Consignment model

Under consignment model, you can keep your item at an e-commerce partner’s facility but ownership remains with you.

Sale to end customer happens with either of you or your e-commerce partner being the seller on record.

1. Your e-commerce partner is seller on record: In this case, your e-commerce partner buys an item from you when they receive order from the customer.

2. You are the seller on record: In this case, you sell the item directly to the end customer at your name.

Key points:

• To store your item at the partner’s facility, an additional place of business (APOB) registration in the GST is mandatory.

• You transfer the item with stock transfer note (STN). STN is a document for moving item from one part of the distribution chain to another. This transfer can be from your existing warehouse to APOB or from APOB to your existing warehouse. Link to check the format of stock transfer note: https://cleartax.in/s/delivery-challan-format Link to understand the impact of GST : https://cleartax.in/s/impact-stock-transfer-gst

• You transfer the item at the unit price in STN which is cost price of item.

How consignment model is useful?

• You can keep a large volume of inventory with an e-commerce partner without shifting the ownership.

• No complicated accounting, you book sale/return in books of accounts when the actual event happens.

Also, if you are the billing party to end customer, there are additional below benefits:

• You can sell products to the direct customer at your name.

• You can keep control of your e-commerce platforms' seller accounts with you.

• You will receive payments directly in your bank account when an actual sale happens.