The basic concept of any commerce since ancient times implies getting goods (buying them, gathering or producing) and selling for a price higher than the cost of resources used for getting the goods. Put simply, before selling, you need to have products in stock, and it doesn’t matter whether you do traditional or ecommerce business. But what if there’s a way to run a business without an inventory?
Customer & seller – where’s your place?
On the face of it, the idea of selling products online without inventory seems not so realistic. However, between buyers and sellers, there’s a place for other participants. In fact, whenever you buy something in a regular store, you purchase it from a retailer that buys the goods from a wholesaler for a lower price. That’s a common practice.
But retailers buy goods with no guarantee that they will be able to sell them, which is a risk any businessperson would like to avoid. This is what makes the following business models advantageous in comparison to traditional ones.
How to sell online without inventory?
Affiliate online store
Affiliate marketing is a relatively new type of online business based on offering intermediary services to online wholesalers and retailers. Strictly speaking, you don’t ‘sell’ products, but rather ‘advertize’ them by creating and promoting a good looking online store with affiliate links leading to the seller’s goods. Whenever someone purchases a product after following your links, the seller pays you a percentage of the product’s cost. So you don’t need to buy goods beforehand and keep them in stock.
Why would anyone pay you for this? The reason is simple. Any company needs advertising, marketing and promotion. Most firms have their own marketing departments, but even in that case using affiliate partnership programs allows them to boost sales.
Creating an affiliate online shop is a good way to start and get experience in e-commerce. It doesn’t take a lot of investment or time and carries little risk – mostly a small sum of money and your dignity in case of fail.
Digital products and online services
Selling products online without inventory is also possible if you deal with nonmaterial products such as digital goods and services. These imply software, multimedia (photos, videos, and music), ebooks, texts (copywriting and translations), tutoring, etc. However, this type of occupation works more like a regular 9 to 5 job.
The idea is based on using someone else’s resources to produce your own products. You create a website selling customized T-shirts, mugs, keychains and so on. Whenever someone places an order with you, you contact a print-on-demand service and ask them to make the product and send it to your customer. Of course, the price on your website must be higher than the cost of production.
In this case, you make money by creating unique designs which the print-on-demand service cannot offer.
Another popular e-commerce model that allows you to sell goods without inventory. The scheme is very similar to the typical wholesaler-retailer-customer model. But unlike the traditional business, you don’t stock up on products before trying to sell them.
Instead, you create an online store and wait until you get an order. After you do, you place the same order with your wholesaler and ask them to send the goods directly to the customer. So you carry no risk of oversupply. Your income comes from higher prices.
This scheme is quite similar to that with affiliate shop, but more complicated and takes more investment and experience.