Consignment Business in the Philippines
A complete low-capital startup guide to selling products without buying inventory upfront
What you'll learn in this consignment business guide
This consignment business guide for aspiring Filipino entrepreneurs walks you through starting a low-capital retail business, finding suppliers, negotiating consignment agreements, registering with DTI, and managing inventory.
For your business registration needs, also see our DTI Business Name Registration Guide , Barangay Business Permit Guide , and BIR Business Registration Guide .
What is a Consignment Business?
A consignment business is a retail model where you sell products without having to buy inventory upfront. Instead, a supplier (called the consignor) gives you products to sell, and you only pay them after the items are sold. If an item doesn't sell, you simply return it to the supplier. This is what makes consignment one of the lowest-risk, lowest-capital business ideas in the Philippines.
Two Main Roles in Consignment:
Consignor — the supplier or owner of the products. This could be a manufacturer, wholesaler, crafter, or even an individual with products to sell.
Consignee — the seller or retail store that displays and sells the products on behalf of the consignor.
Example: How It Works
A local jewelry maker (consignor) approaches a boutique store (consignee) and asks them to display 20 pieces of jewelry. The boutique doesn't pay anything upfront. When a piece sells, the boutique keeps a percentage (e.g., 20-30%) and gives the rest to the jewelry maker. If a piece doesn't sell after 60 days, it goes back to the maker.
How Consignment Differs from Traditional Retail:
No upfront inventory cost — you don't buy the products; you only pay when they sell
Lower financial risk — unsold items go back to the supplier
Shared profit — you split the sale price with the supplier based on an agreed percentage
Flexible inventory — you can rotate products and test what sells without financial commitment
In the Philippines, consignment is popular in categories like clothing, accessories, handmade crafts, food products, beauty items, and home decor. Many small boutiques, tiangge stalls, and online sellers use consignment to stock their stores without tying up capital in inventory.
Why Start a Consignment Business in the Philippines?
Low Capital Requirement
The biggest barrier to starting a business is usually capital. With consignment, you can start with as little as PHP 5,000-10,000 for permits, basic store setup, and transportation costs. You don't need to spend tens of thousands on inventory. Ideal for aspiring entrepreneurs, stay-at-home parents, students, and OFWs.
Low Financial Risk
Since you don't own the inventory, you're not stuck with unsold products. If a product line doesn't sell, you simply return it to the supplier and try something else. This lets you experiment with different products without the fear of dead stock.
Test Market Demand
Consignment allows you to test which products sell well in your area before committing to buying inventory. You can display different products, see what customers prefer, and then transition to buying best-sellers wholesale for higher margins.
Growing Philippine Retail Market
With platforms like Shopee, Lazada, TikTok Shop, and Facebook Marketplace, consignees can sell consigned products both offline and online, reaching more customers than ever before.
Supports Local MSMEs
Consignment creates a win-win: small producers get access to your store's foot traffic, and you get products to sell without upfront costs. This collaborative model supports the local MSME ecosystem.
Flexibility and Scalability
Start small — even with a single retail partner or a small display area — and scale up as you learn what works. Many successful consignment businesses start with one product category and expand into multiple categories as they grow.
Works Online and Offline
Whether you have a physical store, a market stall, or an online shop, consignment works. Display products in your store, sell through social media, or list on e-commerce platforms. The model adapts to any selling channel.
How to Start a Consignment Business Step-by-Step
Choose Your Role — Consignor or Consignee
Decide which side of the consignment business you want to be on. Will you be the consignor (supplier with products to sell) looking for retail partners? Or will you be the consignee (retail store owner) looking for suppliers to provide products? Many beginners start as consignees because it requires less capital and no product manufacturing capability.
Identify Your Product Niche
Choose a product category that fits your target market and location. Popular consignment categories in the Philippines include:
Pick a niche you're passionate about and one that has demand in your area. Research what's already selling in nearby stores and online platforms.
Find Suppliers or Retail Partners
If you're a consignee: Look for local manufacturers, wholesalers, crafters, and online sellers who have products but no retail presence. Attend trade fairs, visit local markets, join Facebook groups for Filipino entrepreneurs, and reach out to makers directly.
If you're a consignor: Look for boutiques, tiangge stalls, salons, cafes, and online sellers who might be willing to display your products. Choose stores whose customers match your target market.
Negotiate the Consignment Agreement
This is the most critical step. A consignment agreement should clearly state:
Always put the agreement in writing, even if you're dealing with a friend or family member.
