The short answer
Not by itself. Vendor managed inventory (VMI) changes who decides when to restock, not who pays. In standard VMI, the retailer still owns, and pays for, stock once it's delivered. Consignment changes ownership: the brand keeps title until each unit sells, so the retailer spends less upfront while the brand carries the risk.
So if a boutique tells you "your opening order is too big" or "I'm not sure it'll sell," VMI alone won't solve that. Consignment, scan-based trading and net terms each move cost and risk to a different place. This guide explains all four, compares them side by side, and helps a small brand pick one.
What vendor managed inventory means for a small business
In VMI, the supplier decides when and how much to replenish at the buyer's location. The buyer shares stock and sales data, and both sides agree on minimum and maximum levels for each item. Zoho's VMI guide describes exactly that setup and notes it's also called supplier-managed inventory.
VMI doesn't require enterprise systems. Zoho notes small businesses can run it with a supplier portal or a spreadsheet shared on a schedule. What turns an informal top-up into VMI is writing down the levels, the count schedule and the terms.
The part most people miss is ownership. MYOB's explainer puts it directly: in a VMI system the retailer owns the stock once it arrives and pays for it then. VMI saves the retailer ordering work and stockouts. It doesn't, by itself, save the retailer cash.
Where VMI fits, and where it doesn't
Good fit: steady sellers with predictable demand, many low-value items that eat up purchasing time, and a long-standing relationship where both sides trust the data.
Poor fit: seasonal, trend-driven or one-off items, stores with unreliable stock counts, and brand-new accounts with no sales history yet.
Shopify's VMI overview adds a caution: VMI takes real trust, because the retailer shares sensitive sales data, plus upfront investment in tools and training. For very small retailers, the cost and complexity can outweigh the benefit.
Selling wholesale to independent stores? Set up your brand on Ordrly. Core is $0/month.
Consignment: the brand keeps ownership until it sells
With consignment, your product sits on the retailer's shelf while you still own it. The retailer pays you only when a customer buys, usually as a split or a percentage agreed up front. Unsold stock is handled under the agreement, and often comes back to you at the end of the term. Shopify's consignment guide sums up the trade: the retailer spends less upfront, and the supplier waits longer to get paid.
For a small brand, consignment for boutiques can open doors that a standard wholesale order can't. A store that won't risk a full opening order on an unknown line may give you a shelf if it pays only when things sell. The costs land on you, though:
Your cash is tied up in stock you've shipped but haven't been paid for.
You carry the risk of unsold, damaged or missing units.
You depend on the store's reporting to know what sold and what you're owed.
Someone has to reconcile sales, count stock and handle returns.
If you're weighing consignment against a small test order, our retailer-side guide on returning unsold wholesale products walks through sale-or-return and test orders from the store's point of view.
VMI vs consignment: they solve different problems
The cleanest way to keep these apart: consignment moves ownership, and VMI moves the replenishment decision. EasyEcom's comparison frames it the same way. Consignment solves a cash and risk problem, VMI solves a forecasting and workload problem, and the two can be combined. DTC makes the same point: VMI has almost nothing to do with who owns the stock, and consignment has almost nothing to do with how it's replenished.
So VMI helps a retailer spend less upfront only when it's paired with something that changes when the retailer pays.
Scan-based trading: consignment triggered at the register
Scan-based trading (SBT) is a more formal, data-driven cousin of consignment. The supplier owns the inventory in the store until the item is scanned at the point of sale. At that moment, the retailer buys it and resells it to the customer. Wikipedia's entry describes SBT programs that run on EDI transactions for items, daily sales, receiving, invoices and payments, and RMS notes that SBT is technically a form of consignment trading.
The Army & Air Force Exchange Service's supplier guide shows what that looks like in practice: the sale and invoice happen at the point of sale instead of at shipment, the supplier takes on inventory management, and shrink costs are negotiated between the two parties. For most small brands selling to independent stores, SBT is something to understand, not something to set up this quarter.
Net terms: the retailer owns it, and pays later
Net terms are the most common option in wholesale, and the one small brands already use. The retailer orders and owns the goods, and you give them an agreed number of days to pay the invoice. Brandboom's net 30 guide calls it what it is: a credit decision. You ship now and get paid later.
Net terms are something you, the brand, offer the retailer. They give the store time to sell some product before paying, easing the upfront cash problem without consignment reports. The risk is late or missed payment. That's why Brandboom and others suggest starting new accounts on prepay or a deposit and moving them to net 30 after on-time payments, with a credit limit you can afford.
