Shop practices & ethics re: consignment guns

[TTSH]

Some semi-weird & questionable situations have come up lately and I'd like to ask the forum about them. The topic is shop handling of consignment guns. Not physical handling but business-related handling. More specifically, how shops should handle offers made on consignment guns when the owner cannot be immediately reached for a decision. And for this discussion, let's take the "good buddies" or "friends of the shop" factor out of the mix.

Question 1: When a reasonable cash offer is made on a consignment gun, should the gun be pulled from display pending a decision from the owner? Or should it be allowed to remain on display for a possible "full asking price" sale or maybe a better offer?

Question 2: In the case of multiple offers on the same consignment gun (obviously this assumes the gun was left on display after the first offer), what should the shop do? Should it simply record the multiple offers without comment and report them to the owner for a decision? Or should the shop interact with the 2nd (or later) offering party(ies) to either:

a) Let the party know that there are other offer(s) on the gun.
b) Let the party know the amount of the preceding offer(s).
c) Let the party know if its offer is lower or higher or the same as the preceding offer(s).

I'm not even sure there is a right or wrong answer on all this, but I'd sure like to know what other forum members think is fair and ethical.

 

[m1gunner]

Should your "consignment" gun be in a shop that closes down due to bankruptcy, "your" gun is considered an asset of the former business, and you will not get it back. It will be used to satisfy outstanding debts of the former business.

I would never consign anything to any business.

As to the OP question, the item is for sale at the asking price until it sells, or the price is lowered. Offers mean nothing.

 

[LittleCooner]

The few I have ever priced in our area LGS, it has been explained to me that the specific gun was "on consignment" and the price was "marked on the gun". Policy was "take it at the marked price or move on". I think that is a great policy for any LGS on a consignment. Had this happen a few times over the years at different LGS.

 

[TTSH]

Should your "consignment" gun be in a shop that closes down due to bankruptcy, "your" gun is considered an asset of the former business, and you will not get it back. It will be used to satisfy outstanding debts of the former business. I would never consign anything to any business.

Which, of course, is why you choose your consignment shop very, very wisely... and why some shops are able to charge a whole lot higher consignment fee than others.

As to the OP question, the item is for sale at the asking price until it sells, or the price is lowered. Offers mean nothing.

So I assume this means leave the gun on display. But then how should the shop handle multiple offers?

 

[m1gunner]

Which, of course, is why you choose your consignment shop very, very wisely... and why some shops are able to charge a whole lot higher consignment fee than others.


So I assume this means leave the gun on display. But then how should the shop handle multiple offers?

Yes, leave it on display. Unless one of the offers is for the asking price, gun is still for sale. As mentioned, pay the price, or move on.

It starts to get interesting when you have multiple offers above the asking price.

 

[TTSH]

The few I have ever priced in our area LGS, it has been explained to me that the specific gun was "on consignment" and the price was "marked on the gun". Policy was "take it at the marked price or move on". I think that is a great policy for any LGS on a consignment. Had this happen a few times over the years at different LGS.

My experience up here has been quite different. Some consignment guns start out at obscenely high asking prices at which no one in their right mind would ever pay. For such obviously over-priced guns, offers are common and readily accepted and relayed to the owner (if the shop is smart). "Take it or leave it" on an overpriced consignment gun is just a waste of the shop's time and display space up this way.

 

[TTSH]

It starts to get interesting when you have multiple offers above the asking price.

Now that is something I haven't run into yet.

 

[howiema]

I will try to shed a little light on what is done with the consignment guns at the MA shop I work in. If a reasonable offer is made the gun generally gets pulled of the rack until we can get in contact with the owner. Bear in mind this has to be a reasonable offer. If the owner says no to low the gun is put back in the rack. Consignment guns are a good stream of revenue for my store as the owner is great with the online pictures and posts them on a couple of broker sights. My store is employed by you to sell the gun so it does run out every offer, the decision is finally up to you. These days with mobile phones e-mail the contact is generally completed in 24 hours.

If I may a couple of things to add, the "Buddies" of the store have the same chance as any patron. Sometimes the owner of the gun sets a threshold with the shop for a how low can you go price.

