A consignment occurs when the owner

A consignment occurs when the owner of goods leaves them with another party to be sold. When the goods are eventually sold, the consignee retains a commission and pays the consignor the residual amount. Consignment arrangements are relatively common for certain types of retail sales. On-line auction sites are a form of consignment arrangement, since a third party is undertaking the sales role.

In a consignment arrangement, the consignor continues to own the goods until they are sold, so the goods appear as inventory in the accounting records of the consignor, not the consignee.