How to start an online store without inventory in 2024

The ecommerce industry has exploded in recent years, so we know that consumers from various demographics love to shop online.

Many aspiring entrepreneurs need more upfront capital to launch their dream businesses. The need for inventory and storage in a traditional online store is not a financial move many people can make.

Fortunately, with the aggressive shift to ecommerce comes new opportunities for creators and designers; this includes running an online store without inventory.

• Several ecommerce business models without inventory management exist, such as print on demand (POD), dropshipping, digital products/services, affiliate stores, third-party logistics (3PL), and Fulfillment by Amazon (FBA).

• Key considerations for choosing the right ecommerce model without inventory management for your business include investment requirements, technical demands, creative autonomy, and scalability prospects.

• POD simplifies ecommerce, enabling creators to sell custom products without inventory; suppliers handle printing, fulfillment, and shipping, freeing creators from storage and management to focus on design and sales.

• Launching an online store without inventory using POD to sell products online involves selecting a profitable niche, conducting market research, choosing a POD service, designing products, selecting a sales channel, setting up and promoting your online business, and continuously monitoring and optimizing for growth.

• Utilizing Gelato's POD model to start your own online store without inventory offers a simple path to success, enabling immediate sales with minimal stress over inventory, shipping, and storage.

Let's look at some ecommerce models that don't necessitate inventory management. You'll notice that each model holds unique advantages and potential challenges that might impact your choice. 

Print on demand (POD)

Print on demand allows creators to design custom products and sell them online without ever having a single piece of physical inventory. When a customer purchases from your online shop, the print on demand supplier prints your design on their white label item (like a hoodie or tote bag), fulfills the order, and ships it to the customer.

This is an ideal method of creating an ecommerce store because it requires zero inventory, storage space, or product management on your end. You upload your designs, select the products you want to sell in your shop, and let the supplier handle the heavy lifting. Its advantages include:

• Low start-up costs and

• Elimination of inventory management

However, this model might have lower profit margins and depend heavily on the quality of your design skills. 

Dropshipping 

In its essence, dropshipping is a lean, inventory-less ecommerce model where you sell products directly from suppliers without holding the stock yourself. This business model provides you with an endless product variety along with the chance to experiment with the product mix. 

This model offers:

• Minimal capital requirement as no inventory to purchase upfront or manage, your startup cost is significantly reduced.

• Flexibility to sell products from multiple niches and suppliers, expanding your market reach.

• Simplicity to manage deliveries, returns, and inventory levels through the supplier.

• Location independence as dropshipping businesses can be run from anywhere with an internet connection.

Some potential drawbacks of this fulfillment method are thinner margins, less control over shipping and inventory management, and sourcing reliable suppliers.

Digital products/services 

With this model, you can sell digital products or services that customers can download or access over the Internet. These can range from ebooks, audio files, video courses, and software to subscription services, amongst others. There is no physical inventory involved, making it a highly scalable model. The primary advantages include:

• Minimal operational costs as there's no physical stock to handle.

• Instant delivery as digital services or products are delivered electronically.

• High profitability as digital products only need to be developed once, but they can be sold an infinite number of times.

• Global reach! Customers from anywhere in the world can buy your products.

Digital products also have significant drawbacks, such as high competition, piracy issues, and a need to stay updated on market dynamics for constant innovation.

Affiliate stores 

Affiliate stores promote products from different vendors and earn a commission for every sale made through their affiliate link. While it's a low-risk model with a potential high return, it can be heavily dependent on search engine optimization and successful marketing strategies. 

Some advantages include:

• Affiliate stores can host products from multiple vendors, providing customers with a wide variety of products to choose from.

• The minimal initial investment with this model focuses mainly on product promotion and less on maintaining inventory and fulfillment.

• Once you establish your platform and design marketing strategies, your affiliate store can generate passive income.

Affiliate stores can be disadvantageous when it comes to competition, generating consistent income, and dependence on vendors.