Set Up Your Selling Space
If you're a consignee, prepare your store or display area. This could be a physical store, a market stall, a section within an existing business (like a salon or cafe), or an online store. Make sure your display is attractive and organized. Good lighting, clean shelves, and clear pricing make products more appealing to buyers.
Track Inventory Carefully
From day one, implement an inventory tracking system. Record every item received from suppliers, every item sold, and every item returned. You can use a simple spreadsheet (Google Sheets or Excel) or a free inventory app. This is critical because you need to accurately report sales to your suppliers and calculate their payments.
Market and Sell the Products
Promote your consigned products through your social media pages, in-store displays, and word of mouth. Take good photos for online listings. Offer promotions or bundle deals to move slow-selling items. The faster you sell, the more you earn — and the more likely suppliers are to give you better products and terms.
Settle Payments with Suppliers
Follow the payment schedule in your consignment agreement. Be transparent about what sold and what didn't. Provide a sales report showing each item, the sale price, your commission, and the amount due to the supplier. Timely and accurate payments build trust and keep suppliers happy.
Evaluate and Adjust
After the first consignment period, evaluate what worked and what didn't. Which products sold fast? Which sat on the shelves? Use this data to negotiate better terms, request different products, or find new suppliers. Continuously refine your product mix to maximize sales.
Checklist of Documents and Requirements
Business Registration Documents
DTI Business Name Registration (if using a business name different from your own name)
Barangay Clearance — from the barangay where your business is located
Mayor's Permit / Business Permit — from the local government unit (LGU)
BIR Certificate of Registration — for tax purposes
BIR TIN (Tax Identification Number)
Consignment-Specific Documents
Consignment Agreement / Contract — written agreement with each supplier
Inventory List / Delivery Receipt — for each batch of products received
Sales Report Template — for tracking sales and calculating supplier payments
Payment Records — receipts or records of payments made to suppliers
Optional but Recommended
SEC Registration (if forming a partnership or corporation)
FDA License (if selling food or health products)
Business insurance (to protect against theft, fire, or natural disasters)
Online Selling Requirements (if applicable)
Social media business page (Facebook, Instagram, TikTok)
E-commerce platform seller account (Shopee, Lazada, TikTok Shop)
GCash or Maya business account for receiving payments
Decision Criteria — Consignor vs Consignee Model
Choose CONSIGNOR (Supplier) if:
Choose CONSIGNEE (Retailer) if:
Hybrid Model
Many successful consignment businesses eventually operate as both. Start as a consignee selling others' products, then develop your own product line and consign it to other stores as a consignor. This diversifies your income and gives you more control over your product mix.
Key Considerations
Capital
Consignee requires less capital (no inventory cost). Consignor requires capital to produce or source products.
Risk
Consignee has lower financial risk (unsold items return). Consignor bears the cost of unsold inventory.
Profit Margin
Consignor typically earns 70-80% of sale price. Consignee typically earns 20-30% commission.
Scalability
Consignor scales by placing products in multiple stores. Consignee scales by adding more suppliers and categories.
Registration Process and Legal Requirements
Register Your Business Name with DTI
If you're operating under a business name (not your personal name), register with the Department of Trade and Industry (DTI). This gives you legal ownership of your business name.
Get a Barangay Clearance
Visit your barangay hall and request a Barangay Business Clearance. Requirements typically include:
Fee: Usually PHP 50-200
Get a Mayor's Permit / Business Permit
Apply at your city or municipal hall's Business Permits and Licensing Office (BPLO). Requirements typically include:
Fee: Varies by LGU, typically PHP 500-3,000
Register with BIR
Register with the Bureau of Internal Revenue for tax purposes. Requirements include DTI Certificate, Mayor's Permit, Barangay Clearance, and valid IDs.
Draft Your Consignment Agreement
A legally sound consignment agreement should include:
It's recommended to have a lawyer review your consignment agreement template, especially if you'll use it with multiple suppliers.
Tips for Managing Your Consignment Business
Keep Accurate Records from Day One
Track every item that comes in and goes out. Use a spreadsheet with columns for: item name, supplier, date received, sale price, date sold, commission earned, and amount due to supplier. This prevents disputes and makes payment settlement easy.
Build Strong Supplier Relationships
Treat your suppliers as partners, not just vendors. Pay on time, communicate regularly about what's selling and what's not, and provide feedback on product quality. Good suppliers will give you priority on new products, better terms, and exclusive items.
Rotate Products Regularly
Don't let products sit on your shelves for too long. If something hasn't sold in 30-45 days, consider returning it and replacing it with fresh stock. Customers notice when a store has the same items month after month — it makes the store look stale.
