As ecommerce continues growing rapidly, many entrepreneurs are looking to start an online business in 2024. One of the first big decisions is whether to take a traditional product-based approach or leverage the growing print-on-demand (POD) model. Both paths have pros and cons to consider.
The Traditional Product Route
The standard model for ecommerce is to find products to sell, whether by manufacturing your own items or sourcing inventory from wholesalers and suppliers. The benefits include:
- Better profit margins and income potential since you keep more of the revenue after covering product and overhead costs.
- Control over branding by customizing packaging, inserts, etc.
- Ability to negotiate better rates through volume ordering from suppliers.
- Diversifying product lines and selection is easier over time.
However, selling traditional physical products also brings some big challenges:
- Substantial upfront capital required for inventory purchases.
- Need to find cost-effective storage and order fulfillment solutions.
- Managing cash flow cycles with inventory replenishment.
- Dealing with excess/dated inventory if forecasting is off.
The Print-on-Demand Opportunity
The print-on-demand model has opened up by enabling ecommerce businesses to sell customized products without holding any inventory themselves. Potential customers upload their designs, and the POD service handles production and shipping for each order placed. Key advantages include:
- Very low startup costs and overhead – no inventory requirements.
- Automated production removes labor needs for the business.
- Customized apparel, accessories, home decor and other items.
- Easy to test multiple niches and designs to find bestsellers.
The POD model’s disadvantages are:
- Lower overall profit margins due to production costs per item.
- Less control over branding beyond imprinting designs.
- Production times are longer than dropshipping pre-made goods.
- Market is becoming more competitive as POD’s popularity grows.
So for ecommerce entrepreneurs in 2024, POD allows very lean startup costs to test product concepts and customized merchandise. It provides a lower risk path to get started. But the standard inventory model offers greater income potential and branding control for those able to make larger startup investments.
There’s no perfect one-size-fits-all answer. But weighing the pros and cons of each model is crucial when deciding the best approach to start your ecommerce business in the new year.