Third-party logistics 

Also known as 3PL, this model involves outsourcing your ecommerce operations, including inventory management, warehousing, and shipping, to an external company. While utilizing 3PL services frees you from handling logistics, it may lead to potential complications. Let's delve into the model's key advantages: 

• Leveraging the expertise and resources of 3PL providers can streamline your operations.

• Outsourcing to a 3PL provider could lead to savings in terms of warehousing costs, staff expenditure, and shipping rates due to their bulk handling capability.

• With 3PL, your logistics operations can easily scale to meet seasonal demand fluctuations without any significant changes to your in-house resources.

• Many 3PLs utilize cutting-edge logistics technology that might be expensive or time-consuming for a business to implement independently.

However, the model is not without its potential drawbacks, such as less control over inventory management and shipping, higher dependence on the 3PL provider, and additional costs like pick and pack fees associated with returns and exchanges.

Fulfillment by Amazon (FBA) 

With FBA, you store your products in Amazon's fulfillment centers, and they handle storage, packaging, and shipping on your behalf. This model provides access to Amazon's massive customer base, but it also means you will have to abide by Amazon's strict guidelines and pay additional fees. The advantages of FBA include: 

• Exposure to Amazon's vast customer base, potentially leading to increased sales.

• The platform handles all logistics, shipping, and customer service related to fulfillment.

• Access to Amazon Prime for guaranteed 2-day shipping for increased customer satisfaction and repeat purchases.

• Amazon's trusted customer care services and return policy for building trust among customers.

However, Fulfillment by Amazon also presents a few drawbacks, such as Amazon's strict guidelines, additional costs like storage fees and Amazon's commission, and increased dependence on a third-party fulfillment provider - Amazon.

Choosing a suitable ecommerce model for your venture is rooted in a comprehensive evaluation of several key factors. Let’s delve into some of these critical considerations.

Required investment 

The initial investment for the setup and operation of your ecommerce venture is a crucial consideration. Some models, like dropshipping, demand less upfront capital as you don’t need to invest in inventory. This approach works well if you're starting on a humble budget. Conversely, models like wholesaling or manufacturing require substantial capital, especially for stock procurement and storage.

Technical demands 

Each ecommerce model differs in its technical requirements. While some may necessitate a simple estore setup, others might demand more sophisticated integrations, including warehouse management and shipping solutions. Scrutinize your team's abilities and the technical demands of each model to determine compatibility. 

Creative autonomy 

Your ability to control the product quality, branding, and customer experience can vary greatly between different models. For example, dropshipping offers limited control over product quality or branding compared to manufacturing your goods.

Scalability prospects 

Your ecommerce model should also align with your growth ambitions. A model like dropshipping allows for rapid scaling due to its low overhead and on-demand product-sourcing nature. Meanwhile, maintaining your own inventory might constrain your ability to scale quickly but permits a higher degree of control and potential profit margins.

Opening an online store without inventory may sound crazy, but it's a feasible and profitable business model. Many online entrepreneurs have transitioned from running a traditional online store to selling products online without having any inventory.

Print on demand suppliers make it possible to do so. Let's find out what you must do to start selling online.

The first order of business when starting an online store is essential; you'll need to decide on a niche.

Consider your passions, interests, and hobbies as you explore different niche options. Do you love pop culture and enjoy staying updated on the latest viral trends? Creating custom pop culture designs on various merchandise items may be a good fit for you. Or, say you're a die-hard sports fan; you can begin by creating different sports memorabilia and designs for your online store.

Selecting a niche that aligns with your existing skills and interests will make creating the designs easier. It's also essential to confirm the niche is appealing and in demand and will improve the profitability of your custom products.

How can you research a particular niche or market? We're glad you asked!

Understand the market you will enter as you begin creating your online business. When deciding which products to sell online, your target audience can tell you what they want and need; you must know where to look.