Price Products Strategically
Work with suppliers to set prices that are competitive but profitable. Research what similar products sell for in your area and online. Consider bundle deals to move slow-selling items. Make sure your commission is built into the price, not added on top.
Leverage Online Channels
Don't limit yourself to physical store sales. List consigned products on Facebook Marketplace, Shopee, Lazada, and TikTok Shop. Take clear photos, write good descriptions, and respond to customer inquiries quickly.
Negotiate Better Terms Over Time
Once you've proven you can sell consistently, negotiate for better commission rates. Suppliers value reliable retail partners who move product. After 3-6 months of consistent sales, ask for a higher percentage or exclusive rights.
Diversify Your Supplier Base
Don't rely on a single supplier. Work with multiple suppliers across different product categories. This ensures you always have products to sell even if one supplier runs out, discontinues a line, or goes out of business.
Track Your Expenses
Keep track of all business expenses: rent, utilities, transportation, packaging, permits, and marketing. These are tax-deductible and help you understand your true profit margin. Your commission income minus your expenses is your actual profit.
Common Mistakes to Avoid
No Written Consignment Agreement
Many beginners start with verbal agreements, especially when dealing with friends or family. Without a written agreement, disputes over profit splits, payment schedules, and responsibility for damaged goods become he-said-she-said arguments. Always put everything in writing.
Poor Inventory Tracking
If you can't account for every item, you can't pay suppliers accurately. Missing items, unrecorded sales, and sloppy record-keeping lead to lost money and damaged relationships. Use a spreadsheet or inventory app from day one and update it daily.
Accepting Too Many Products at Once
Overcrowded displays confuse customers and make it harder for any single product to stand out. Start with a manageable number of items from 2-3 suppliers, then expand as you learn what sells.
Not Setting a Consignment Period Limit
Without a clear time limit, products can sit on your shelves indefinitely, taking up space that could be used for better-selling items. Set a 30, 60, or 90-day consignment period. If it doesn't sell by then, return it.
Unrealistic Profit Expectations
Consignment commissions are typically 20-30% of the sale price. Focus on volume — selling more items at a smaller margin is better than selling few items at a higher margin. Understand that the supplier bears the cost of producing the product.
Ignoring Legal Requirements
Operating without DTI registration, barangay clearance, and a mayor's permit is illegal and can result in fines or closure. Even if you're just selling from home or online, you need proper registration. Get your permits before opening.
Not Communicating with Suppliers
Silence is the enemy of good supplier relationships. If products aren't selling, tell the supplier. If customers are giving feedback, share it. Regular communication builds trust and leads to better business for both parties.
Mixing Personal and Business Finances
Don't use your personal bank account for business transactions. Open a separate bank account or use a GCash/Maya business account. This makes it easier to track income, pay suppliers, and file taxes accurately.
Underpricing to Compete
Don't engage in price wars with competitors. If you lower your prices too much, your commission shrinks to nothing. Instead, compete on service, product quality, and unique offerings. Customers will pay a fair price for good products and good service.
Conclusion
Starting a consignment business in the Philippines is one of the smartest low-capital business ideas available today. It lets you start selling without buying inventory, test products before committing, and build a retail business with minimal financial risk.
Key Takeaways for Success:
Start with a clear plan. Decide whether you'll be a consignor or consignee, choose your product niche, and identify your target market before reaching out to suppliers.
Always use written agreements. A consignment agreement protects both parties and prevents disputes. Include profit splits, payment terms, consignment periods, and responsibility for damaged goods.
Register your business properly. Get your DTI registration, barangay clearance, mayor's permit, and BIR registration before opening. Operating legally protects you from fines and builds credibility.
Track everything. Inventory, sales, payments, and expenses — record it all. Good record-keeping is the foundation of a profitable consignment business.
Build relationships. Your suppliers are your partners. Pay on time, communicate openly, and provide feedback. Strong supplier relationships lead to better products, better terms, and long-term success.
Start small and scale gradually. Don't try to stock every product category at once. Master one niche, prove your sales ability, then expand. Consignment rewards consistency and reliability over speed.
Leverage both offline and online channels. Use your physical store and online platforms to maximize your reach. The more customers you can reach, the faster your consigned products will sell.
The consignment business model proves that you don't need a lot of money to start a business in the Philippines. What you need is initiative, good relationships, and the discipline to track your inventory and finances. With the right approach, a consignment business can grow from a small stall into a thriving retail operation — one product at a time.
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