On Demand Business Models Explained An exploration of the different business models and products made possible by adopting an on demand fulfilment strategy August 2019 Andrew Talbot @customgateway c u s t o m - g a t e w a y . c o m __________________________________________________________________________________________________________ On Demand Business Models Explained Page 1 of 65 Contents Introduction 4 What Are On Demand Products? 4 On Demand Content Types 5 What is An On Demand Fulfilment Strategy? 6 What Makes On Demand Possible? 6 What is the Difference Between On Demand & Dropship Products? 6 Truly A Global Marketplace 7 Increased Profit Margins for On Demand 7 Photo & Personalised Gift Market Size 8 Photo Gifts 10 Photo Books 11 Prints & Enlargements 11 Wall Art 11 Home Decor 12 Other Gifts 12 Personalised Gifts 13 Flowers 14 Greetings Cards & Invitations 15 Licensed Personalised Products 15 General Personalised Gifts 16 Personalised Hampers & Alcohol 17 Subscriptions 17 Personalised Packaging, Gift Wrap & Gift Boxes 17 Personalised Books & Newspapers 18 Gift Cards & Experiences 19 Personalise Anything 21 Made To Order 22 Made to Measure 23 Home Decor 24 Incentives, Trophies & Rewards 26 Instore Personalisation 28 Instore Printing 28 Dropship Fulfilment 28 Click & Collect 29 Souvenirs 31 Green Screen Experiences 31 Print On Demand for Smaller Attractions 31 Instant Photo Gifts 31 __________________________________________________________________________________________________________ On Demand Business Models Explained Page 2 of 65 Personalised Souvenirs 32 Event & School Photography 32 Customised Services 33 Fundraising 34 Monetising Your Assets 35 Promotional Merchandise 36 Corporate Programmes Based on Stock 36 One Off Purchase with a Minimum Order 36 Web2Print 38 Business Stationery 39 Invitations 39 Signs, Display & Point of Sale (POS) 39 Workwear, Teamwear & Uniforms 40 Workwear 40 School Uniforms 40 Teamwear 41 Sales Promotion & Premiums 43 Print On Demand 45 Fast Fashion 46 User Generated Content 47 Brand Extension 47 Licensed Content 47 Stock on Demand 48 Printables 50 Marketplace Traders 51 Becoming Your Own Marketplace 52 Conclusions 53 Appendix 55 How Technology Helps Reduce The Barriers To Entry & Harness the Market Drivers 56 Overview of How Markets Are Enabled 57 Summary of On Demand Decoration Options 61 Estimated Market Values 63 Organisational Changes Needed for Mass Customisation 64 References 65 __________________________________________________________________________________________________________ On Demand Business Models Explained Page 3 of 65 Introduction The objective of this white paper is to introduce you to the brave new world of on demand fulfilment and the business models that this opens up for companies by exploring the potential ways in which it could change an existing market you are involved in or create a completely new market Some business models are completely new and many are a disruption of the way an existing market currently works - potentially making them either more profitable or easier to enter / manage Some of these markets are now also starting to mature but even they are changing as the internet continues to revolutionise sales, production & fulfilment The list of 50 potential markets in this paper is intended as a guide to the most established markets and is no by no means an exhaustive list of all markets currently using the on demand business model. Many of the markets and their various sub markets cross over into each other and like you would expect also disrupt each other What Are On Demand Products? The term “on demand” means products that do not really exist until they are ordered and has three main definitions in this white paper ● Virtual products that only become real products when they are ordered. This is usually by decorating or printing on a blank product ● Made to order products that are created from base component and made from scratch when ordered ● Virtual stock products that are not owned by your company or kept in your warehouse but stocked in a third party warehouse and ordered on demand (commonly known as dropshipping) All these types of products can be used individually or in combination to power an on demand business model and will be explored in more detail over the pages of this white paper __________________________________________________________________________________________________________ On Demand Business Models Explained Page 4 of 65 On Demand Content Types Virtual and made to order products typically fit into five main content types that we will also explore in this paper as these certainly effect which markets may be most desirable for your business 1. User Generated Content - your customers create their own content either for themselves or others to use from customisable blank products 2. Simple text personalisation on a predesigned template 3. Licensed Content - brand owners supply content 4. Designer Orientated Content - designers provide patterns and images 5. Parts & Components - provided by manufacturers to enable product configuration or mix & match Again we will explore these in more detail over the following pages Many of these markets are interlinked and we can learn from each of them trick & tips to maximise revenue As you can tell from our logo Custom Gateway are a company that specialise in providing a platform for the creation, management and fulfilment of on demand products so we are always keen to understand the markets in which our customers work and could work in the future All markets introduced in this white paper are made possible by technology and we will illustrate how they have or will evolve as technology evolved and improves __________________________________________________________________________________________________________ On Demand Business Models Explained Page 5 of 65 What is An On Demand Fulfilment Strategy? Companies traditionally sell what is in their own warehouses or shops - an on demand strategy is focussed on what product can easily be accessed by a retailer or trader and can be more focussed on the current market trends - it is powered by platforms like Custom Gateway and enables businesses to increase their inventory without increased their investment in stock and perhaps even more importantly not be left with stock that will not sell On demand fulfilment is split into 3 main areas all of which purchase, supply or create products only when a customer orders hence “on demand” ● Mass Customisation - using mass production techniques for order quantities of one ● Made to Order - final products made from stocked components ● Dropship - stock in warehouses owned by other people that are delivered direct to the customer on demand rather than being stocked in sellers warehouse The key benefits of an on demand strategies are explored over the following pages but all on demand strategies benefit from increased choice and reduced or zero stock holding The most common On Demand Strategy is known as “Dropship” when products are delivered direct to a consumer but with some companies having increasingly sophisticated delivery networks this is not the case for all on demand orders and deliveries back to distribution hubs to be consolidated or even click and collect are certainly also part of the On Demand world What Makes On Demand Possible? Although this paper focuses on the business models made possible by on demand fulfilment it is also worth summarising the key principles that have made the “on demand” model a reality 1. The Internet - has made it possible to connect companies like never before 2. Software Platforms - mean that both access to product data and automated ordering are easy 3. Reduced Distribution Costs - mean it is feasible to ship products from both multiple and international locations 4. Available Suppliers - who understand the model can tailor their business processes to suit an on demand model 5. The Long Tail - means people are used to and demand more choice If you are interested in learning more about these factors then we have produced a more in-depth white paper called “Understand Mass Customisation” available at www.custom-gateway.co.uk/white-papers/ ​ What is the Difference Between On Demand & Dropship Products? In reality there is no difference they are just different ways of describing the same thing so you can substitute dropship for on demand anywhere in this white paper. The term Direct Despatch products is ​ ​ also used by some companies to mean the same thing. The fact that different people call the market by different names does lead to some confusion when analysing how different companies approach the opportunity but hopefully this white paper will help clarify __________________________________________________________________________________________________________ On Demand Business Models Explained Page 6 of 65 Truly A Global Marketplace On Demand does not only present increased business opportunities in local markets but also makes it easier for almost any company to adopt a global strategy With Dropship suppliers already in existence globally using a common software platform that creates either artwork, component build choices and branded paperwork automatically every organisation could now benefit from localised manufacturing A good example would be a designer or company that trades on a marketplace in one country but want to sell their products in another country. A marketplace like Amazon makes it easy to sell in multiple regions and then a software