A few more things, when you bring a gun in for consignment try and do a little homework on the piece as I have seen guns come in and the owners think they are worth unbelievable prices and they are not. Please make sure the gun is clean and in safe shootable condition, this takes time and money for us to clean and determine this.

The bottom line is make sure the store sets your expectations when consigning a gun.

Good luck hope this helps.

Pete

 

[Arik]

1. In my opinion the gun should be pulled if money changed hands. Until then it's not sold, it's not even almost sold. My experience working in the sales field for over a decade. ...I've seen a lot of weird money related things that I go by the rule -its sold when it's sold- The offer might be reasonable to you but may not be to the consignee. He may not want to budge at all on the price and the next guy coming in may thing that asking price is a steal.

2. Shop should let the consignee know that he has X amount of offers at such and such prices. Of course we all know that anyone selling is going to sell to the highest amount. It should be a one time deal. Here are your offers and who would you like to sell to? That's it. Otherwise it turns into, or has potential to turn into an auction and this will be a headache to all involved. The shop trying to get a hold of the consignee while he's at work, then wait for him to call back if he can't pick up right away. Afterwards call all the other interested parties, wait for them to counter offer if they decide then repeat the whole thing over again by calling the consignee. Nah. One time and done, which will most certainly be the highest amount

 

[BB57]

I'm in agreement with both posts above. Guns on consignment generally start out with a set price and it's a take it or leave it kind of deal - at least in the initial few months.

Seller and shop expectations also need to be considered. There should be a general understanding of what the seller expects. If the seller wants a high asking price near the full market value of the firearm, the expectation needs to be that it is going to take awhile to get that price - something that has to be acceptable to both the seller and the shop where it's taking up space. And then the reality is that with a realistic asking price, the seller is only going to get about 80% of full market value after the commission.

In contrast, if the seller wants to turn the firearm into money quickly, then the expectation needs to be that the seller has to set a fairly low asking price, or at least give the shop a reasonable "lowest offer" the seller will accept.

In practical terms, this second approach is a lot less common as a highly motivated or desperate seller is far more likely to take the 50% to 60% of market value that the shop would probably offer for the firearm outright. If it's a firearm the shop knows it can move quickly the shop may offer a little more, but it won't be more than about 80% of what the shop can get for it in the short term.

Consequently that usually leaves consignment guns in the "not motivated seller, priced at market value" category - often niche market pieces where the shop is unwilling to pay a high percentage of the market price and keep that money tied up for the length of time it takes to sell it.

The reality is however that if the gun has sat there several months or even a couple years, and obviously isn't selling at the asking price, passing along a reasonable offer made on the gun to the seller for possible acceptance isn't out of line.

That's generally been my approach when I see an overpriced consignment gun. I'll check back in every few months, see if it's still there and after it's been taking up shelf space long enough that I detect a willingness to entertain offers from the shop, I'll float an offer. Sometimes it's accepted, sometimes it's not. But generally at that point the buyer will have the shop owner in his corner as he's beginning to view the firearm as a waste of sales staff time and shelf space and will generally encourage a seller with unreasonable expectations to either take the offer or take the gun back home.

 

[Arik]

I think you have more chance of getting hit by lighting on the day you find the pot of gold at the end of the rainbow before your gun is taken by bankruptcy filing. Not saying it can't happen, never did and never will but the chances are so so so slim. You have to know your gunstore. The stores I deal with are family businesses, not corporate, but the only way they'll close is if there is a new law prohibiting gun sales, manufacturing and possession. Two of these store are the top 25 sellers on gunbroker with an avg of 50 sales in store a day. A 3rd is just as busy. I don't see them going bankrupt overnight

 

[Xfuzz]

None of my bidness..but my 2 cents.
In todays modern age, namely the net and
auction sights or the many classified
sections why take your gun to a shop ?

In short, why give someone else 15-20% of your
dough to sell your gun ?
On-line selling and buying is a simple process.

