Consignment trade refers to a trade method in which the consignor ships goods abroad and entrusts an overseas consignee to sell them on agreed terms; the consignee deducts commission and expenses from the proceeds and remits the balance to the consignor through a bank. Its core feature is export first, sale later: ownership remains with the consignor until the goods are sold, and the consignee is only responsible for custody and sale. Use cases include opening new markets, promoting new products, and clearing excess inventory or seasonal goods. Precautions: the consignor bears the risks, costs, and capital occupation before sale; a reputable consignee should be selected and a clear agreement signed specifying commission, cost sharing, and minimum selling price. Differences from agency and distribution: an agent only signs contracts on behalf of the principal and does not bear sales risk; a distributor buys outright and owns the goods; in consignment, the consignee does not own the goods and only receives commission. In addition, consignment trade has a long foreign exchange collection cycle, requiring attention to foreign exchange controls and tax issues.
📝 Examples
1. Our company adopted consignment trade to ship a batch of new-style clothing to the United States and entrusted a local customer to sell it on our behalf, settling payment only after the goods were sold, which effectively reduced the risk of entering a new market. (Note: the consignor ships first, and the consignee pays after sale; the risk is borne by the consignor.)
2. Because demand for a certain electronic product in the European market was uncertain, we signed a consignment agreement with a German agent, who sold at the agreed price, summarized sales reports at the end of each month, and remitted the net proceeds. (Note: in consignment trade, the consignee periodically reports sales and pays the proceeds after deducting commission.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
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