mentioning the name of another artist that was handling exchanges in
this fashion. These two galleries are related, so I was wondering if
this is just their policy, or is this the norm? Any guidance here
would be most appreciated. Also, thanks to Hanuman and all of you
really active people on this site that are a daily, and I mean daily,
help to us less experienced.
Best regards,
Jim Papuga
Spirit of New England
Jim, You are not alone in being asked what your “exchange” policy is.
The subject of returns has become a big one in the jewelry world in
the last 10 years or so, for both large manufacturers and small
designers. Retailers have come to expect manufacturers to take a
certain amount of exchanges of their products: at least yoru
customers asked up front, instead of just coming back to after a year
and demanding you exchange the poor sellers!
My suggestion would be that you formulate such a policy, since the
demand for it is endemic in the jewelry world. Besides, a fair
exchange agreement can be a win-win situation. After all, if a piece
they bought doesn’t sell, it’s just going to sit in the case getting
dusty, year after year, and they won’t buy another piece to replace
it. Maybe they’ll scrap it eventually, or maybe it’ll finally sell,
but as long as it’s gathering dust in the case, they aren’t buying
more pieces from you to fill up that display space. If you exchange
that piece for another, you might get lucky and the next will become
a runaway best seller. Faster turnover means more purchases from you
for replacement inventory. You do end up with the old piece in your
inventory, but I don’t expect the trade-off is any worse than you’d
see with consignment, where they can just ship back your unsold
pieces and say ‘thanks for the loan, have a nice day.’ At least this
way you get paid right up front! You also don’t have to worry about
what happens if they go bankrupt: you’ve already got your money.
That doesn’t mean you have to exchange everything you send them, or
offer refunds for non-selling pieces. Be sure to negotiate the exact
terms of exchange: how many pieces of a purchase you’ll exchange (I
think typical ratios are 2:1 – one exchange for every two pieces –
and 3:2. Maybe someone else can offer more advice on that) and how
long after purchase can they be exchanged for. (You don’t want
anything turning up unsold five years later!) You might charge a
small re-stocking fee – you’ll have to clean, etc., returned pieces
before you can send them out again. Or you might want to add wording
about what happens if you discontinue a series: you don’t want to
find yourself stuck with a lot of work that doesn’t fit in with your
current body. Others with more experience can probably suggest other
considerations.
Even with an exchange policy, moving to wholesale is normally much
better for cash flow. Good luck!
Suzanne
Suzanne Wade
writer/editor
Suzanne@rswade.net
Phone: (508) 339-7366
Fax: (928) 563-8255
Dear Jim, The wholesale exchange policy you described is pretty
standard by my experience. I actually find that sort of policy
works well for me and I initiate it myself with galleries. It’s my
own work I’m exchanging for and I find it in my best advantage not
to have it look like my pieces are sitting in a gallery not selling.
I’ve sold across different points of western Canada and down across
into the Great lakes area of the States. Most galleries seem to
appreciate the courtesy of knowing you have the confidence in your
work to do the exchange if need be. It’s like saying to them that
if they were inept at moving your product, you’ll have no problem
selling it elsewhere. Also it gives them security if they are
buying higher-end pieces from you, not to lose financially, remember
they didn’t have that risk on consignment. Congratulations, it’s a
big step when the galleries start asking you to sell them at a wholesale
price, it shows confidence in your work. -Naomi
Jim, I would limit exchanges to three months. You don’t want to be
getting back old designs that don’t go with your current work.
Deb Karash