“When eCommerce companies build scale, cost comes down. Companies that can handle scale and reduce costs over time will win. Margins will come from reducing costs over time and not by increasing prices. Technology is the answer at large scale.” – Sachin Bansal
Are you considering opening an eCommerce store, but you are not sure what products to stock? You also do not have vast sums of money to purchase stock and store it in a warehouse until it is sold and can be shipped to the purchasers. What do you do? How do you start your store and stock enough products to sell and earn a living?
eCommerce has grown in the last couple of years. Thus, it is safe to conclude that customers love the freedom of being able to shop online and not to have to go out to the stores.
2015 statistics show that online shopping accounted for more than 33% of the retail sales growth. Reports from the U.S. Department of Commerce show that total retail sales for 2015 added up to just over $341 billion for the year. That equates to a 14.6% increase when compared to 2014 figures.
Technology and your online store: a case study
As a small eCommerce retailer, here are different options available, including drop shipping or offering products for sale and then manufacturing them after you have sold a certain number of each product.
The quotation by Sachin Bansal mentioned above does not only apply to large eCommerce retailers. The whole quote, especially the last sentence “Technology is the answer…” applies to all eCommerce retailers, irrespective of the size of your store.
By way of proving that you can use technology (outside of the Internet), let’s look at a case study that involves a small eCommerce retailer who sells products such as coffee mugs, assorted drinkware, and clothing.
The retailer’s business model is to print funny or theme-related like Halloween, HIV/Aids, and cancer slogans on the products he offers for sale. However, he only prints the products once the minimum number of each product has been ordered and paid for.
Consequently, he only needs to purchase enough of his base product from his suppliers. Thus, making it financially viable to stock and sell his products without having to keep large supplies of his raw materials.
Additionally, by purchasing the latest technology in treating cylindrical or glassware surfaces such as a Flame Treatment Machine, our retailer can deliver a unique, quality product.
For example, cancer is one of the most widespread epidemics in our modern world. The good news is that cancer is no longer a death sentence. Many cancers are curable. However, people need to be aware of the need to get to the doctor early enough to give specialists a chance to treat the disease.
Our retailer has decided to promote cancer and cancer treatment. Therefore, he offers a wide variety of drinkware for sale with the slogan “Cancer Is A Word, Not A Sentence” printed on each product.
He has calculated that he needs to sell 20 of each product before he can start printing them. He alerts his target audience to this fact, and he keeps his customers up to date with the progress of the manufacture of their orders. Thereby, he has happy, returning clients, and he can grow his business.