One of the biggest obstacles for many people when opening a new business is buying inventory. There’s the cost of the product to consider and other factors like transportation and having a place to keep the stock. Of those people that do open a business, about 45% of their companies will fail in the first five years. One of the most common reasons businesses fail is a lack of financing, which itself is often contributed to by the need to buy stock upfront.
Not only can many people struggle to raise the money they need, but there’s also the risk of not being able to sell the product. If you can’t sell the product, you’re potentially looking at large financial losses, and any loans will still need to be repaid. Considering the financial risks and the potential headaches involved, it’s no wonder that many people are reluctant to open their own company.
However, some business models allow you to open a no inventory online store without having to invest in inventory first.
Not having to invest in inventory removes the risk associated with not being able to sell the stock your purchased. Such models also offer other advantages, such as not needing a place to store your inventory because it’s stored for you.
No inventory business models have seen a boon in recent years. This boon is thanks partly to the rise of the ecommerce industry, which is expected to reach $875 billion in the USA in 2022. Ecommerce is ideal for no inventory business models because virtual stores don’t need to contain physical products; an image and description of the product being sold is all that’s needed.
There are several no inventory business models to choose from, and this article takes a look at some of the most popular.
No Inventory Business Models
Print on Demand
Print on demand involves working with a printing company that will print your designs for you. The printer will be able to print on a wide range of products, with mugs and t-shirts being among the most popular.
The print on demand industry has seen a surge in recent years and is expected to reach just over $10 trillion globally in 2026, up from just under $2 trillion in 2020.
Print on Demand Pros and Cons
The print on demand business model has various pros and cons, including:
Pros
- No Need to Buy Inventory Up-Front: You won’t have to invest in inventory when working with a print on demand company. Instead, your print on demand partner will print the product and receive a cut. This also means you won’t have to store your inventory yourself.
- No Need to Buy Printing Equipment: Professional printing equipment can be very expensive to purchase or rent. However, when working with a print on demand partner, they will already have all the printing equipment needed. This means you won’t have to spend a penny on the equipment yourself.
- Product Sent Directly to Customers: With the print on demand model, the printer typically sends printed products directly to your customers. Not having to dispatch the products yourself reduces your workload and makes it easier to manage your business.
- Make Your Own Products: One of the most appealing advantages of the print on demand model is that you get to design your own products. The company will offer you a selection of products to print on, and you get to decide which designs you want to be printed on the product.
- Get Expert Advice: There is a lot that can go wrong with printing. For example, the right materials need to be used otherwise there might be problems with the product. However, a print on demand partner will know what needs to be done, ensuring your customers get a quality product every time.
Cons
- Reliant on a Third-Party: When working with a print on demand partner, you are reliant on them providing a good service that will help keep your customers happy. It’s advisable to use a partner like Printbest, which has an excellent reputation for printing quality products and providing an excellent all-round service.
Third-Party Fulfillment Centers
Third-party fulfilment centers don’t make any products. Instead, they have warehouses and other infrastructure and will store and distribute your products for you. Other services include packaging your products and handling customer services calls.
Third-Party Fulfillment Pros and Cons
The third-party fulfillment center model has various pros and cons, including:
Pros
- No Need to Store Inventory: The third-party fulfillment center model will store your products for you, meaning you don’t have to yourself. Such a service is ideal for companies that might otherwise have to invest in real estate to store the products they sell.
- Products are Distributed for You: A third party fulfillment center will send your products to your customers as orders come in. This means less work for you, letting you focus on other aspects of running your business.
Cons
- Costs: Third-party fulfillment is among the more expensive no inventory business models there is. Although the service will be perfect for many larger companies that sell many products, it’s less ideal for smaller businesses trying to get a foothold.
- You Have to Invest in Inventory: With this model, you still need to buy your inventory before you can sell it; you just don’t need to store and manage it yourself.
- Reliant on a Third-Party: As with print in demand, working with a third-party fulfillment center means you are reliant on another business to provide a good service on your behalf.
Dropshipping
Dropshipping is perhaps the most common no inventory business model and is very similar to the print on demand model. The model involves store owners selling products from an ecommerce store, for a manufacturer that will send the product directly to their customers.
Dropshipping Pros and Cons
The dropshipping model has various pros and cons, including:
Pros
- No Need to Buy Inventory Up-Front: With dropshipping, the manufacturer sends their products to your customers as they are ordered. This means you don’t have to pay anything up-front, and you will get your share of every sale you make.
- Product Sent Directly to Customers: A dropshipping company will send the product directly to your customers for you. This method makes managing your business much easier because you don’t need to be concerned about packing and dispatching items yourself.
Cons
- Little Control Over Products: Unlike the print on demand model, dropshipping allows little say over the product design. Instead, you are selling products that have already been designed and made by the manufacturer.
- Reliant on a Third-Party: With dropshipping, you are reliant on the dropshipping company to provide a good service to your customers. It’s important to do your research first so you find a partner you can count on to.
- No Control Over the Supply Chain: With dropshipping, you have no control over the supply chain. This means your products might sometimes be out of stock with little to no warning.
Affiliate Marketing
Affiliate marketing involves selling products on behalf of other businesses. You would make commissions from every product you sell or meet other criteria such as generating leads. Affiliate marketers are usually experts in online marketing. Affiliates will also often support their affiliate marketers with marketing materials and similar
Affiliate Marketing Pros and Cons
The affiliate marketing model has various pros and cons, including:
Pros
- No Need to Buy Inventory Up-Front: Affiliate marketers don’t have to buy inventory up-front. Instead, they sell products on behalf of another company (the affiliate). In many cases, the marketer will be selling digital goods such as SaaS products.
- Product Sent Directly to Customers: Affiliate marketing is another model where the product is typically sent directly to the customer from the manufacturer. This gives the marketer more time to focus on selling the product.
Cons
- Competitive: Affiliate marketing is highly competitive, and many people struggle to make money until they gain experience. There can also be a great deal to learn on various topics such as web design, SEO, PPC, and content creation. As such, it’s not the best solution for novice marketers and people who need to start making an income quickly.
- Investment Needed: Affiliate marketers usually need to invest in websites, SEO, ads, and other marketing assets. This investment means some people are reluctant to get involved, especially considering its competitive nature.
Summary
Which of the no inventory business model mentioned above works best for you depends on various factors. Such factors include your budget, the nature of your business, and whether or not you already have inventory. The examples mentioned are typically used by online ecommerce stores and online marketers.
All the models mentioned require you to find a reliable partner to work with. Otherwise, you risk selling poor-quality products with poor delivery and customer service. Such issues can result in unhappy customers that won’t recommend you or buy from you again.
When it comes to print on demand, Printbest is a partner you can count on to be a valuable business ally that will help your business thrive. Our team will help ensure that your customers get the best possible services and products they will be delighted with. Check out our catalog to see what you can start selling.
