Why You Should Stop Reselling and Start Manufacturing
May 6, 2016 10 min read
Your E-commerce success depends on your inventory more than anything else.
If you’re a reseller, selling what you’ve purchased at a price higher than you paid can be a difficult undertaking if you don’t take a strategic approach to your inventory (keep in mind that swan diving into clearance bins is not necessarily strategic).
This is one of those “if it were easy, everyone would do it” kind of things and that’s because certain problems remain constant throughout the reselling process.
Whether you’re a newcomer or a seasoned expert, you face the same problems again and again. The successful ones know how to consistently overcome these challenges but that doesn’t mean they go away. Here are some of those issues.
The Pitfalls of Reselling
First of all, your stock can be hard to predict. Even if you buy a huge amount of product and have enough to sell until next year, you still have a limited amount and may not be able to restock once you’re out. There’s no guarantee that you’ll have access to the items you purchase regularly. Granted, most e-commerce sellers will therefore suggest that you have a broad range of products you sell to prevent this from happening. But the threat is still there.
You need to understand what sells well and what doesn’t. This is usually the most difficult part for newcomers. It takes time, money and chance to find this out.
You spend a lot of time looking for the right products. You’re scouring clearance sections at retail stores, yard sales, bulk sellers, liquidators, thrift stores and more, which takes time. If you know exactly what you’re looking for, you’re spending time looking for it. If you don’t know what to look for but you have a few ideas, you’re spending time trying to figure out what to buy. It takes a while to find the balance between time spent searching for an item and the amount you profit off of it.
And then, there’s competition. If you’ve found a product that sells really well (and is not a rarity), you’re more than likely to encounter other sellers who will try to compete with you (or, you’re already competing with them, to begin with). The two most common strategies here are to price just below or to match the price of the seller you’re competing with. This, in many cases, leads to a race to the bottom. And the only person who wins that race is the buyer. Not the other seller and not you.
But there is a better way, a way that eliminates every aforementioned problem - manufacturing. If you’ve heard a lot of negative things about working with manufacturers, we ask that you set that aside for just a moment. We’re not dismissing the validity of what you’ve heard and we’re more than ready to admit that this road isn’t the easiest one. But, the payoff can be tremendous and here are the reasons why.
Why Manufacturing is Far Superior to Reselling
Please note that when we say, “manufacturing,” we mean something specific. The main point is not to manufacture something that people are already selling. You’re only going to be overwhelmed by the existing, established competition and underwhelmed at your ability to sell it well. Instead, you want to research your target market, discover their needs and then create a product that solves their problems. Keep in mind that you only need to solve one in order to be successful.
This can be costly, at first, as you sort out the details, drawings and prototypes. However, if you think about it, the time and money invested in the initial stages of working with a manufacturer are not that different from the amount a new reseller invests on items that don’t sell well.
With a manufacturer, you control the amount of inventory you’d like produced. So, you’re no longer at the mercy of your local stores for your stock.
You’re no longer left guessing as to whether or not somebody wants to buy your product because you’ve already done your research and established that it meets a need for your target audience.
By the time you’re past the early stages of working with your manufacturer, you’ll have way more time on your hands because you won’t be spending it rummaging through clearance bins (which is fun, in its own way, don’t get me wrong).
Think of how your earnings could skyrocket with this model. And you’ll have way more time on your hands so you can focus on doing what you love, even if that thing is clearance bin diving.
Thanks for Reading Skubana's post on Manufacturing your own products. Skubana is an all-in-one ERP system that seamlessly integrates with most e-commerce marketplaces, 3PLs, warehouses, provides state-of-the-art profitability and multi-channel inventory management. Skubana compiles all of your marketplaces on a single page to intuitively control and understand your entire business. Try Skubana free for 14 days, or feel free to contact us at firstname.lastname@example.org with any questions!
Written By Chad Rubin