Why Consignment Sales Are a Dead End for New Inventors

Learn more and create a foundation for long term growth by starting with online and direct sales.

When you’ve just created an innovative product, getting it onto store shelves feels like the holy grail of business success. Walking into a local retailer and proposing a consignment deal—where they display your product without paying upfront and only give you money when it sells—seems like a win-win scenario. You get shelf space, they risk nothing. What could go wrong?

As it turns out, almost everything.

The Harsh Reality of Consignment

On paper, consignment looks like a low-risk opportunity. In reality, it creates a perfect storm of problems for inventors. The core issue isn’t just about money—though you’ll likely collect very little—it’s about the lack of accountability and usable data that makes these arrangements nearly worthless for growing your business.

Here’s what typically happens: Your product makes it onto the shelf, but the store never properly enters it into their point-of-sale system. According to a National Retail Federation report, inventory accuracy in small retail environments can be as low as 65%. That means your product often exists in retail limbo. When units disappear, there’s no way to determine whether they were sold, stolen, damaged, or misplaced. You’re left playing detective over a few missing items while learning nothing about your actual customers or sales patterns.

Even with a formal consignment agreement—which you could draft using AI tools and legal templates—the administrative burden often exceeds what most small retailers want to handle. For them, the paperwork hassle often outweighs their willingness to try unknown products, making the “no upfront cost” advantage moot.

The Real Challenge: Breaking Through Consumer Awareness

Poor tracking and accountability aren’t even your biggest problem. The real challenge facing any new product is consumer awareness and credibility—two areas where consignment provides zero help.

Think about how people shop. Research shows 72% of grocery and retail purchases are pre-planned, with only a small percentage of impulse buys—and those are dominated by familiar, low-risk categories like snacks and accessories. Your revolutionary kitchen gadget or innovative tool isn’t on that list. For someone to buy it, two difficult things must happen simultaneously:

1. Your product catches their attention enough to interrupt their shopping mission.

2. It builds instant credibility despite being from an unknown company.

That second point is especially brutal. Consumer behavior research consistently shows that shoppers trust established brands far more than new ones. In fact, 81% of consumers say brand trust is a deciding factor in purchase decisions. When your “XYZ New Co” label sits next to names like Stanley Black & Decker or OXO, skepticism is natural. Why should they trust a company they’ve never heard of with their hard-earned money? This credibility gap kills sales regardless of how innovative your product may be.

A Note on Exceptions

There are rare cases where consignment can make sense. Specialty boutiques, gift shops, or local artisan stores may handle consignment more responsibly, especially if your product aligns with their curated brand. In these limited contexts, consignment can provide visibility and serve as a credibility builder. But these are the exception—not the rule—and they still won’t provide the kind of sales data and customer insights you need to truly grow.

Better Alternatives for Learning and Growing

Instead of wasting time with consignment arrangements that provide poor data and minimal sales, focus your energy on channels that deliver rich feedback and genuine learning opportunities.

State Fairs and Direct-to-Consumer Events

Selling at state fairs, swap meets, farmers markets, or trade shows puts you face-to-face with potential customers. You’ll quickly learn what questions people ask, what objections they raise, and what features excite them most. This real-time feedback is invaluable for refining your pitch and packaging. Plus, when customers can talk directly with the inventor, the credibility issue largely disappears.

Online Sales and Testing

If your product can be shipped, online platforms offer unmatched opportunities for data collection and optimization. E-commerce platforms like Amazon, Etsy, or Shopify provide detailed analytics about customer behavior, conversion rates, and demographics. You can run A/B tests on product descriptions, images, pricing, and marketing messages to systematically improve your approach.

Online sales also solve the awareness problem through targeted advertising. Instead of hoping random shoppers notice your product on a crowded shelf, you can reach people who are already interested in your category.

The Bottom Line

Consignment feels like a shortcut to retail success, but it’s usually a detour that wastes precious time and energy. New inventors need data, feedback, and direct customer relationships to refine their products and marketing. Consignment provides none of these benefits while creating accountability headaches that make it nearly impossible to assess true market potential.

Focus instead on channels where you can directly interact with customers, gather meaningful data, and build credibility through relationships. Your product—and your business—will be far better off for it.

Ready to take your product direct to customers? Start small with local events or online marketplaces where you can test, learn, and iterate quickly. The insights you gain will be worth far more than any consignment arrangement could ever provide.

Invention City can help you with launching your new product. Learn more about us here.