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For those unfamiliar, a consignor is an entity or individual who sends a consignment. On the other hand, a consignee is the one who receives the shipment of goods owned by the consignor. Before we start discussing the details of how can both these individuals work in harmony, it is vital to clear out a few misconceptions to get everyone on the same page.
A consignee could be the buyer or someone representing the consignor within the international markets. What's important to understand is that the consignor retains ownership of the consignment until the consignee pays for it. Payments are made according to the terms of the agreement finalized between the consignor and consignee.
Let's take an example to help you understand clearly. Suppose John is a consignor and Shawn is a consignee. The two of them make a deal that John will ship a consignment of t-shirts to Shawn, who will pay for the products from the money earned after selling them. Meanwhile, the shipment charges, as well as storage costs, will be borne by Shawn. He is also responsible for any damages to the consignment of goods. John remains the owner of the t-shirts until Shawn has paid him in full.
Doesn't Shawn seem like an important person for John's company? Imagine what would happen if Shawn stops buying? John would have to look for another consignee to replace Shawn to avoid a substantial reduction in his annual revenues and profits. Therefore, every consignor has to maintain a trustworthy relationship with their consignee.
Let's see how John can continue to indulge in profitable transactions with Shawn in the short and long run;
It is pretty common for a consignment to incur damages while in transit. John knows that if the t-shirts get spoiled under his supervision, he will have to compensate for them. Hence, he decides to pay a monthly insurance premium to secure himself. At the same time, he must also tell Shawn to do the same. This way, the consignee becomes aware of the possibilities and prepares to steer clear of unpleasant events by hiring an insurance firm for himself.
These are the terms and conditions that explain the responsibility of the goods to both key parties. The incoterms state things like who will pay the shipping charges, import taxes, and other charges on the consignment. They also have details regarding all the logistics related to the shipment of products. All of this information reduces misunderstanding and confusion, clearly defining each entity’s roles. It also strengthens the relationship of the consignor and consignee as better understanding between the two contributes to fewer or no disputes. John and Shawn must negotiate the incoterms before the finalization of each deal.
Shawn, the consignee, is responsible for selling all the goods received from John. In case he fails to empty the stock, John would incur substantial losses, and Shawn may not receive the commission as promised. Therefore, they both need to consider working according to a time limit. Shawn would get the motivation he needs to meet the deadline, improving the prospects of the consignment being sold. If he does not deliver as per the time limit, Shawn can pay for the goods himself or return the consignment to John. Of course, the consignee would have to bear any shipping charges incurred during the return of goods.
As stated earlier, goods can be damaged in transit and storage. While insurance protects the interests of the consignor and consignee, it is better to avoid such events altogether. The consignor can ask the consignee to pay for storage care. This way, the consignment is handled with special care and stored safely. The amount might seem like a big expense at first, but the long-term benefits for both parties outweigh any drawbacks associated with such payments.
Did you notice anything common in all the guidelines mentioned above? The quality of the relationship between a consignor and their consignee depends on effective communication. John can keep working with Shawn for a long time by merely keeping all channels of communication open. Sorting out problems together, negotiating beforehand, and advising the best possible options to each other is how they can continue to reap the profits as a team.
A consignor has a set of responsibilities unique to those of the consignee. They both need to fulfill their duties effectively as one benefits from the other. Adequate communication with no gaps goes a long way in ensuring the consignment is delivered, handled, and stored correctly. Furthermore, the consignee can focus more on selling the goods if everything else goes smoothly. Consignor and consignee are indeed separate entities, but they are dependent on each other to enjoy profits.
John and Shawn must maintain an understanding that motivates them to discuss their ongoing issues related to the consignment with full disclosure. Working in a secretive manner or deceptions would only lead to adverse outcomes in the long run. Being transparent is what's going to add to their bank. Agreeing to what would happen if one of them fails to execute any task they are responsible for during the negotiation process is essential to avoid conflicts. If John finds it hard to work with Shawn, he must convey it before it is too late. Either Shawn takes his consignor's judgment into consideration and changes accordingly or ends things. The same applies to the consignee. In case he thinks his consignor is being unreasonable and not listening to him, finding a new one is advisable.
As with all other things, finding something is not hard if you know where and what to look for. How a consignor finds a consignee is a bit different compared to the other way around. We are going to discuss all of it in detail to help everyone understand it properly.
Firstly, a consignee must learn everything about their market to see what sells the most. It will help in filtering out the best consignors who deliver the goods as required.Being aware of popular products in a particular industry is how one can look for the right consignors. Moreover, you need to see which region has the best suppliers of the required products. Then the only thing remaining is approaching consignors. The 21st century’s modernizations allow you to utilize the internet to find what’s needed efficiently.
Moving on, a consignor can find consignees by implementing adequate marketing strategies. They can use social media and other digital means of promoting their business. Email marketing also goes a long way in attracting consignees, but you have to keep taking follow-ups for better outcomes. You can create a business website by hiring skillful developers while using SEO (search engine optimization) to make it rank higher. All of this is about boosting your company’s online presence, which ultimately creates awareness among the prospects and generates leads.
Consignors and consignees can find what they are looking for through another method as well. Have you ever heard of foreign trade B2B platforms? These are digital portals that operate to connect businesses selling products with those prepared to buy them. All dealings take place via the internet, giving you a cost-effective option of getting in touch with consignors and consignees. A B2B eCommerce marketplace offers various services to benefit buyers and sellers. From marketing your consignment business to making sure all agreements are finalized smoothly, everything becomes seamless when you choose to work with a B2B platform.
Foreign trade B2B platforms are free from the restrictions of borders, time zones, and languages. They remain operational 24/7, so if you are sleeping or on vacation, your business will stay open through the online B2B marketplace. These platforms are open to all industries without exceptions, so you can sell anything there. Consignees do not have to worry about the quality of the goods as it is verified before registering sellers by the B2B platform and multiple third-party companies.
It is safe to say that the hard-earned investments of consignors and consignees become worthwhile by working with a B2B platform. TradeWheel.com, Alibaba, GlobalSources, and Made-In-China are some of the leading firms you can consider using. It is a completely secure method of trading with modernizations that adds efficiency and contributes to the sustainable growth of businesses.
