RETURN TO ME (NOT!)

Oh, just give it away!

Oh, just give it away!

A few years ago I wrote a series of articles about selling your work in stores and galleries. I covered all the ins and outs of consigning and wholesaling, the good, the bad, and the ugly.

There’s one thing I didn’t cover, and that is returns–when the store wants to return certain items of your work.

The way returns are handled is what separates consignment from wholesale. In consignment, your work is placed in the store and you don’t get paid until it sells. In return for waiting, you usually get more than 50% of your retail price than you would by selling to the store outright (wholesale). The traditional split is 60% (artist) and 40% (store). When things got rough in the economy while back, this sometimes dropped to 50/50.

In consignment, if unsold work is returned to you, you aren’t out any money. You may be out time of course (waiting to see if the work sold) and you may be out the opportunity to have placed the items somewhere else where they might have sold quicker/better. But you don’t “owe” the store anything. You just get your stuff back.

Wholesale works differently. You sell your work outright to the store. You are paid upfront for your work–usually 50% of your retail price. (if you’ve figured your costs and pricing correctly, there is still profit there for you.) In essence, the store (usually) gets a slightly better price from you, in exchange for buying on the spot.

But store buyers are not infallible. Sometimes they pick stuff they love, but it just doesn’t sell. Sometimes the “sure sale” thing doesn’t work. They’re stuck with inventory that doesn’t move. Your work is money sitting on their shelves, taking up space where other more sale-able items could be.

At this point, your buyer now has several options:

1) Put the item on sale. Mark it down and move it out!

2) Donate the item to a charitable auction/fundraiser/non-profit and take a tax write-off. (I’m not sure if they can claim what they paid for it, or what they could have sold it for. Either way, it’s more than you the artist would get. If YOU were to donate the exact same item, you actually can only write off the actual cost of materials.)

3) Give to someone as a present. (“Look what I got you!”)

4) Try to return it to you.

We all have different ways of handling wholesale returns. Some artists won’t, period. Others take returns happily–it’s product that can be resold somewhere else.

And some of us who are way too nice, had to learn the hard way. Accepting returns can be a bottomless pit if you’re not careful.

It starts small. In my experience, the store owner/manager opens the dialogue during a follow-up sales call. They pick an assortment of new items. You are happily writing up the sales tally. Another great sale! Things are great! Until….

They ask if they can return a few things that just didn’t sell.

There are problems with accepting returns you need to consider:

1) It usually starts small, but gets bigger and more complicated quickly.

They say, “I have a couple items that just aren’t selling. Can I exchange them for different ones?” You say sure, no problem. Happy to oblige!

Soon there are way more than “a few things”. In fact, they are now returning a lot of stuff. Maybe even more items than they’re actually buying.

2) It leaves you in a position where YOU owe the STORE money.

I had one client who returned so much inventory at each reorder, I could barely keep up with what was going out and what was coming back in. At the end of a year’s worth of transactions involving thousands of dollars, I realized I’d only made a profit of less than $500. And that didn’t include the shipping costs. I was so excited by the big sales, I’d neglected to factor in the big returns.

3) The returns are no longer in the same condition. Sometimes the returned items are shopworn. Or they don’t go with your newer product lines. Or they’re now hopelessly off-trend or dated. Silver tarnishes, items come back in bags and packaging that aren’t yours, that particular style doesn’t sell anymore.

4) Once you start, it’s really hard to close that door. (See #2 below.) (I know, I have a lot of lists in this post!)

It can feel like you and your work is being disrespected. Sometimes, this IS the case. A few of my first clients tried to make me feel like the returns were substandard in some way, that it was my fault they hadn’t sold. I refrained from mentioning that they had hand-picked each item. And that displaying them on a shelf 6″ above the floor or in a basket under a table was probably not conducive to selling them.

Sometimes it’s a person who doesn’t have a lot of retail experience. They simply buy stuff they like, with no consideration or knowledge of their clientele, the right audience for the work, or the right price points for their store. This was the case for the buyer in #2. When I described the situation to a friend in the business, she exclaimed, “That’s just a personal shopper with a store budget!” In fact, the only reason I’m not more embarrassed about admitting how out-of-hand this got, is how it ended. (See #9 below.)

But some buyers are simply in a bind. They have money tied up on inventory that isn’t moving. Every time they look at it, they see a little pile of money that could be put to better use.

Understandable, to a degree. On the other hand, most “regular” stores buy inventory from much larger businesses who do NOT accept returns. That’s why some ready-made frames at frame shops are on sale. Why summer clothing gets marked down in August. Why specialty food items have a ‘sell by’ date. They can’t return stock three months later to these suppliers. So why do they ask us?

They ask us because there’s a chance we might. So it couldn’t hurt to ask, right?

Yes and no. I want to be a good vendor. I want to be professional. I like having a genuine relationships with my buyers. I want to work with them. I want to know what sells for them, what they’re customers are looking for, and what their needs are. That’s win-win for both of us.

Unfortunately, this attitude also makes me “too nice” sometimes. I had to learn to say no. And it’s important to know that you can say no, whenever you like.