 

[m1gunner]

I think you have more chance of getting hit by lighting on the day you find the pot of gold at the end of the rainbow before your gun is taken by bankruptcy filing. Not saying it can't happen, never did and never will but the chances are so so so slim. You have to know your gunstore. The stores I deal with are family businesses, not corporate, but the only way they'll close is if there is a new law prohibiting gun sales, manufacturing and possession. Two of these store are the top 25 sellers on gunbroker with an avg of 50 sales in store a day. A 3rd is just as busy. I don't see them going bankrupt overnight

It may not happen to you, but it is part of bankruptcy law. And I have personally seen businesses be operating wide open one day and closed up tight and in bankruptcy the next day. Employees congregating around a locked door in the morning with no clue as to what is happening. FAR more likely the smaller the business is.

Why in the world anyone would chose a consignment sale over just using gunbroker is a mystery to me.

 

[m1gunner]

Hit by lightening? I always love that one. I have been hit 3 times!

 

[nicky4968]

Not enough room here (even for a court reporter who gets paid by the word) to describe my few experiences putting up a gun on consignment.

Enough to say I will not ever do it again.

 

[Arik]

Since I was old enough to know what bankruptcy is I have seen your scenario twice. Once with an electronics store which was all over the east coast and once with a window store which closed because the place they were buying their product from turned out to be a mob front.

Like I said worrying about that store closing is like worrying that I may be hit my lighting if I step outside

 

[hoc9sw]

Should your "consignment" gun be in a shop that closes down due to bankruptcy, "your" gun is considered an asset of the former business, and you will not get it back. It will be used to satisfy outstanding debts of the former business.

I've asked that question myself, and at least in my state, that is not the case. The firearm is property of the owner until a transfer is done. The risk is that the firearm is sold, and the business has not yet paid you, or a check is declined if the business were to close.

My LGS has a lengthy agreement regarding the consignment.

Yes, a risk exists, but not in such a large window of time.

As to offers, they do not negotiate against my price. They do review my asking price against the new price, condition, and market. They will tell me if they think it would ever sell at the price I set. They let me know in general what reaction they get, but no, they don't call me with lower offers on the spot. If I wanted less, I would ask less. I would not want to be bothered in business meetings for someone lowballing my price.

The way I know I priced it too low is if it sells too fast.

 

[TTSH]

The way I know I priced it too low is if it sells too fast.

You sound like an old buddy of mine.

He was always happy when his gun didn't sell because he knew then that he hadn't under-priced it.

But then when a gun of his did sell, he was unhappy because it raised the possibility that he did under-price it and maybe could have gotten more. In a couple such cases, he actually squashed the sale fearing he had made a big mistake.

 

[m1gunner]

I've asked that question myself, and at least in my state, that is not the case. The firearm is property of the owner until a transfer is done. The risk is that the firearm is sold, and the business has not yet paid you, or a check is declined if the business were to close.

My LGS has a lengthy agreement regarding the consignment.

Yes, a risk exists, but not in such a large window of time.

As to offers, they do not negotiate against my price. They do review my asking price against the new price, condition, and market. They will tell me if they think it would ever sell at the price I set. They let me know in general what reaction they get, but no, they don't call me with lower offers on the spot. If I wanted less, I would ask less. I would not want to be bothered in business meetings for someone lowballing my price.

The way I know I priced it too low is if it sells too fast.

Once you consign an item to a store, you have already received compensation in the form of advertising, display space in the store, and sales assistance from the staff. This is the "investment" the store has made, it is not without cost.

This is the basis for it being treated as a store asset, the store has already invested in that item once it is on display. As a creditor, I have a right to make a claim against that asset if the store owes me money.

 

[TTSH]

I will try to shed a little light on what is done with the consignment guns at the MA shop I work in. If a reasonable offer is made the gun generally gets pulled of the rack until we can get in contact with the owner. Bear in mind this has to be a reasonable offer. If the owner says no too low the gun is put back in the rack. Consignment guns are a good stream of revenue for my store as the owner is great with the online pictures and posts them on a couple of broker sights. My store is employed by you to sell the gun so it does run out every offer, the decision is finally up to you. These days with mobile phones e-mail the contact is generally completed in 24 hours.

Good feedback... thank you! So given your shop's procedure you are highly unlikely to have two (or more) competing offers at the same time. That does solve the ethics question.