How Consignment Sales Work for Pre-Owned iPhone Suppliers

Consignment places stock in a market without selling it first. This guide covers the split structures, how settlement is calculated, and the terms that decide who carries the risk.

What consignment means in the phone trade

Consignment separates ownership from possession. The consignor keeps title to the units; the consignee holds them, sells them, and settles an agreed share only when a unit actually moves.

Nothing is invoiced at handover. That is the point: a supplier places a wider model range in a market without funding the buyer's inventory, and the seller stocks shelves without spending cash.

In the used iPhone trade the arrangement appears most often between an overseas supplier and a local dealer, or between a dealer and a repair shop that also sells handsets.

The three structures you will actually be offered

These are commercial labels, not legal categories. What matters is which document states who owns the stock on a given date.

How the revenue split is calculated

Commission is normally a percentage of the realised sale price, not of a suggested retail price. That distinction matters the moment a discount is given at the counter.

Agree the base explicitly: gross sale price, net of tax, or net of returns. Also agree what happens when a unit sells below a floor price, and whether the split adjusts or the seller absorbs it.

• State the commission percentage and the exact base it applies to.
• Define who pays freight, insurance and duties in each direction.
• Set a floor price below which the seller must ask before discounting.
• Confirm whether unsold stock returns at the seller's cost or the owner's.

Who carries which risk

Because title stays with the consignor, most inventory risk stays there too. Theft, loss and damage inside the seller's premises are the exceptions, and those are the ones to insure and document.

Functional failure is the common argument. If a phone fails after it is sold, the buyer's claim lands on the seller, while the cost may belong to the consignor.

Write the rule down before the first unit ships: which fault class is covered, for how long, and whether the remedy is repair, credit or replacement. Our consignment after-sales service guide covers how that side is normally structured.

Choosing between consignment and outright wholesale

Run the comparison on cash, not on cost. Outright wholesale gives you a lower unit price, full control of pricing, and a clean balance sheet entry. Consignment gives you a wider range, no upfront outlay, and a smaller share of each sale.

The deciding factor is usually sell-through confidence. If you can move the models reliably and finance the stock, buying wins on margin per unit. If you are testing a model range or a new market, consignment limits the downside of being wrong.

Many successful relationships start on consignment and convert to outright purchase for the models that prove out. Agree that conversion path up front, including whether the trial period counts toward your volume tier.

Settlement mechanics that survive an audit

Statements should reconcile to physical units, not to a running balance. A per-IMEI schedule showing date sold, sale price, commission and net payable is the format that holds up.

Monthly settlement is standard, and weekly is normal for fast-moving models. Longer cycles push working capital onto the consignor, who should price that in.

Handle returns inside the same statement instead of netting them silently, and keep the credit trail attached to the original unit record.

Documentation and cross-border compliance

Goods moving on consignment still cross borders, and customs treatment depends on the destination. Some markets treat a consignment shipment as a sale on entry; others allow duty deferral when the paperwork states the goods remain in the owner's name.

Rates, thresholds and relief schemes change, so confirm the position with a licensed broker in the destination market at the time of shipping rather than relying on a general summary.

Keep an export invoice, a consignment agreement referencing the IMEI list, and a reconciliation statement for every period. Where the market requires it, register the arrangement properly instead of invoicing it as an ordinary sale.

When consignment is the wrong model

• The seller cannot track units individually, so reconciliation becomes guesswork.
• Sell-through is slow and the model range is broad, leaving both sides with dead stock.
• Payment terms are already open account, so consignment adds paperwork without adding reach.
• The destination market taxes entry as a sale, removing the cash-flow advantage entirely.

Consignment works when the seller has a real channel and the supplier has models that channel cannot easily buy. Without both, outright wholesale is simpler and cheaper.

Frequently asked questions