Final answer:
In a consignment sale, the consignee holds and sells goods on behalf of the consignor without taking ownership, earning a commission on sales and returning unsold items. The consignment agreement details the terms, commission rate, and period, benefiting both parties.
Step-by-step explanation:
In a consignment sale, the consignee is the individual or business that holds and sells the goods on behalf of the consignor. The consignee is responsible for storing the goods, displaying them, and selling them to the end customer. However, the consignee does not take ownership of the goods; instead, the consignee earns a commission for any items sold and returns any unsold items to the consignor.
The consignment process involves a consignment agreement, which outlines the terms and conditions of the sale, including the commission rate, the period of consignment, and the responsibilities of both the consignor and the consignee. This relationship is beneficial for the consignor, as it allows them to reach a wider market without the upfront costs of renting a space or hiring staff, and it is advantageous for the consignee, as they do not need to invest in inventory.