When it comes to company stores, choosing an on-demand store or an inventory store can have a big impact on your operations, finances, and customer satisfaction. We'll look at the pros and cons of each to help you decide.
The On-Demand Store
Pros:
1. Cost Efficiency:
- Low upfront costs because no purchasing and storing inventory.
- Reduced risk of overstocking or having outdated products (think logo change).
2. Flexibility:
- Ability to update product offerings quickly without worrying about existing stock.
- Easier to test new products or designs without a large financial commitment.
3. Space Savings:
- No need for storage space, reducing overhead costs.
Cons:
1. Longer Lead Times:
- Products are created after an order is placed, leading to longer delivery times.
2. Potential for Higher Costs:
- Per-unit cost may be higher compared to bulk ordering for inventory stores.
3. Limited Control Over Product Options:
- Products with larger minimum quantity order requirements may not be available (think custom woven socks).
- Products from factory partners may go out of stock when product is needed.
The Inventory Store
Pros:
1. Quick Fulfillment:
- Products are ready to ship immediately, reducing delivery times and enhancing customer satisfaction.
2. Bulk Pricing:
- Ability to purchase in bulk, leading to lower per-unit costs.
- Ability to order products with higher minimums and allow buyers to procure smaller amounts.
3. Quality Control:
- Better control over product quality by having Ideation inspect items before they reach customers.
Cons:
1. Upfront Investment:
- Significant initial investment required to purchase and store inventory.
- Risk of tying up capital in unsold products.
2. Storage Costs:
- Need for warehousing space, which adds to the cost of having a store.
- Costs associated with managing and maintaining inventory.
3. Risk of Obsolescence:
- Products can become outdated or unpopular, leading to potential dead inventory.
- Popular products may become discontinued or unavailable at the point of reorder.
The decision between an on-demand store and an inventory store depends on your business's specific needs and resources. An on-demand store offers flexibility and lower initial costs but may result in longer lead times and higher per-unit costs. On the other hand, an inventory store provides quicker fulfillment and potentially lower costs per item but requires upfront investment and ongoing storage management.
Consider your budget, additional warehousing and fulfillment costs, and customer expectations when making this choice. At Ideation Creative Brand Management, we're here to help you navigate these options and set up a company store that aligns with your needs and goals. Contact us today to discuss your needs and find the best solution for your branded merchandise.
Not ready yet? Want more information? Check out our webinar with more information on Company Stores and Warehousing 👇.
