Sale or Return
by Rachael Chambers
When visiting the British Craft Trade Fair earlier this year I went as a gallery owner looking for new work for the Ferrers Gallery’s general stock and for specific exhibitions. I was a little surprised to find such a mix of reactions from makers regarding supplying on a Sale or Return basis; there were those who were delighted to be able to display their work at the Ferrers Gallery to those who won’t do sale or return at all. On closer questioning I found that there seems to be a great deal of confusion in the trade about the Sale or Return concept.
As a gallery owner I have about 35% of my stock on sale or return, it offers me flexibility and the opportunity to try to sell the work of new makers and products without the risk of paying for the goods in advance of possible sales. There are many other possible reasons for gallery owners to have work on Sale or Return.
Exhibitions
I like to take items on Sale or Return for exhibitions, as they are usually only six to eight weeks long, and I don’t want to be left with part of a collection to try to house and sell elsewhere in the gallery after the event. For example, the Ferrers Gallery has an exhibition in July, ‘Handbag Heaven’ that is, as the title suggests, dedicated to handbags. For this we wish to be able to showcase as many designs as possible, but ultimately we don’t want to be left with lots of stock that
we don’t have the room for when the exhibition ends.
Changing Stock
As a gallery owner one of my priorities is to offer my customers
something new to look at every time they visit, so I like the concept of being able to regularly change my stock. If I work on Sale or Return with a maker I can top up or change to a different collection regularly by returning the last few items and refreshing with new ones. (If I had bought in the stock, I am less likely to refresh the stock so quickly.) I know
from my stock and sales figures that refreshed stock encourages more sales, a few items of a collection takes much longer to sell.
VAT
Taking items on Sale or Return means that I am selling the work on behalf of the maker and therefore I only pay for the VAT on the Sale or Return commission (the difference between the trade and sales price).
Cash Flow
With Sale or Return I don’t have to pay for the goods before I have sold them. I will have been paid by my customer before I pay the maker, which means that I have much better cash flow, although the commission I gain will be much lower than the mark up I would put on if I had bought the stock in, but then I haven’t taken a risk, so I won’t be left with stock I can’t sell.
So what are the benefits of Sale or Return for makers.
- You will be able to get your work into more galleries and into exhibitions.
- Being part of an exhibition means you and your work are likely to gain publicity and recognition.
- You may be able to encourage a gallery that wasn’t willing to buy in your work to take your work on Sale or Return.
- Your sales relationship with a gallery is likely to last longer as you will be able to keep the gallery refreshed with stock and encourage more sales, so you are therefore likely to sell more work in the long run.
- A gallery will take a much bigger collection on Sale or Return than they might if they bought it.
- You can always encourage a gallery to buy some items and then agree to top up their collection with Sale or Return items.
- If correctly priced up you should gain a higher price than if you sold the items as a direct sale. What are the possible downfalls
- You won’t get paid immediately for your work, but you will get paid regularly as and when the gallery sells the work.
- You will need to keep on top of the paperwork as to who has got what.
- I have known galleries close down having not paid the makers for Sale or Return work, so please make sure the galleries you choose are reputable, you could even ask for a Sale or Return reference. How to manage Sale or Return
- Have a clear set of guidelines as part of a Sale or Return contract, this should include who is responsible for insurance, postage and packaging, and cleaning and repair costs as well as a return date and details of ownership of work. Get the gallery to sign it.
- Keep a clear record of which galleries have what work on Sale or Return and create a Sale or Return coding system, so both you and the gallery are aware of exactly which item has sold.
- Record payment received when an item has sold and you have been paid for it.
- Recall your Sale or Return work if the gallery doesn’t return it on the date requested, or agree a longer period if both parties are happy with this arrangement.
- Ring the galleries to see how things are selling and offer to exchange anything that is not selling well and to re-stock items that are selling well.
- Price your work clearly for both direct sales and Sale or Return. The best way to do this is to have a Recommended Retail Price, as galleries will take commission on Sale or Return of between 25-50% whereas for direct sales the mark up will be much higher at around 100%.
It is therefore advisable to have a Recommended Retail Price that all galleries can work to, this way makers can gain a bigger cut of the final price for Sale or Return and the customers are unaware as to whether the item has been bought in or is on SOR and your prices in the retail market are standardised. Sale or Return, if managed correctly, can create a strong relationship between a maker and a gallery and build recognition on both sides. At the Ferrers Gallery some of our strongest and longest lasting relationships are with makers who supply us on a Sale or Return basis because the liaison work involved has nurtured a strong two-way rapport.
