Watch our video summary, then read the extended article with all details below.
So you want to sell from home, but do not have the space for stock? We look at sixways that you can sell from home without a warehouse, shop or lock-up.
Many eCommerce sellers – whether on your own site, or through a marketplace such as eBay or Amazon – are retailers. A retailer typically buys things in bulk, and sells on in smaller quantities for a profit. The word ‘retailer’ comes from the French word ‘retailler‘, which means ‘to cut up’.
Retailers usually need to buy stock in bulk to make it a success – it is through buying in bulk and splitting the stock down that they add value. This needs an up-front investment for the stock, and somewhere to store the stock whilst you sell it.
Fear not if you do not have the investment required or the space to retail. There are several other ways in which you can make a success of eCommerce.
1. Small items that you can sell from home
If space is your main issue then consider what small items you could sell form home. Items like jewellery are small and should be easy to store, yet can attract a high markup.
You can always add more value by offering next day delivery (ideal for last-minute presents!), special gift boxing, or customisation. A hand-written note adds a personal touch which many people are willing to pay extra for.
You will need to make sure that your stock is stored securely, and that you have adequate insurance cover for it – home insurance won’t generally cover stock like this.
2. Buy-to-order goods
Both space and cash flow can be challenging when you are starting out. Buying stock only once you have sold it is a good way around this. You can test the market but only pay out once you have orders.
The downsides to this include the extra costs involved in one-off orders. You’ll generally be able to secure a better price if you order in higher quantities, and you’ll have to pay for delivery to your home for each item. These costs can dramatically cut into your profit margin.
You also need to trust your suppliers enough to be confident that they will have the items that you need in stock, and at a price which will still turn a profit for you. There’s a chance that they will raise the price or be out of stock when you want to deliver to a customer. Even if you legally cover yourself in your terms of sale you’ll lose goodwill with your customers if you can’t deliver.
Despite these risks, buying-to-order could be a good way for you to test and get a foothold in the market.
3. Drop shipping: Sell from home with no stock
Drop shipping works in a similar way to buying-to-order, but you let your supplier fulfil your orders. This leaves you to focus on marketing and building customer relationships.
The advantages include not having to deal with any stock. You cut out the costs of you being an intermediary – there are no delivery costs to your home, for example. There’s no need to insure against holding the stock, and stock won’t fill up a spare room!
A good drop shipping supplier should give you stock availability updates and agree to hold prices for you. They should ensure that any packing slips, return slips and invoices use your branding.
Like buying-to-order, you are reliant upon your suppliers being able to fulfil your order. Make sure that you research and do due-diligence before you commit to using them. As part of this, ask them how they handle returns. They might ask you to ask you to contribute towards the cost of restocking if the customer changes their mind, but they should incur the costs of a faulty item being returned.
Drop shipping can help build a long-term eCommerce business if you can find reliable and trustworthy suppliers. It’s a win-win situation: the suppliers sell more, and you can profit without getting involved with logistics.
4. Fulfilment by Amazon (FBA)
By becoming an Amazon seller you can take advantage of its ‘Fulfilment by Amazon’ programme. This lets you ship goods to its giant warehouses, and Amazon will manage all order fulfilment for you. By arranging shipment directly from your manufacturer or wholesaler you can avoid handling stock altogether.
You can only sell via the Amazon marketplace. Amazon handles almost everything bar the sourcing and delivery of products to its warehouses. It will take payment (including by payment card and by Amazon gift vouchers), pack and ship your customer’s orders, and handle any returns for you. By using Fulfillment by Amazon your items are also eligible for Prime delivery – a great selling point for your customers.
You would need to factor in the cost of Fulfilment by Amazon. The eCommerce giant will charge you a fulfilment fee of £1.34 for small items and up to £8.32 for larger items. It will also charge a storage fee of £0.65 per cubic foot per month between January and September, and £0.91 per cubic foot per month in the busier October to December period.
Products which sell quickly will therefore attract lower storage fees. You’ll need to make sure that your prices take into account Amazon’s fees, yet still remain competitive against others selling on Amazon marketplace.
One major downside to Fulfilled by Amazon is that the people buying your goods are Amazon’s customers, not yours. That means that you won’t be able to follow up with promotional offers, up-sells to related products or offer relevant services such as maintenance or training.
For the hassle-free factor, however, your sell from home strategy should certainly consider Fulfilled by Amazon.
5. Sell Made-to-Order Items
If you are creative then you could make items to order to sell from home. Crafty people (that’s people who are good at crafts, not sly people!) could add even more value to products by taking custom or personalised orders.
It’s usually far easier to store materials such as craft materials. As you’re adding value during the creation process you can easily justify buying in materials as needed.
Artisan products made using local materials are very fashionable. This is especially so with concerns over the carbon footprint left by transporting goods long distances. Try showing local storekeepers product samples and seeing if they’d like to order some, or advertising on local Facebook groups.
For selling further afield, sites such as Etsy are ideal marketplaces for craft products.
6. Sell Intangible Goods and Services
If you’re as old as I am then you’ll remember the joy of unwrapping the latest CD from your favourite band to read the lyrics and album notes. Older still and you might remember browsing the aisles of Tower Records or Virgin Megastore looking at tapes or vinyl!
The CDs, tapes and vinyl were tangible – you could touch them and pick them up. Most people today simply stream or download music, of course. And its not just music – newspapers are being replaced by websites, and books are often read on Kindles. We’re far more likely to share photos on Facebook than print and post them to friends and family.
Intangible goods are things that you can’t touch – and are ideal to sell from home. Digital products are good examples – the only space they take up is on your computer and web site, if you’re selling from there.
There are lots of ways to create and sell digital products. Writers could create an eBook and sell it on Amazon. Musicians could write tracks for advertising and marketing, and sell on Audio Jungle. Bloggers could repackage their posts, with some editing, as a training course or book.
Digital products have a near-zero marginal cost to produce. It doesn’t cost anything to create another copy of an eBook, for example. Costs are generally related to production (the time it takes for you to produce the work), marketing, and transaction costs. The last two of these are often included in marketplace fees. It’s not unusual for marketplaces to levy high commissions for selling digital products. A 50% share for you might still be worthwhile, however – remember that there aren’t any ongoing costs for you.