How to purchase products for an online store with no inventory? Explaining the process leading up to sales
When starting a new online store, the risks that can arise are "inventory" and "start-up capital." If you have a large amount of inventory, there is a risk that it will become dead stock if the products remain unsold, and if you spend a large amount of startup capital, if you cannot recover it, it will lead to a deterioration in cash flow. Starting an online store without inventory is attracting attention as a way to solve both problems.
In this article, we will thoroughly explain the advantages and disadvantages of starting an online store without inventory, how to purchase products during operation, and points to differentiate from competitors. At the end, we will also introduce ASP services that allow you to build an EC site for free and come with many convenient functions as standard, so if you are considering starting an online store, please refer to this.
Advantages and disadvantages of operating an inventory-free online store
Excess inventory is one of the risks when starting an online store. Not only does it require a lot of effort to manage and store, but it can also become dead stock and lead to a deterioration in cash flow. Here, we will introduce the advantages and disadvantages of operating an inventory-free online store, which is attracting attention as a way to avoid inventory risks.
What is an inventory-free online shop?
An inventory-free online shop is an e-commerce site that can be operated without purchasing products or managing inventory. This business model is called inventory-free sales or drop shipping, and the shop owner lists products without inventory. Then, when the product is purchased, the shop owner requests the order and shipping from the external manufacturer, wholesaler, or wholesale site that will be the supplier. There are also online shops that list products as completely made-to-order or made-to-order products and do not have inventory. The advantage of completely made-to-order products is that the product is manufactured after an order is placed, so there is no need to hold inventory, and basically there is no risk of running out of stock.
An inventory-free online shop does not require you to carry out procedures associated with ordering or manage inventory yourself. It is an ideal way to start selling products that are difficult for individuals to handle, such as large furniture or high-priced products, as well as if you are worried about holding inventory.
Advantages and Disadvantages of Inventory-Free Online Stores
Advantages
An advantage of inventory-free online stores is that they can reduce labor costs by outsourcing inventory management, packaging, shipping, inspection, and other tasks to purchasing sites and wholesalers. They are suitable for cases where the income from online sales is low and it is difficult to hire employees, or when there is no know-how regarding inventory management or shipping.
Another advantage of inventory-free online stores is that they minimize the risk of holding inventory. This is because the seller does not manage the inventory, but manufacturers and wholesalers directly ship products to the buyer. There is no need to worry about a deterioration in cash flow due to dead stock or prepare storage space for inventory, so you can operate your site with peace of mind.
In addition, while inventory-based sales require you to secure a certain amount of inventory before listing your products, inventory-free online stores do not require this, making it easier to start your business with minimal initial costs. This is a convenient sales method if you want to run a product sales business as a side job with minimal capital, or if it is difficult to prepare a large amount of capital.
Another benefit of inventory-free sales is that it makes it easier to focus on tasks such as attracting customers and coming up with campaigns, as there is no need for tasks such as inventory management, shipping, and returns. If you can attract more users, it will also lead to maximizing profits and increasing motivation.
Disadvantages
Because inventory-free sales are limited in the items they handle, it is important to note that it is difficult to differentiate from rival stores that handle similar products. If you want to stand out as unique, you will need to devise a way to do it, such as selling original products that are made to order or printing your shop's logo on general products.
Another disadvantage is that inventory-free online stores may not be able to respond quickly, such as same-day shipping, because the time from order to shipping depends on the supplier. In some cases, the supplier is not domestic but overseas, and if it takes a long time for the product to arrive at the user's hands, this may be a reason for them to purchase from another shop.
In addition, since inventory management is outsourced, it is difficult to receive large orders, and the profit margin may be lower than with inventory-based sales. It is important to introduce a logistics management system so that you can check the inventory status at any time.
In addition, there are cases where it is difficult to answer detailed inquiries from users because the seller does not have the product on hand. If you give an ambiguous answer, it may lead to potential customers abandoning your store or complaints.
How to procure products for an inventory-free online store
When opening an inventory-free online store, you need to be aware of some points that are different from general online stores, even from the product procurement stage. Here are three ways to procure products for an inventory-free online store.
Contract with a DSP (Drop Shipping Service Provider)
DSP refers to an agency that handles a large number of products that can be sold on the Internet. When an order is placed at an online store, the specified product is shipped from the DSP. The difference is that while affiliates receive advertising fees and referral fees for products, with drop shipping, the seller is free to set the price and receives the difference with the wholesale price as revenue. The seller does not need to manage inventory, and even if the product does not sell, there will be no profit, but there will be no large loss, so it is easy to start inventory-free sales.
Make a direct contract with a business partner
To open an inventory-free online store, you can enter into a drop shipping contract with an existing business partner. If you want to sell products from a specific manufacturer or wholesaler without inventory, you can negotiate directly with the specific company. Although it takes time, it is an effective method when you want to sell highly unique products provided by companies other than DSPs.
However, for shops that have just opened and are not well known or have low sales, the benefits for the company are small and it is unlikely that they will accept the contract. In such cases, it is a good idea to use a purchasing site. A purchasing site is a service that acts as an intermediary for transactions with wholesalers and manufacturers online, and products that are displayed as "Available for order after sale" can be listed on an inventory-free online store.
Make order-made production of original goods
By using a service that will manufacture and ship original goods based on your own design images, you can sell original products without having to carry inventory. There are various items that can be handled, but smartphone cases, mugs, T-shirts, etc. tend to have well-established production lines and are easy to undertake. This service is suitable for those who want to sell items that use original illustrations and photos, and the appeal is that it is made to order, so the risk of running out of stock can be avoided.
