Final answer:
Consignment arrangements involve a consignor providing goods to a consignee who pays only upon sale of those goods, with the consignor retaining inventory ownership until that point.
Step-by-step explanation:
Consignment arrangements are agreements where a consignor (usually the manufacturer or wholesaler) provides goods to a consignee (the retailer) without the consignee paying for the inventory upfront. Instead, payment is made only when the goods are sold to the end consumer. In a consignment arrangement, inventory ownership remains with the consignor until the goods are sold. The main advantages are that consignees can offer a wider range of products without making large investments, and consignors benefit from more exposure in the marketplace. However, the consignor also takes on the risk of the goods not being sold.