Buyer vs. Consignee — What's the Difference?

A buyer is an individual or entity that purchases goods or services, entering into a transaction with the intent of acquiring ownership. The buyer is responsible for paying the seller and, upon completion of the transaction, assumes ownership of the goods or benefits from the services provided. In contrast, a consignee is an individual or entity named in a shipping contract to whom goods are to be delivered. The consignee might be the end customer, a middleman, or an agent, but importantly, they do not take ownership of the goods upon receipt. Instead, the goods remain the property of the consignor until sold.

The role of a buyer is straightforward in most transactions, involving the selection of goods or services, agreement on terms, payment, and then taking possession. The consignee, on the other hand, has a more specific role, often within a consignment arrangement, where goods are sent by the consignor to the consignee. The consignee is responsible for the sale or care of the goods without owning them. They may earn a commission upon sale but do not bear the initial cost of the goods.

In the buyer's case, the relationship is primarily with the seller, and the transaction concludes with the exchange of goods for payment. For the consignee, the relationship can be more complex, involving duties such as storing, displaying, and selling the goods on behalf of the consignor. The consignee must manage these goods separately from their own, if applicable, and ensure they are accounted for correctly.

The financial risks for buyers and consignees also differ. Buyers risk their capital upfront in purchasing goods or services with the expectation of utility or resale value. Consignees, however, generally do not risk their capital on the inventory received; their risk is more aligned with the responsibility of care and the potential cost associated with unsold inventory or any agreed-upon terms with the consignor.

Both buyers and consignees are essential in the commerce ecosystem, playing different roles in the movement and sale of goods. While buyers fuel the market through demand and purchasing power, consignees facilitate the distribution and accessibility of products, often providing a platform for consignors to reach potential buyers.