How "On Demand" Can Help Scale eCommerce Startups
By: Brian Rainey, CEO of Gooten
As an entrepreneur, you understand the importance of having multiple income streams. Online sales are a great way to create them. If you haven’t jumped on the eCommerce bandwagon, now is the time to do so. The eCommerce industry grew tremendously last year and shows no signs of slowing down. Global retail eCommerce sales totalled $4.2 trillion in 2020, according to eMarketer.
That’s good news for both new and established eCommerce store owners, but it can also seem a bit intimidating. While it is true there are plenty of potential customers waiting to buy your product, you’ll also see more competitors popping up to get in on the booming market. You’ll need a sound strategy to ensure your business can continue to grow along with the eCommerce industry.
A low-risk, high-reward approach to tap into this ever-growing marketing is using on-demand manufacturing for your online store. On-demand is a process by which goods are produced only when they are needed and in the quantities required. The method has made headway among small-to-medium size brands, with major retailers only slowly starting to adopt the relatively new process.
Whether you’re an experienced eCommerce entrepreneur or you’re just getting started, now is an ideal time to capitalize on this new and revolutionary method of making and selling products.
On-Demand vs. Traditional Wholesale Manufacturing
Traditional manufacturing requires products to be made and then warehoused until they are ready to be shipped, whereas on-demand makes it possible to manufacture goods only when needed and in the quantities required.
By eliminating the cost and effort of storing and managing inventory, more and more companies are turning to on-demand manufacturing. The recent eCommerce boom and shifting consumer preferences have largely driven the growth of the on-demand market. On-demand, also called cloud manufacturing, is expected to reach about $112 billion by 2024, growing at almost 20% annually, according to MarketWatch.
For the everyday home business owner, there are many reasons why on-demand manufacturing is an appealing alternative or supplement to traditional wholesale.
1) No Inventory, No Problem
On-demand production virtually eliminates the need to store materials and the goods made from them. Instead of guessing what consumer demand will be every season and stockpiling inventory, businesses can now meet the demand directly because orders are made when requested. Because on-demand minimizes the need to forecast new product volumes or meet minimum order requirements, it allows companies to skip the costs of warehousing and direct staffing resources to other tasks and removes the worry of offloading unsold inventory.
2) Test New Ideas & Products With Zero Risk
With the freedom of a no-inventory model, businesses can easily adapt to new trends in the marketplace with minimal or no risk. If a brand wants to test a new product idea with their audience, they can quickly mock-up a design, add the product to their online store, and observe the results. If the product doesn’t fly off the virtual shelves, then they can simply remove the product from the store. In a social media world where memes can go viral in a matter of seconds, on-demand allows the everyday entrepreneur to quickly capitalize on these trending moments with limited risk.
3) Streamline Operations
When businesses partner with an on-demand manufacturing provider, they can outsource their entire supply chain—from the moment the order is placed to when it arrives at the end customer’s doorstep. A comprehensive on-demand solutions provider, such as Gooten, manages everything from producing and shipping quality products to unified invoicing and a fully integrated order management system. This kind of end-to-end solution allows businesses to concentrate less on logistics and focus on what they do best — whether that’s connecting with your audience through creative designs or innovating bold, new products. For entrepreneurs, the easy and efficiency of the on-demand manufacturing model enables them to quickly go-to-market without major capital investments.
4) Eliminate Long Sales Cycles
For a B2C eCommerce store, speeding up the sales cycle is an important factor to scaling your business. Because on-demand manufacturing allows business owners to focus on revenue-driving activities, like sales and marketing, it can help reduce the time it takes for a customer to make a purchase. Entrepreneurs can spend time on testing business strategies like offering free shipping, building out paid media campaigns, or email marketing reminders to help increase conversion rates.
5) Get Personal With Customers
Giving personalized products as gifts has greatly increased over this past year, especially due to social distancing measures and stay at home orders. A personalized product—like a throw pillow with your nephew’s name and favorite animal or a canvas portrait of your friend’s cat dressed up as a renaissance figure—is a unique, thoughtful way to connect with a loved one without being able to visit them in-person. Advancements in technology have allowed brands to easily incorporate customized products into their online stores.
Personalized products are an effective way to build customer loyalty, generate word-of-mouth marketing, and ultimately increase sales. According to a Deloitte study, 1 in 5 consumers would not mind paying 20% extra for an exclusive product. While the cost of customized products might be slightly higher because you may have to hire a visual artist to design it, you can ultimately charge more for it because consumers know that they are purchasing a specialized, unique product.
6) End Overproduction and Reduce Landfill Waste
In 2021, we will continue to see conversations around the impact consumerism has on the environment. That’s why it’s important for home business owners to incorporate sustainable practices into their business model. Traditional manufacturing generally leads to overproduction because businesses must estimate consumer demand for each product. When those items aren’t purchased, many wind up as landfill last or are incinerated. Because on-demand manufacturing allows companies to produce only what consumers order, it eliminates unnecessary production and harmful waste—saving both the business’ bottom line and the environment. Simply put, companies using on-demand manufacturing can implement a shorter and more efficient supply chain.
Conclusion
With advancements in technology and the ever-increasing demand for eCommerce, it has never been easier to embrace the on-demand model in your business in 2021. Home-based entrepreneurs and business owners all over the world can diversify their income stream by taking advantage of this innovative, cost-effective and sustainable manufacturing process.
