What is consignment?

What is consignment?

• A. A loan of money to a dealer by a bank.
• B. A marketing term for discount sales.
• C. A warranty type for jewelry repairs.
• D. A selection of goods loaned to a dealer by another wholesaler or manufacturer.

Answer: (D)

Consignment is when a supplier provides a dealer with goods but retains ownership until those items are sold. The dealer can display and sell them, but payment to the consignor is made only after a sale, and any unsold items can typically be returned. This setup lets the dealer offer more inventory without tying up capital, while the supplier keeps title and bears the risk of inventory until it’s sold. The description given—goods loaned to a dealer by another wholesaler or manufacturer—best matches this arrangement, unlike a loan of money, a discount marketing term, or a warranty type.

Consignment is when a supplier provides a dealer with goods but retains ownership until those items are sold. The dealer can display and sell them, but payment to the consignor is made only after a sale, and any unsold items can typically be returned. This setup lets the dealer offer more inventory without tying up capital, while the supplier keeps title and bears the risk of inventory until it’s sold. The description given—goods loaned to a dealer by another wholesaler or manufacturer—best matches this arrangement, unlike a loan of money, a discount marketing term, or a warranty type.