What is a consignment letter and what is it meant for? Ever heard of a consignment letter and wondered what type of letter that might be? Or maybe you just heard of it for the first time right here? Well worry no more for this post will explain to you in details what a consignment letter is and what it is used for.
First off, in business, consignment is a term used to refer to the act of handing over the custody of commodities (done by the consigner) to another individual (the consignee). A consignment letter is therefore a letter of agreement that is usually sent by a consignor to a consignee and usually countersigned by the carrier of the goods.
When a consigner hands over goods to a consignee, the main responsibility of the consignee is sell the goods on behalf of the consignor and to be in charge of the goods or take care of them until they are sold. The consignor still has ownership rights over the goods and is responsible for any damages to the goods while they are on the hands of the consignee. The consignee usually does this at an agreed fee with the consigner so both of them benefit from the consignment.
For example, let’s say boutique A wants to sell their products in Nairobi where they have not yet set up shop. They come to an agreement with boutique B who are based in Nairobi to sell the products on their behalf. Boutique A therefore consign their products to boutique B.
The consignment letter is meant to indicate that a consignor sent certain goods via a specific carrier to a specific destination for the consignee. It also includes details of the cost of the shipment of the goods
NOTE: We will share a sample of a consignment letter here and how to write one. This post is only sharing on what a consignment letter is.