The research is done, you have chosen the product, and you’re ready to sell. Well, almost. You still need to get your hands on the actual goods. Like most steps in ecommerce, you have multiple options with different benefits and risks. Here are the four most common methods of inventory acquisition for ecommerce stores.
Good for you creative types, making the product you sell is the most reliable way to control quality and manage hands-on. This is definitely more time-consuming and work-heavy unless you have help. If you don’t, expect to spend most of your time keeping up with orders.
This method is low risk and you don’t have to worry about having a huge stock of inventory to buy and move. And with ecommerce vending sites like Etsy, and site creators like Shopify doing a lot of the selling, having the talent to create is a huge part of the process.
Fortunately you don’t have to be good at making things to sell products online. Finding a manufacturer to make them for you is easier and cheaper than creating them yourself. This creates consistency in quality and the markup will be much higher, giving you a bigger reward.
However, it can be painful to deal with overseas importing regulations, and there is a lot of risk when it comes to product quality and inventory. You are often required to purchase a large quantity of product that might not be moveable. No one wants to be stuck with 3000 units of slightly-too-small iPhone screen protectors. Make sure you ask for samples from multiple manufacturers before making your final decision.
This is also where a good relationship with the manufacturer can save you money. Introducing yourself, setting up a face-to-face meeting can get you a smaller order minimum or price per unit, saving you on startup costs.
Or maybe you don’t care about designing the product at all. If you want to buy bulk brands or proven products, then wholesale is the way to go. Similar to manufacturing but without all the risk of product testing, wholesale involves buying product in bulk from middle men or manufacturers and reselling them.
There are fewer branding opportunities, but sometimes wholesalers will allow you to sell the product with your own label, giving you the opportunity to personalize. You can do this with many brand, making a unique collection of your own.
The option that involves the least risk and is the easiest to get off the ground and running is drop shipping. Here, there is no acquisition of inventory, no money tied up in the inventory and no hassle of order fulfillment. With drop ship, the minute an order is placed it is sent to the shipper who fills it. You have very little involvement in the process.
This is a very low risk method but also a low gain one. Because you are selling products for someone else, you are acting as a middle man and only taking a percentage of the profit. Startup costs are at their lowest, making the barrier of entry low as well.
Deciding which option for you depends on the amount of time you plan to spend on your business, the amount of money you have up front, how quickly you want to start your business, and whether or not you care about building your own brand. The level of risk varies, as does the amount of possible gain.
Once you’ve got your sales system set, get in touch with Ripen for unique ecommerce services. Whether you require custom web design or marketing strategy, we have four integrated departments and a full list of services that can be tailored to help your business grow.