It's essential to choose a niche that has the potential to be profitable or is already a famous market to enter. From sports merch to pop culture, TV shows, or puppies, many unique niches are waiting to be monetized.

Google Trends is quite helpful in determining what consumers are searching for. If you have a specific design idea, you can type it into Google Trends and get valuable data on how many people search for that term worldwide or in particular areas. Trends can help you understand your custom products' relevance to any audience.

Use social media

Influencers and everyday social media users are open about sharing the products they love and what they're using daily. Social media is an excellent resource for building an online business; you can rely on your followers and community for significant research and intel.

Explore popular relevant hashtags within your niche to discover any products or items that consumers are using. From bags to t-shirts, hoodies, and home decor, there is no shortage of opportunities for the merch you could create. Listen to what the people want, and start there.

Research your target audience

Your target audience is the shoppers you'll be designing your products for. It's helpful to know your audience's interests (although you may know at least one of them, based on your niche) and other demographics, ages, locations, and more.

Understanding your target audience's needs and pain points helps determine what products you should offer in your online store. The items they want to buy but need help finding online are an easy starting point for your ecommerce business.

Once your niche is established and you have the insight you need about your target market, next on the list is finding a print on demand service to complete your printing, order fulfillment, and shipping.

Research print on demand suppliers to compare costs, shipping costs and times, and locations of the supplier. These factors will impact your bottom line, how much you charge for products, and how competitive you can be in the market.

Important factors

Other important factors to consider include the supplier's customer service offering. Whether you're just starting with an ecommerce business or a seasoned pro, customer service issues are a headache regardless. Partnering with a company that offers the support you need is essential to running a successful online store without inventory.

Product offerings

You must also explore the supplier's product catalog you ultimately partner with. Ensure you know the supplier's product selection, their merchandise's quality, and their commitment to sustainability in their fabrics, materials, and processes.

Many print on demand suppliers succeed in providing quality products with customization options, but they must catch up regarding sustainability. On the contrary, Gelato offers a highly eco-conscious experience for all its customers. From offering responsibly sourced materials to production in 32 countries, sustainability, and quality are at our core.

Based on your target audience's needs and the quality merchandise available from your print on demand supplier, it's time for you to decide what products you can print your designs on.

Choosing popular products

Perhaps your business model is to start with one product, like a high-quality tote bag or a custom hoodie. If you start selling online in small batches, customers may want more customization options or different products.

Selling products online without inventory means you can easily add more products to your online store. You simply need to work with your supplier to add a new item to your shop, like a few variations in wall art or coffee mugs to appeal to the masses.

Offer customization

Listening to the wants and needs of your customers will only improve sales to your online store. Customization provides insight into your target market and can fuel brand loyalty as shoppers purchase products they love.

It's time to put pen to paper and bring life to your inspiration! Remember the following tips as you design your products for your online store.

Design process

Whether you already have sketched designs or are starting from scratch, create a few digital mockups using design software like Canva or Adobe Photoshop. Gelato also offers a helpful Design Editor tool to develop and polish your imagery.

If you aren't yet confident in your design skills but have ideas, enlist a qualified designer's help to bring your vision to life.

Design tips

During the design process, avoid using too many colors and design elements. Keep your imagery clean and minimal to appeal to a broader audience and to create a design that will look great on both a t-shirt and a coffee mug. Overly cluttered or busy designs will not sell as well.

We also recommend working with a color palette with complementary colors to keep the fonts and visual elements harmonious.

Order samples

Once your initial designs are complete, order samples from your print on demand supplier to get a feel for the final product.

Samples will allow you to feel the items, examine how your design looks on each product, experience the print quality in real life, and determine if any changes need to be made to designs or merchandise.

If you're happy with the samples, you can take high-quality photos to be used in the product listings in your online store.

Next, it's time to decide which ecommerce platform is best for your online store. Many platforms can support a business in selling custom products, but the two most popular are Etsy and Shopify. These platforms have unique core features and benefits that attract different companies.

