The 4 Main Supply Options for Ecommerce: Which Is Right for You?

The profitability model behind ecommerce is pretty simple: Get some products and sell those products online for more than you spent acquiring them. As long as you have a relatively inexpensive way to get those items and a market that generates suitable demand, you should generate a profit.

Related: 10 Questions Every Entrepreneur Needs to Ask Suppliers

You can improve your chances of success by performing market research to better understand your target demographic and investing in marketing and advertising to generate more traffic. But how can you acquire those products more cost effectively?

Four main supply options are available, and each one comes with advantages and disadvantages. Your choice could have a massive impact on your eventual profitability, so it’s not one to take lightly. As Wasp Barcode points out, figuring out how to enter the ecommerce space is half the battle:

Do it yourself.

Your first option is to simply make whatever you’re selling yourself, piece by piece. This is typically the choice of hand-crafters, who set up Etsy shops as a hobby rather than make plans to build a national-scale ecommerce empire. Some keys to keep in mind here:

Easy entry. You’re entirely relying on yourself, which means you don’t have to research partners or deal with heavy paperwork. You can literally start immediately, which is a huge advantage if you want to get moving now.

Complete control. From start to finish, you’re going to have complete control over the execution. You’ll come up with all the ideas, do all the work and give everything a final quality control check.

Labor intensity. Making everything yourself, however, requires an intense amount of effort, especially if you make everything from scratch. If you enjoy what you’re doing or don’t plan to have many customers, this isn’t a big concern. Otherwise, it could throw a wrench in your plans.

No scalability. It’s virtually impossible to scale an operation like this. It requires too much manpower and isn’t easy to automate or grow.

Turn to manufacturing.

Your next option is to rely on manufacturing. That way, you’ll be partnering with a factory or some other large-scale industrial producer to make all your products. This is ideal for larger operations or those where products can’t be handmade. Consider these unique qualities:

Low costs per unit. Depending on your manufacturing partner of choice, manufacturing tends to run with the lowest overall cost per unit. This, in turn, gives you the highest per-unit profitability.

Scalability. Because manufacturing processes and equipment can be replicated, manufacturing is one of the most scalable ways to get into ecommerce. If your business takes off, you can increase production without a sweat.

Development time. The downside is it may take a long time to get established in manufacturing, especially when your products are specially designed.

Minimum orders. You’ll also need to bear in mind that most manufacturers have minimum orders, which could eat up more cash up-front during your startup years.

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