1688 Consignment vs Buying Outright: Which Fits You?
If you are sourcing from 1688 right now, you are probably choosing between two payment structures without realizing how different they are underneath: buying outright (pay first, own the stock) or consignment (factory holds stock, you pay on sale or on a set deadline). Most guides stop at defining these terms. The real decision comes down to three operating questions: which one locks up your cash longer, which one leaves you holding dead stock, and which one gives you leverage to negotiate price. Your answer depends less on general advice and more on your shop's size and cash position right now.
Consignment and buying outright: what actually separates them
Buying outright means you pay the factory before or at pickup, the goods move into your warehouse, and you own them the moment the transfer clears. Simple, and the factory has zero risk once payment lands.
Consignment (ky gui in Vietnamese sourcing circles) flips that: the factory keeps physical custody of the stock, and you only pay when you sell it, or by an agreed date, whichever comes first. You are effectively renting shelf space at the factory instead of buying inventory upfront.
These are not two opposite poles. A lot of 1688 factories run a hybrid: 30-50% deposit upfront, with the remaining balance settled under consignment terms once you start selling. This is common with seasonal apparel, where a factory won't fully commit inventory to you without some cash on the table, but also won't force you to pay 100% for stock that might sit unsold through a slow season. Phone case and accessory suppliers, by contrast, lean toward outright purchase more often, since their SKUs turn fast and margins are thin enough that carrying consignment risk isn't worth it for the factory.
Cash flow pressure: who holds the money longer
With buying outright, your cash leaves the bank the day you pay, and it stays locked in inventory until you sell through it. If your sell-through is slow, that capital is dead weight sitting in a warehouse instead of funding your next order. This is the single biggest risk for shops running tight cash flow management for 1688 imports.
Consignment protects working capital, but it is not free. Factories that accept consignment terms typically price the goods 10-20% higher than an outright deal, because they are absorbing the carrying cost and the risk that you never sell the stock at all.
Run the math against your sales cycle. If you turn inventory in under 30 days, say a fast fashion SKU or a trending accessory, buying outright almost always wins on margin. The 10-20% consignment markup eats more profit than the cash-flow benefit is worth when your money isn't tied up for long anyway. Consignment starts paying off once your sell-through stretches past 45-60 days.
One thing shops get wrong: consignment is not free storage forever. Factories set a payment deadline regardless of whether you've sold the goods. Miss it and you are treated as in default, same as any unpaid invoice.
Inventory risk: who eats dead stock and defects
Buying outright means you carry all the downside. If a SKU doesn't sell, that's your loss. If you discover a defect after the goods already cleared payment and shipping, you are negotiating a return or refund from a position of weakness, since the factory already has your money.
Consignment shifts part of that risk to the factory, but only for a limited window. Most factories cap consignment terms at 30-60 days, after which they either demand you buy the remaining stock outright or ship it back. Read that clause carefully before you sign anything, because inventory risk when buying wholesale compounds fast if you assume consignment means unlimited grace.
There's a hidden risk too: factories prioritize fulfillment for outright buyers. If a bestselling SKU is running low, the factory ships it to the customer who already paid before it ships to you on consignment. You'll notice this as consistently slower delivery or, worse, getting handed older stock that's been sitting in their warehouse while the fresh batch goes to paying customers.
The fix is basic but often skipped: ask for a periodic stock report (weekly or biweekly) and get the return or buyback terms in writing before you commit, not verbally promised over WeChat.
Negotiating power under each model
Buying outright gives you real leverage, especially at 2-3x MOQ. Factories that get paid immediately are far more willing to shave price, since there's no risk on their end once the transfer clears. If you've read anything on negotiating price with 1688 factories, this is the underlying reason cash-in-hand buyers get better numbers than anyone else at the table.
Consignment buyers have almost no room to push on price. The factory is already absorbing liquidity risk by not getting paid upfront, so they're not going to discount on top of that, unless you have a proven order history with them.
The practical play: use outright purchase for SKUs you've already validated as sellers, and reserve consignment for testing new, unproven SKUs where you don't want to risk capital on something that might flop.
Worth noting: larger 1688 factories rarely offer consignment to new shops at all. It's typically reserved for buyers with a track record, sometimes six months to a year of consistent order history, because the factory needs to trust you'll actually pay on time.
Which model fits your shop size
If you're a new shop with thin capital and no sales data yet, lean toward consignment or a hybrid deposit structure. You cannot afford to have cash locked in unsold inventory while you're still figuring out which SKUs actually move.
If you've got a stable order history and healthy margins, buying outright is usually the better play. You get better unit cost, faster turnaround, and none of the fulfillment-priority disadvantage that consignment buyers face.
A workable middle ground for growing shops: buy your proven, high-volume SKUs outright to lock in the best price, and use consignment for new or seasonal SKUs you're still testing. This splits your risk instead of betting the whole order on one payment structure.
Whichever model you pick, none of it matters if the factory can't actually deliver. Always vet the factory before committing to an order, whether that's outright or consignment. A factory that can't produce at scale will burn you either way, just on a different timeline.
Frequently asked questions
Is 1688 consignment safe if I've never worked with the factory before? It's higher risk with an unknown factory, since there's no track record to lean on. Start with a small hybrid deposit order first, confirm the factory actually delivers on time and quality, and only move to full consignment once you've built that history.
Does buying outright always mean paying 100% before the factory ships? Not always. Many outright deals still split into a deposit at order confirmation and the balance before shipment, rather than 100% upfront. The defining feature isn't the payment split, it's that you own the goods and carry the full risk once you've paid in full, regardless of timing.
How do I confirm a factory actually offers consignment instead of just saying yes to close the deal? Ask for their standard consignment contract template and check if they've done it before with other buyers. If they can't produce a written agreement with specific terms (deadline, return policy, reporting cadence), treat their "yes" as a soft promise, not a real offer. If you're not sure how to evaluate what you're reading, that's exactly the kind of 1688 sourcing basics worth reviewing before you commit money either way.
What hidden costs get missed when comparing the two? Storage and handling fees the factory quietly folds into consignment pricing, inspection costs you still owe even if goods are returned, and the opportunity cost of capital tied up in outright purchases sitting unsold. Factor all three in before comparing headline unit price.
What does Ordinex do to help with this decision? We're building Scout to surface factory-level data (order history, verified capacity, consignment track record) so you're not guessing which payment model a given supplier will actually honor. Scout is in private beta now, along with Orders for managing the purchase and payment side of these deals. If you want early access, check ordinex.cc.