When dealing with an online shop, it’s vitally important that you operate without an inventory, as it will help you save a lot of money. That’s applicable when you have a stable manufacturer to whom you can send the products’ descriptions, and then the manufacturer designs the product and ships it to the customer.
On the other hand, operating a physical business without an inventory can be the worst mistake of your business life. Below are three pros and two cons of starting a business without inventory, respectively.
Reduced holding costs
Keeping the stock of your company is very costly as you have to incur different costs. The costs include; handling costs, storage costs and transportation costs. All these costs make it cumbersome for you to operate your business effectively as you have to balance and pay for each of them. When operating a business without inventory, you won’t have to incur all the above expenses.
You can easily sell shirts online without inventory and make huge money with a good production manager. Getting Printbest as your business partner, the manufacturer, will be of great help because they will design for you the t-shirts as required and ship them to the respective client under your store’s brand.
It’s the dream of every business out there to achieve excellent organization in their operations. It’s clumsier to handle all your business operations, especially when you have a large customer base. And inventory management is one of the most tiresome and hard operations that many businesses find hard to handle.
Operating without inventory gives your business more time to concentrate on the other management functions like marketing. Eventually, you will have more effective management than a business that is running with an inventory. That’s because more tasks have been eliminated, giving room for the other tasks to be done effectively without rushing.
More usable cash
Apart from holding costs, other costs are related to inventory, such as stock-out sales and transportation costs from the manufacturer to the warehouse. That means that if you have to sell your products, you have to cater to all the running expenses. Such scenarios tend to affect cash flow in the business, which in turn hampers the business’s operations.
Operating without an inventory ensures that you don’t have to spend an extra coin in getting the very expensive inventory. It gets more expensive to deal with inventory depending on the quantity of the products you are dealing with. The more the products, the higher the cost of inventory management. Operating without an inventory will ensure that you have eliminated all those instances that will interfere with cash flow in the firm.
Increased dependency on the suppliers
Operating without an inventory can sometimes increase your dependency on your manufacturer or the supplier. Think of what would happen if you are operating without an inventory and suddenly, your manufacturer suffers a huge loss or runs bankrupt! That means that your online shop may, at some point, become almost useless as you have no one to supply you with the right products.
At some point, it will appear like the supplier is in full control of your business, and they are unethical; they can easily overturn the business to build their empire. However, if you have the inventory, you can easily find the materials that the business is running short of quickly, and everything continues to be normal.
Sometimes when you are fully running your business, you can easily control everything that happens to it. You know when the sales are expected to be high, and you can easily adjust the inventory to cater to the projected increase in demand. On the other hand, you know when the demand is low, and you can respond appropriately and save the extra money that could have been spent on the excess products.
In case of price hikes and you have no inventory, you have to connect with the production manager and decide on the way forward. That can be a lengthy process as the prices of different products keep on fluctuating depending on the period of the year. Eventually, you will face many flexibility issues as all the above occurrences are likely to happen to your business.