Which Ecommerce Fulfillment Option is Best for You?
Print-on-demand. Drop shipping. White-labeling. With so many ecommerce fulfillment options on the market, how do you know which method works best for you?
Each fulfillment model comes with its pros & cons and requires some strategic thinking to figure out which option best serves your business. We’ve put together a round-up of how each model works & how to decide which one to choose.
What is Print-on-Demand (POD)?
When you work with a supplier who uses print-on-demand, or POD, they don’t print or fulfill the item until it sells. Think about Amazon’s POD service. When your book sells, they’ll automatically print & fulfill it for you. This eliminates the need for ecommerce shops to store inventory & can reduce their overhead.
CustomCat is also an example of a print-on-demand supplier. You choose our customizable products like T-shirts or mugs, upload your design, and connect our app to your ecommerce store. Once your item sells, we fulfill & ship it to your customers directly on your store’s behalf.
What is DropShipping?
You may have heard rave reviews about dropshipping in the ecommerce space for its ease & low cost. Dropshipping is a retail method where you sell a third-party item that the vendor fulfills directly. Your shop earns a portion of the profit when the item sells, & the rest goes to the vendor.
Dropshipping comes with minimal investment & is an easy way to get up & running with your ecommerce store. However, if a vendor runs out of products, your store is still responsible for taking care of the customer. This could result in loss of sales or poor reviews.
If you choose to dropship, use a reputable retailer or lean towards a print-on-demand model where your vendor’s inventory never runs out.
What is White-Labeling?
White-labeling a product means you take an existing item for sale & rebrand it to align with your own ecommerce store. White-labeled products are typically more generic, like T-shirts or canvas bags that can be customized & branded again & again for various ecommerce stores.
CustomCat’s white-labeling also aligns with our print-on-demand technique. We create the products, apply your branding, and fulfill & ship it on your online store’s behalf. Your ecommerce store gets to elevate their brand without producing & manufacturing your own products.
What is Private Labeling?
Private labeling is similar to white labeling but is usually customized to meet a retailer’s needs. Once the item is produced, the retailer sells it under their own existing brand.
Think of a generic cereal box at your local grocery store. A company like Publix or Giant Eagle isn’t typically the manufacturer of that product. Instead, a food manufacturer creates the cereal & the grocery store uses its own branding on the product. Unlike white labeling, the retailer has specific requirements & requests on how to develop the product.
Handmade sellers on Etsy often create & fulfill their own items. Whether you’re knitting a custom blanket or painting a portrait, sometimes self-fulfillment works best. You’ll need to take care of all of the details on your own, store the items, make them, and fulfill them, but will also keep more of your profit doing it all on your own.
More Etsy sellers are turning to third party fulfillment options to grow their ecommerce business. Once a seller creates the design by hand, they turn to services like CustomCat to fulfill their products.
What are Digital Downloads?
Digital downloads are items that the buyer downloads or views online. Software, an independent music album, prints you can frame at home, graphics for your ecommerce store, and online memberships can all be sold as a digital download or product.
As an ecommerce seller, you can send the downloadable file or information directly to the buyer. Or you can use Etsy & Shopify automated tools to do the work for you.
If you sell digital downloads on Etsy, the platform will ask you to upload the PDF file or specify where the customer should retrieve their product. You set it up once, and it’s good to go unless you make changes. When a customer completes a purchase, they receive the information to download the item automatically.
What Are Affiliate Sales?
Affiliate Sales and Marketing is a method where you sell other people’s products but don’t white-label or brand them as your own. Here’s how it works:
- You find a product or service you want to promote
- If the vendor or supplier has an affiliate program, you can sign-up to earn a commission when you help sell an item
- The vendor typically sends you an affiliate link that automatically tracks your sales
- You add the link, images, & description about the product to your store or blog
- When the buyer clicks on the affiliate item, they’re taken directly to the vendor’s site & purchase the product there
- The vendor fulfills the item
- You eventually receive a commission on the product you helped sell
A smaller website or blogger selling a course may offer a lucrative 50% commission to an affiliate. Other sites, like Amazon, provide a small commission of 5% or less to link to & sell products you want to promote.
What Type of Ecommerce Fulfillment Option is Best?
There’s no right or wrong answer to ecommerce fulfillment, & it ultimately depends on your business model. If you want to develop your own following & sell products as if they are your own, using CustomCat’s print-on-demand & white-labeling service is likely the best option.
If you prefer to sell items from various vendors & curate a collection, drop shipping or affiliate sales may work best for you. Each fulfillment option comes with its set of unique pros & cons.
Here’s a good way to decide what’s best for your ecommerce business: Chart out how much you have to spend on inventory, fulfillment, and shipping.
If you’re in the business of making your own products & have the capital to store the items, time to fulfill them, and ability to grow your business with multiple employees, you should probably use a self-fulfillment option. You’ll keep more of your profit fulfilling everything on your own.
If you’re working on a smaller budget, keeping inventory in a storage space or warehouse & paying someone to fulfill your orders probably isn’t a good use of your resources. Instead, you can use a print-on-demand service & only pay for the service when you sell your items.
What about you? Which fulfillment method do you prefer for your ecommerce store? Let us know by leaving a comment below!