The process from purchasing to selling at an inventory-free online store
The operation of an inventory-free online store can be brought closer to success by utilizing services and tools that are suited to the products and scale of the store. Here, we will introduce the process from purchasing to selling at an inventory-free online store and tips on choosing a service in three steps.
STEP 1: Decide on the purchasing method
First, decide on the products to be handled, the supplier, and the purchasing method. Products to be sold are generally considered from existing items, highly original items, completely original goods, etc. Once the products to be handled are decided, proceed with the procedures regarding the contract contents such as inventory management, shipping agency, handling of cancellations, and costs including shipping.
STEP 2: Build an online store
Next, you will build a platform to sell your products. There are various ways to build an online store, such as EC malls and open source, but we recommend using an ASP (Application Service Provider) service, as it is easy to launch an online store without much hassle. ASP services are services that use apps to set up a store, and many of them offer a wide range of design formats, allowing you to create highly original store pages. Some services offer a wide range of features in their free plans, making this the perfect way to create a store if you want to keep initial costs down.
STEP3: Start operating your online store
Once you have completed the construction of your website, open your online store and start promoting customer acquisition measures. If you can afford to spend a certain amount of money on customer acquisition, it is important to choose the most suitable method according to your management policy and budget, such as strengthening online advertising and SEO, or using SNS if it is difficult to spend money.
Some ASPs have services that support customer acquisition measures such as linking online stores with SNS and SEO. If you already have a physical store or a mall-type EC, it is a good idea to choose an ASP with a wide range of external linking functions.
In addition, for inventory-free online stores, it is important to clearly communicate the delivery time to users when they purchase products. This is because in the case of inventory-free sales, it may take longer than it takes for the online store manager to ship the product. Make efforts to avoid problems after purchase, such as listing the estimated shipping date on the product page.
Points to remember when running an inventory-free online store
Inventory-free online stores are popular with people who want to open an online store with a small amount of capital, because they allow you to sell products with reduced inventory risk. In order to differentiate your store from stores with similar concepts, keep the following two points in mind.
Conduct thorough competitor research
When selling products using the dropshipping business model, there are many competitors selling similar items. Therefore, if you do not take any measures, your products may be lost among rival stores, or even if customers purchase your products, they may not become repeat customers.
It is important to thoroughly compare the product lineup and prices of your items with those of your competitors, and to purchase and price items that are more likely to be supported by users. However, there is a risk of falling into a price war, so you also need to pay attention to differentiation in your brand concept, services, and the usability of your online store. It is a good idea to use frameworks such as STP, 3C, and 4P to build a competitive advantage for your online store.
STP is an abbreviation for "Segmentation Targeting Positioning," and is an analytical method that segments the market according to the business content of the company and clarifies the target market and the position relative to the competitors. 3C refers to a method to develop a business more advantageously by analyzing the three Cs "Customer (consumer), Competitor (competitor), and Company (company)." 4P analysis is a method to develop a strategy in four directions of "Product (product), Price (price), Place (distribution), and Promotion (promotion)" and use it for marketing.
Consider purchasing items with potential needs
To make your shop more attractive, it is a good idea to consider purchasing items that are likely to be in high demand in untapped markets. It is easier to establish your own originality than purchasing only popular and well-known products, and you can expect to be effective not only in acquiring new customers but also in increasing the number of repeat customers.
When purchasing undiscovered items, it is important to analyze the online behavior of your target users. Use opinions on social media and reviews on your product pages as a reference. Also, if you have a social media account for your shop, you can use the survey function to help with product development.
Perfect for running an inventory-free online shop! "MMWISHMALL" allows you to start with zero initial costs.
"MMWISHMALL" is an ASP (Application Service Provider) service with no initial costs, monthly fees, or sales commission. The initial costs are greatly reduced, with only commission fees depending on the payment method, so it is also suitable for those who want to start a small online shop business or those who are considering opening an EC site as a personal side job.
"MMWISHMALL" allows you to register an unlimited number of products and product images, allowing you to line up a wide range of products in your shop. Shops of various genres, such as apparel stores that have a large number of products and change their products quickly to match trends, general stores that sometimes handle imported goods from overseas, and cosmetics stores that require a wide variety of products, use "MMWISHMALL". Since the quality of product photos affects users' purchasing motivation, it is a good idea to take photos with a single-lens reflex camera or leave it to a professional.
In addition, "MMWISHMALL" has a wide range of design formats, so you can create a shop page with a high level of design even for free. If you want to differentiate yourself from your competitors, you can easily build an original site by introducing paid designs that are compatible with both PCs and mobile devices.
In addition, "MMWISHMALL" has no initial cost or sales commission, and yet has many features to enhance your shop. Specifically, it has the ability to edit product pages and designs, link with EC malls such as "Yahoo! Shopping" and "Rakuten Ichiba" and SNS, inventory management, customer information management, sales analysis, etc.
In addition, you can use "MMWISHMALL" to acquire your own domain and build a cross-border EC shop. You can also use your own domain acquired from another company, so you can switch with confidence even if you are currently using another service.
Check the process from purchasing to selling for an inventory-free online shop in advance
This time, we explained the process from purchasing to selling when opening an inventory-free online shop, as well as the key points of suppliers and platform construction.
When starting online sales, having a large amount of inventory is one of the risks. If the products do not sell as expected, it will become dead stock and cause a deterioration in cash flow. In order to minimize inventory risk, why not consider building an online store without inventory? If you decide on the products and targets to sell based on market research and plan in advance the process from purchasing to selling, you can run an attractive store even without inventory.
"MMWISHMALL" is an ASP service that is also useful for building inventory-free online stores. Since there are no initial costs or monthly fees, it is also popular with small and medium-sized enterprises and sole proprietors who want to keep their initial investments low. If you are considering opening an inventory-free online store, please register as a member for free and give it a try.