And you can make exceptions. You don’t have to say no to every buyer. You can make exceptions to those who don’t abuse the privilege.

If you decide to take returns, have a policy, and a plan.

1) You can put a time-limit on returns. (“No returns after 30 days.” Or even 10 days, if you think you’re dealing with buyer’s remorse.)

2) You can accept returns for exchange only. (Actually, this should be written in stone! Who wants to write a check to the store?!)

3) You can put a limit on the amount or the number of items returned.

4) You can limit the number of times you accept returns. Maybe just once a year. Or maybe even just once, period.

5) You can charge a restocking fee. This will help cover your time for returning the item to inventory, the time for doing the necessary cleaning/repairs/repackaging, and the time spent to sell it again. It’s also a general “nuisance fee” if the buyer gives you grief about your “inferior word” or your “unprofessionalism”.

6) You can refuse to accept any shopworn or damaged items, period.

7) For stores you deal with at a distance, you can request they get pre-authorized for any returns. They have to check with you before they just send stuff back.

8) Any or all of the above.

So you can actually say you only accept returns in a calendar year, maximum 10 items and/or totaling less than $200, with a 20% restocking fee, and no exchanges on damaged or shopworn merchandise.

9) You can always change your mind. It’s your business. You get to decide.

In fact, I did just that. After I tallied up my sales and returns for this buyer, I changed my policy. Soon after that, I received a lot of inventory–unauthorized–in the mail. I wrote them and told her of my policy change. I gave them two options: I could mail the returns back to them. Or, if I didn’t hear back from them with 30 days, I was donating all the items to charity. I never even heard back, which means their accounting/accountability was even worse than mine.

10) You can have different policies for different buyers. Just make sure your strictest policy is your stated default. If you have someone who never abuses the privilege, you can state your regular return policy and then make exceptions for them. This is a lot easier than trying to rein in someone you’ve been lenient with.

What you DON’T want is a revolving door of sales and returns that wastes your time, your energy, and your patience.

Is there an upside to accepting returns? Yes!

1) It encourages the buyer to try new items they’re not sure about. Although it might make more sense to CONSIGN items like this. More paperwork, but at least money isn’t going back and forth.

2) When the privilege isn’t abused, it’s a good way to build rapport with a buyer. They know that you understand how hard retail is, and that you’re willing to work with them. Nice rapport!

3) The product really isn’t up to snuff. Sometimes there’s something about your item that needs work–a difficult clasp, an awkward length, a lack-luster presentation. Use it as an opportunity to improve your product.

4) Sometimes you get stuff back you can resell for MORE–because you’re prices have gone up!

A final word: The worst thing about returns is, the negative energy. The bad, sad place it puts you in (if you let it.) It feels like the store–and the world–is rejecting what you make. Especially if the buyer is a jerk and uses that against you. (It happens.)

Don’t go there. Don’t waste your good creative energy.

I still stumble. But I’m constantly learning.

Know your tolerance level. Be prepared. And if necessary, simply move on. Not every opportunity is a good one.

And say good-bye to the bad returns!

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6 Comments

Filed under art, half-wholesale, wholesale

6 responses to “RETURN TO ME (NOT!)

  1. A very timely article for me Luann, thanks!

  2. Thanks for sharing! I just started consigning my work and this is super helpful info to know up front.

  3. Great blog post! Very sound advice spoken from true experience! Thank you! I have not done enough wholesale or consignment to have this dilemma personally. I appreciate your perspective and will put some thought into creating my own return policy!

  4. Very interesting,, thank you for sharing

  5. Deborah Swanson

    I’m one of those artistic, but logical, thinkers/planners and thought I’d pretty much pre-conceived just about any situation that could come up in this arena prior to my entering it. Previous experience in federal law enforcement and various legal entities had already opened my eyes to what humans are capable of doing and just how far some will go. I was ready! (Ha!)

    To anyone just starting out, or still fairly new at it, do NOT be discouraged – GO for it – BUT, as Luann so wisely advised: HAVE A POLICY, MAKE IT KNOWN UP-FRONT and STICK TO IT (except with those wonderful clients who support you, understand that responsibility and accountability goes BOTH ways in order for you BOTH to be happy and successful in business, and honestly WANT a good relationship – CHERISH these dear folks!).

    Depending upon the type of work you create, also be wary of returns that mysteriously (and continually) seem to happen after “events” (the day after Halloween, 2 days after the high school prom, the week after her return from the 3-week cruise, etc.).

    Role play: Try to imagine various scenarios, “put” yourself face to face (a mirror is great) with people, actually say their lines out loud, and RESPOND – out loud. In other words, REHEARSE – it’ll not only make you think about WHAT you want to say, but also HOW you want it to sound (how it will be perceived), what their replies might be, how you’ll respond to their replies, etc.

    It forces you to think ahead and your mouth will have already “exercised” it: Planning and muscle memory are your tools to success not only in your craft, but also in your commerce with that craft!

    I now know that there is no way to be fully prepared for everything that could possibly arise, but if you heed all Luann’s advice here, you’ll be well on your way to success – success that avoided a LOT of chaos!

    Good one, Luann!!

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