what is a consignment stock

what is a consignment stock is a business arrangement where goods are placed in a retailer’s or distributor’s warehouse, but ownership of the stock remains with the supplier until the goods are sold. Consignment stock is commonly used in industries like retail, manufacturing, and e-commerce to help suppliers reduce the risk of unsold inventory while ensuring that products are readily available for customers. This type of arrangement benefits both parties: the supplier can expand product reach without the need to store products in multiple locations, and the retailer or distributor only pays for the stock once it has been sold, reducing upfront costs. The key benefit of consignment stock is that it enables businesses to manage inventory efficiently, ensuring that they have products on hand to meet demand without overstocking or tying up capital. However, it requires clear agreements between the supplier and the retailer, including terms on payment schedules, stock management, and responsibility for unsold goods.