All in the Bag

It's become standard practice for retailers and artists to split profits evenly on consignment goods. But some artists cry foul.

Three years ago, Bobby Glasser stumbled onto a fabulous idea for a new artisan product when he walked into the now-defunct King Kovers auto upholstery shop in uptown Oakland. Glasser happened to come across the shop during its going-out-of-business sale, and a display of vintage auto seat covers instantly caught his eye. Made of glowing vinyl with bright, psychedelic patterns, the merchandise seemed to call out to him, demanding to be salvaged and transformed. Glasser could only think of one thing: messenger bags. Bright, shiny carry-ons with seatbelt handles and handmade piping. Thus, his line of handicrafts was born.

By launching King Bag Company, Glasser became part of a local class of artists whose ranks have risen in recent years, particularly with the proliferation of boutique-style storefronts in Oakland, many of which feature artisan products. He has three ways of peddling his wares: One is to sell directly to the consumer, either at festivals, hand-to-hand, or via the web storefront Etsy. That’s a guaranteed win-win: Glasser recoups the cost of materials and labor (usually five hours per bag), with no retail mark-up. The second is to sell goods wholesale to retailers, which allows him to liquidate merchandise and recoup the cost of overhead, albeit with a significantly reduced profit. The third way is for Glasser to sell goods on consignment, meaning he puts them on display at a neighborhood store and loses a portion of the profit when they sell.

Consignment used to be one of Glasser’s best options, because it gave him a storefront without the headache of running one, and it yielded reasonable paper returns. Ideally, he said, the retailer would keep 30 percent of the revenue from whatever sold, leaving 70 percent for the artist. It seemed like a symbiotic relationship, given that a lot of local boutiques pride themselves on stocking locally sourced goods.

But lately, retailers have been a lot less generous, Glasser said. It has become increasingly common for stores to split profits fifty-fifty on consignment goods. From a store owner’s perspective that’s fair, since the store has to pay rent, hire staff, and operate a business, which is costly. But to artists, it’s debilitating. “With the new shift, artists must either take less of a cut, or raise their prices, passing this on to customers, Glasser wrote in an e-mail, complaining about the “new” policy.

Local boutique stores like Oaklandish, Pretty Penny, The Rare Bird, and worker-owned shop Rockridge Rags all use the fifty-fifty rate. Oaklandish owner Angela Tsay says that’s standard practice, and it’s been that way for a while — unlike Glasser, she hasn’t noticed any “shift” in policy. “Sometimes it’s sixty-forty, but I’ve never heard anything other than that,” she said. “I’ve never encountered seventy-thirty.”

Like many shop owners in Oakland, Tsay also ranks among the artist class, since Oaklandish produces its own line of apparel and accessories. The company sells its wares at Residents Apparel Gallery (RAG) in San Francisco’s Hayes Valley neighborhood, where Tsay said the consignment rates are also fifty-fifty. Local jeweler Kate Ellen, who is opening her first brick-and-mortar store in Old Oakland as part of a six-month pilot program, says that she plans to implement the fifty-fifty rate — albeit with reservations. “I would like to build the kind of business model that rewards artists properly for the work that they do,” Ellen said, adding that she has sometimes struggled as an artist working with retailers, most of whom give her a fifty-fifty or sixty-forty rate. But she also understands the business owner’s point of view. “Retailers are paying overhead for the space, and for any employees that they have to pay,” Ellen said. In other words, it not just about unit cost.

To an outsider, fifty-fifty might seem like a fairly large portion for the retailer, especially since he or she isn’t risking any capital — just donating shelf space. If Glasser sold products at Pretty Penny, for instance, he’d get an $80 return on a bag going for $160 — and some of that $80 would go to his increasingly hard-to-find raw materials. (Now that King Kovers is closed, he’s getting most of the seat covers on eBay, or from somebody’s grandfather’s attic.) The current rate seems mostly market-driven: Store owners argue that they can take a bigger cut because they have the advertising arm, the foot traffic, and the operational costs to justify it, and artists benefit as a result. Artists like Glasser also face an interesting quandary: They need to sell in places like Pretty Penny and The Rare Bird in order to earn visibility.

That said, many are also rebelling against the current consignment rates by selling their goods exclusively at festivals (where they only have to recover the vendor booth fee) or on web storefronts like Etsy. Some are also forging friendlier deals with smaller businesses, for whom it’s more advantageous to be nice to the artist. Sharon Hoyle, who owns the vintage specialty store Mixed Pickles, says she usually gives artists a 70- or 75-percent rate of return on consignment goods, because the cost of labor and materials comes out of the artist’s portion. “I used to make jewelry … so I was on the other end,” Hoyle said, explaining why she empathizes with people like Glasser. She added that since the store specializes in rare vintage products, it behooves her to work amicably with people who make those products. Right now, Howle buys wholesale from a woman who makes jewelry from bits of old tire, and she also sells Glasser’s bags on consignment.

Another local jewelry-maker, Carol Tanenbaum, said she’s seen a similar shift in the consignment market in favor of retailers. “I used to encounter a sixty-forty split,” Tanenbaum said, adding that now, many stores that sell her goods mark them up more than a hundred percent in order to help her recoup the original cost. Tanenbaum says she has tried to get a more generous deal by selling in a store where she’s also a customer, and to some degree it’s worked. The owner of one local mom-and-pop optometry shop gives her an eighty-twenty rate on handmade holders for glasses. Other stores give Tanenbaum the fifty-fifty rate, but double her prices. (One store owner tags his consignment inventory with a more-than-doubly inflated price, then puts a slash through it, to make the 100 percent markup seem cheap.) Tanenbaum says she’ll accede to such seemingly extreme mark-ups so long as she can recoup the unit cost. Still, she aims to do most of her selling at open studios and shows, where she only has to pay a participation fee.

Glasser’s livelihood doesn’t depend on whether or not his goods sell — he’s also a sixth-grade teacher, and that accounts for the bulk of his income. But he’s concerned for people like Tanenbaum who work on arts full time. “[I’m] seriously thinking of unionizing local artists for the purpose of maintaining profits and consumer prices,” he wrote in an email. “The prevailing message: Buy local, support the arts, but best to buy directly from the artists.” Yes, the economy downturn is brutal, he said, but so is this business model.


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