A guide for consignment and resale shops

How to handle returns and refunds on consigned items

When a consigned item comes back, three things have to happen: the customer gets their money, the item goes back on the floor, and the consignor's share comes off their balance. The hard case is a refund that arrives after you already paid the consignor. This guide covers the rule to write down, how to process the return in Shopify, what happens to the share, and how to handle a balance that dips below zero. The last part shows how Still Works Consignment takes the share back for you.

1. Write the rule into your agreement

Consignors take returns better when they agreed to the rule up front. Put these in your consignment agreement:

If a sold item is returned, the consignor's share of it comes back off their balance, and the item is theirs on the shelf again.
If they were already paid, the amount comes out of their next sales, unless you agree another way.
Whether they get any part of a restocking fee you keep.
What happens if an item comes back damaged.

2. Process the return in Shopify

In the admin, go to Orders and open the order. Choose Return if the item is coming back, or Refund if only money is going back.
Pick the consigned item and the quantity.
Choose to restock it, at the location where it will sit, so it is for sale again. If you skip restocking, the product stays at zero stock and nobody can buy it.
Check the refund amount, then confirm.

At the counter, open the sale in Shopify POS and start the return there; the restock choice is the same. If an order has not gone out yet and the customer changes their mind, Edit on the order removes an item, and Cancel order under More actions cancels the whole thing.

The consignor's share was figured on what the customer paid. A full refund takes the whole share back. If the customer bought two of an item and returns one, half the share comes back.

A restocking fee is a choice. The item is back to sell again, so the simplest rule is to take the full share back. Whether the consignor gets a cut of the fee you kept is your policy; write it down either way.

In your payout sheet, add a minus row dated the day of the refund. Never edit the original sale row. The balance stays the sum of the rows, and the history explains itself.

4. Refunds after you already paid out

If you paid the consignor and then the item came back, their balance goes below zero: for now, they owe the shop. That is normal, and the fix is simple:

Do not pay them again until their next sales bring the balance back above zero.
Tell them in writing, with the item and the order, so the next statement holds no surprise.
If they stop consigning with a balance below zero, follow what your agreement says.

5. Honest limits in plain Shopify

Shopify refunds the customer and restocks the item, but it does not know there is a consignor. The share is yours to take back by hand. Refunds from the register and refunds dated after your last payout are the easy ones to miss. Before each payout, filter Orders by payment status for refunded and partially refunded orders since your last payout, and check each one against your sheet.

The same steps in Still Works Consignment

The app watches Shopify for paid, edited and cancelled orders and for refunds, online or on Shopify POS, and reads the whole order each time. A refund takes back the share for the units refunded. An order edit that removes an item takes back its share. A cancellation takes back whatever is left. Nothing is taken back twice. The item shows as in the store again in the app; Shopify puts it back in stock if you chose to restock it.

This happens even after a payout. The balance can go below zero, the consignor's page in the app says they owe the shop, and their next sales settle it. While nothing is owed, the payout form says so instead of letting you pay. The consignor's own page shows the same thing in plain words.

If the customer got back less than the item cost, a restocking fee for instance, the share still comes back in full, and Today shows what the consignor's cut of what you kept would be, in case your agreement gives them one. A refund of money not tied to any item does not change any share; it is listed on Today for you to look at.

Any other change is a correction on the consignor's page: an amount and a reason. Nothing in their history is ever edited or deleted. Every night the app adds up each history and checks it against sales, refunds and payouts. The app is free for up to 15 active consignors. It is on the Shopify App Store.

Where to go from here

The Still Works Consignment page has the plain description of what the app does and does not do. If something here does not match what you see, email the studio and it gets fixed the same business day.