Selling on consignment: Lesson from a micro-entrepreneur

In the meat processing industry I am in, consignment is a common marketing mode.  (It is when you deliver your products to another business, usually a retailer, on the understanding that the goods will be paid once they have been sold.) A relationship with the consignee is based on trust.

To minimize risks I am careful not to consign products to just anyone.   With a new, unknown customer, I transact business on cash basis only.  But with those who have earned my trust, I consign meat products valued up to P30 thousand.  By the third delivery of products, the consignee is expected to pay for the first two deliveries.

But sometimes, things do not go as expected.

One consignee, for example, failed to pay P30 thousand worth of processed meat, pleading more urgent financial obligations.  Though I ought not to do business with this person any more, I still allowed him P10 thousand worth of consigned products.

Despite his delinquency, I still kept consigning products to him.  He eventually went back to being a good payer and business partner, although he never settled the first P30 thousand he owed me.

On hindsight, I would say I did the right thing, though it may not make sense to more hard-nosed businessmen.

Kahit na malaki ang utang niya sa akin, pinautang ko pa siyang muli.  Kung hindi ko siya pinautang muli, malamang, hindi na ako kumikita sa kanya ngayon.  Kinalimutan ko na yung unang utang dahil mas malaki pa sana ang nawala sa akin.  (Though he owed me a lot of money, I still consigned products to him.  If I did not, I wouldn’t be earning profit from his business now.  I decided to forget his unsettled debt because I could have lost more if I cut business relationship with him drastically.)

 

– Jing Lucareza, Jing-Yan’s Meat, Bacolod City

(as told in a story published in Doers, Dreamers, Risk-takers 3:  The Micros that Roared)

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