Etsy

Etsy is a marketplace where creators can sell goods and services. With an Etsy shop, businesses can create custom products, add them to their Etsy page, and have access to a massive marketplace of shoppers. Etsy's main drawback is limited branding opportunities, so small shops may need help to stand out against their competitors. Etsy also charges per-transaction fees, which can add up quickly.

Shopify

On the other hand, Shopify is a popular choice for retail sellers because of its valuable resources for shops, like marketing tools, customer service offerings, and many different integrations. Store owners can customize the look and feel of their online store, creating the design they want. Shopify's most significant drawback for sellers is its expensive monthly fee and transaction fees. On the back end, Shopify manages the platform your online shop runs on, taking care of any technical headaches that may occur.

Once you've determined which platform is best to sell custom products online, the next item on your To-Do list is to set up a website with your shop's name as the domain name (the URL that will appear when shoppers visit your website).

Set up shop

Use the functionality and features of your chosen platform to customize a storefront that is harmonious with your brand and caters to your niche. Upload your shop's logo and other imagery, add any slogans or taglines you've created to represent your brand, and use your color palette to keep everything cohesive.

Create a clear return/ refund and cancellation policy within your online store so shoppers are well aware when they make a purchase.

Add products

Using the photographs you took from your product samples from step 5, create detailed product descriptions that share all relevant details about each product's sizing, dimensions, fit, material, fabric, and more. Be as straightforward as possible so your customers know what to expect when purchasing your products.

Keep SEO (search engine optimization) in mind

When you write your site's product content, you can optimize each product title and description using relevant keywords. Doing so will optimize your shop for search engines and bring more eyes to your shop.

Selling custom products can only be done with effective promotion of your shop. You may have the best t-shirts and tote bags online, but no one will know about them if you don't have a robust marketing strategy to promote your shop.

Social media

Social media will become your best friend as you promote your custom products. Zero inventory won't matter because you can still promote your designs, share links to your website, and collect email addresses to build rapport with your audience.

Use your marketing skills on social media to promote your products. Do this by creating YouTube videos about your vision or inspiration behind each design, jumping on Instagram Stories or TikTok to share your design process, and interacting with your followers to create a solid relationship.

When you start selling online, building relationships with influencers in your niche who will promote your products through giveaways and collaborations is a great idea. These will increase the number of visits to your online shop and build credibility for your brand.

Lastly, allocate some of your monthly marketing budget to run focused ad campaigns on your social media profiles to increase exposure to your page and website. You can promote individual product posts, collect subscribers, or run ads for page likes.

Email marketing

Lastly, implement email marketing to share new products with your subscribers from those social media campaigns. Your subscribers will want to know about new drops, upcoming promotions, special discounts for holidays and events, and new designs you're working on.

Congratulations - your shop is live! Now, it's time to monitor your growth and essential metrics and optimize your shop as you see fit.

Monitor shop data

Through your website or ecommerce platform, monitor data points like the average order value, conversion rate, customer acquisition cost, net promoter score, the bounce rate on product pages, and much more.

This valuable intel makes it possible to gauge your store's success and adjust as necessary to enhance and grow your business.

Ask for feedback

Send surveys to customers to get their valuable insight about your products and the entire shopping experience. Ask about the fabrics, designs, customer experience, and what they would change or do differently about the shopping experience in your shop. You can implement necessary changes or keep the feedback in mind while creating new designs and choosing new custom products to sell.

Building an online store without inventory is a significantly lucrative business if you have a plan in place and take the necessary steps to be successful. Using a print on demand business model makes selling online straightforward and efficient, and it means you can start selling as soon as you have designs ready.

Will it take work? Absolutely. Will it be less stressful than managing inventory, shipping costs, and storage space? A little louder for the people in the back... Most definitely, yes!

Ready to turn your passion into profit? Start creating custom products to sell online with Gelato. With the freedom to create your online store without stressing about inventory management or storage space, nothing stops your creativity from soaring to new limits.