VMI vs consignment vs net terms vs scan-based trading
Model | Who owns stock on the shelf | When the retailer pays | Who decides restocking | Who carries unsold-stock risk | Best fit for a small brand |
|---|---|---|---|---|---|
Standard wholesale (prepay) | Retailer, after purchase | Before or at shipment | Retailer | Retailer | Proven products and accounts that pay reliably |
Net terms | Retailer, after purchase | An agreed number of days after invoice | Retailer | Retailer (brand carries payment risk) | Accounts that have earned credit |
Vendor managed inventory | Retailer, typically from delivery | On normal invoice terms | Brand, against agreed min/max levels | Retailer, unless the agreement says otherwise | Steady sellers in trusted, data-sharing relationships |
Consignment | Brand, until each unit sells | After the customer buys | Usually the retailer, per the agreement | Brand | Getting a new line onto a hesitant boutique's shelf |
Scan-based trading | Brand, until scanned at the register | When the item scans at the point of sale | Brand | Brand (shrink is negotiated) | Larger programs with POS and EDI data exchange |
How a small brand should choose
Start from the retailer's actual problem, not the model that sounds most advanced.
"Your minimum is too high"
Lower the barrier before you take on risk. A smaller opening order, a sampler assortment, or a deposit with the balance on terms often solves this without consignment.
"I'm not sure it will sell here"
This is where consignment can make sense, for a limited set of SKUs, a fixed term and a written agreement covering pricing, reporting, shrink and returns. Keep it small. Every consigned unit is your cash sitting on someone else's shelf.
"I keep running out and forget to reorder"
That's a replenishment problem, which is what VMI is meant to fix. But you don't need a formal VMI program to start. You need visibility into what's running low and an easy way for the store to place the next order. It's also where brands quietly lose revenue: accounts that bought once and never came back. The missed reorders calculator puts a dollar figure on that gap for your own accounts.
"I'd love to carry more, but cash is tight"
Net terms are usually the cleanest answer for accounts that have proven they pay. The retailer gets time, and you keep a normal wholesale sale and invoice.
Where Ordrly fits today, and what's not live yet
To be plain about it: Ordrly doesn't offer vendor managed inventory today. VMI is on our public roadmap. So is starting the next purchase order from what a retailer actually sold through a connected POS or Shopify register. Neither one is live, and we won't describe them as if they were.
What is live is the part of the problem most small brands feel first: getting the second order.
Forecast-based low-stock alerts. Connected retailers get an email naming which of your products are heading toward a stockout, with a link to reorder. You see the same list with a recommended quantity.
Live wholesale catalog and ordering. Retailers order at your live wholesale price and stock instead of emailing a PDF back, and you can start an order for them.
Three-tier MOQs. Set minimums that match how different accounts buy.
Net terms with the order. When you offer terms, they live with the order instead of a spreadsheet. For eligible brands, Ordrly's trade finance handles AR, credit underwriting and collections, so extending terms doesn't mean doing the credit work by hand.
Retailer chat and dealer management in the same place as orders.
That covers the "I keep running out" and "cash is tight" cases without consignment paperwork. See the full list on the Ordrly for brands page. For more ways to get accounts reordering, read how to get retailers to reorder.
Ready to try the reorder side now? Create your brand account. Core is $0/month, and you pay a 1.5% Network Fee only when an order runs through Ordrly.
FAQ
Is vendor managed inventory the same as consignment?
No. VMI is about who decides when to restock. Consignment is about who owns the stock until it sells. They can be combined, but a standard VMI arrangement has the retailer owning and paying for stock on delivery.
Can a small business use vendor managed inventory?
Yes, on a small scale. Start with one trusted account and a few steady-selling SKUs, agree on min/max levels and a count schedule, and put it in writing. A shared spreadsheet or portal is enough.
Is consignment a good idea for boutiques?
For the boutique, it lowers upfront spend and risk. For the brand, it ties up cash and adds tracking. It works best as a limited, time-boxed trial with a written agreement, not as a default for every account.
What is scan-based trading?
A form of consignment where the supplier owns the product until it scans at the retailer's register, and the sale and payment are triggered by that scan. It usually depends on POS data feeds and EDI, so it's more common in larger retail programs.
Does Ordrly offer VMI or consignment?
No. VMI is on Ordrly's roadmap and isn't live. Ordrly doesn't run consignment. Today, brands get forecast-based low-stock alerts to connected retailers, live wholesale ordering, three-tier MOQs, and net terms that brands offer, backed by trade finance tools for eligible brands.
What does Ordrly cost?
Core is $0/month with a 1.5% Network Fee. Basic is $99.99/month (1.25%), Growth $449.99/month (0.75%), Scale $999.99/month (0.35%), and Enterprise is custom. Plans are monthly only; paid plans include a 15-day trial. If Ordrly introduces a retailer, a 15% acquisition fee replaces the Network Fee on that first order only ($75 on $500). Processing is billed at cost. Retailers use Ordrly free.
Start with the reorder, not the paperwork
VMI, consignment, scan-based trading and net terms all answer the same question: who takes on the cost and risk of stock sitting on a shelf? For most small brands, the practical path is smaller first orders, net terms for accounts that have earned them, and a reliable way to get the next order before the shelf goes empty.
Brands: Join Ordrly as a brand. Core is $0/month, with the same software on every plan.
Retailers: Create your free retailer account to order and reorder from the brands you carry in one place.