There is a moment every wholesaler knows. The customer calls. They need the item now. Not next week, not when your next purchase order arrives. Now.
You know that if you say no, they’ll call someone else. If you say yes without having the goods ready, you risk delays and dissatisfied customers. And if you stuff your own warehouse to the limit to be ready next time, you tie up capital you would rather use for growth.
That is the classic wholesale balancing act: availability versus capital freedom.
When risk and capital tie up are allowed to grow, three things typically happen in a wholesale business:
1. Liquidity gets tight because money is sitting on the shelf instead of working in the business.
2. Decisions slow down because a large inventory makes it expensive to change direction.
3. You become more vulnerable to market swings because wrong purchases can stick around for a long time.
This is where consignment stock can be a surprisingly effective way to gain both speed and flexibility. And yes, it can be done without losing control, if you have your data and processes in order.
In this article we cover:
- What consignment stock is and how it works
- Why consignment stock benefits growth focused wholesalers
- The typical pitfalls and how to avoid them
- How to make consignment stock work in practice
- How inventory management and WMS make it scalable, including with barcode scanners for inventory management
What is consignment stock
Consignment stock is an inventory agreement where you, as the supplier, place goods at the customer’s site or close to the customer, but you keep ownership until the goods are used or sold. The customer only pays when the item leaves the shelf in practice.
In short:
- The goods are stored at the customer
- You still own them
- The customer pays upon use or sale
It is a model that shifts security to the customer and gives you a stronger position in their day to day operations.
Why consignment stock is brilliant for wholesalers
As a wholesaler with growth on the agenda, you constantly work to make it easier for customers to buy more and buy more often. Consignment stock removes several of the most stubborn obstacles in sales at once:
1. You reduce the customer’s risk and make it easier to say yes
When the customer pays only when the goods are used or sold, it becomes far less binding to take in a larger assortment. This increases the chance that they try new products, buy more over time, and stick with you as their supplier.
2. You strengthen the relationship and become part of the customer’s daily business
Consignment stock makes you an active part of the customer’s operations. The goods are already there, so you become the natural first choice when the need arises. That builds loyalty because you are not just delivering products, you are delivering availability.
3. You get more predictable demand
When you can continuously track the customer’s consumption, you can plan purchasing management more precisely. You refill in time, buy smarter, and avoid costly rush orders that squeeze both margin and flow.
4. You can grow faster without drowning in tied up capital
You move inventory closer to where it is actually sold. It is not about having more stock. It is about having stock in the right places. And that is the difference between standing still and scaling.
The challenges you need to control
Consignment stock is a growth tool, but only if you avoid the classic tripwires.
1. Ownership and inventory value can become unclear
Without solid systematics, it quickly becomes unclear what you own, what has been consumed, and what should be invoiced. That creates noise in both operations and accounting.
2. Shrinkage and obsolete goods can land on you
Products that sit with the customer for a long time can be damaged, become outdated, or disappear. That is why the model must always run on clear agreements and strong traceability.
3. Replenishment without data leads to empty shelves
If you don’t see consumption early enough, the customer can still run out. Then the whole idea collapses. Precise reordering rules and updated stock levels are crucial here.
How to make consignment stock work in practice
1. Make a clear consignment agreement
At a minimum, the agreement should clarify:
- When ownership transfers
- How consumption is registered
- Who is responsible for shrinkage or damage
- How often settlement takes place
- Which products are included
- How returns and expiry are handled
The fewer grey areas, the better the collaboration and the more stable the growth.
2. Set fixed reordering rules
Consignment stock requires minimum levels and reorder points per item. This ensures the customer doesn’t run dry and that you don’t overfill their shelves.
3. Make consumption measurable, not based on gut feeling
Manual registrations create errors and discussions. Automatic registrations create peace and speed. This applies to both inventory management and order management. When consumption is clear, settlement and replenishment can run without friction.
Consignment stock in Rackbeat
Consignment stock is a data discipline. That is why a spreadsheet is rarely enough when you want to scale the model.
With Rackbeat you can:
- Create separate locations for the customer’s consignment stock
- Track inventory movements and consumption continuously
- See inventory value and ownership correctly in reports
- Set up minimum levels and reordering
- Document exactly what has been delivered, used, and remains
- Work in a WMS setup where processes are standardized
- Use barcode scanners for inventory management for fast scanning during consumption, counting, and replenishment
The result is full control without extra administration. And that is exactly what makes consignment stock scalable.
When consignment stock makes especially good sense
Consignment stock is powerful when:
- Customers have fluctuating consumption
- Lead time is critical
- The goods are expensive for the customer to keep in stock
- You want to be the customer’s preferred supplier
- You want to drive growth through availability and service
If even a couple of these points match your reality, consignment stock is worth taking seriously.
Book a meeting and see what consignment stock can do for your growth
Want to see how consignment stock can work in your wholesale business with full control over consumption, value, and reordering?
Book a no obligation online meeting with a Rackbeat advisor. We’ll show you how to set up consignment stock in practice, connect it to your inventory flow, and free up capital for growth:
