The Business Case for On Demand Products Andrew Talbot @customgateway +andrewtalbot ​ ​ May 2016 custom-gateway.com Introduction Difference Between On Demand and Personalised Products Difference between On Demand and Mass Produced Types of On Demand Products Interface Options The Commercial Case Unlimited Demand - The Long Tail DesIgn and Content Options The Economic Argument Possible Limitations Critical Success Factors The Supply Chain The Production Process Software Needed for Creating On Demand Products At What Point Do On Demand Product Become Viable Suitable Product Groups Decoration Options Current Market Sectors Sales Channels Case Studies & Example Sites About Custom Gateway ________________________________________________________________________________________ The Business Case for On Demand Products Page 1 of 22 Introduction This paper introduces the concept of printed or decorated on demand products and explains the business case for their adoption and technology / supply chain needed to deliver them to the customer Technology has enabled many advances in print and decoration methods helping printers and decorators implement the mass customisation business model. This has lead to a substantial reduction in the costs of supplying products on demand enabling them to become more competitive when compared against products supplied and manufactured in larger volumes (Mass Production) Mass customisation is now well understood as a method of delivering user personalised products but has so far been less utilised for delivering on demand pre designed products - despite the fact that they can be produced in exactly the same way. Print on demand (POD) is a printing technology and business process in which products are not printed until an ​ ​ ​ order has been received, allowing them to be printed singly, or in small quantities. While build to order has been ​ ​ an established business model in many other industries, "print on demand" developed only after digital printing ​ began because it was not economical to print single copies using traditional printing technology Global leaders in mass customisation like Vistaprint continue to invest in the machinery / IT systems needed to deliver products in small batches which means the costs of manufacturing on demand will continue to fall making this business model even more attractive On Demand products open up even more new market opportunities and have the ability to change the supply chain for many businesses Industries traditionally buying products that can be supplied on demand include ● Fashion Brands ● Artists & Designers ● Licensed Merchandise ● Book Publishing ● Marketing & Promotional Products ● Tourist Attractions & Places ● Schools & Organisations ● Sports & Membership Clubs However as the supply chain continues to develop more and more opportunity to supply on demand will happen ________________________________________________________________________________________ The Business Case for On Demand Products Page 2 of 22 Difference Between On Demand and Personalised Products Although the production methods are the same on demand products differ from personalised or customised products in that they are pre-designed with a specific design, logo or image rather than allowing the user to personalise the product themselves online. From an end user perspective they look quite different to personalised products as they generally have no customiser or design tool so look just like any normal stock eCommerce product. The main exception to this rule is when the on demand product is available in a range of colours when a simple customisation tool is often deployed to change the colour of the product rather than having to create multiple Images of the same design From a production perspective on demand and personalised are normally fulfilled by the same mass customisation production process as they are both a batch of 1. It is really only companies that have invested in building a mass customisation workflow that can fulfil orders for on demand products ________________________________________________________________________________________ The Business Case for On Demand Products Page 3 of 22 Difference between On Demand and Mass Produced Mass Production 1000 x 1 Design = 1000 Print Jobs On Demand Production 1 x 1000 Designs = 1000 Print Jobs So in terms of end user experience they would see no difference in a mass produced or on demand product - the difference is in the fulfilment Another key differentiator between on demand and mass produced is the opportunity that on demand gives you to promoter a wider product range - just take a look at the number of T-Shirt designs offered on Amazon to see the variety that on demand makes available to the consumer It is possible to,use both on demand and mass produced for the same product so that products that are selling well can be mass produced or products that have gone out of stock can be produced on demand The cost of transportation is also a differentiating factor between the production methods as mass produced products are increasingly produced in lower cost economies so have higher transportation costs to get to their sales location whilst mass customised products have lower labour costs thanks to technology so can be produced in the same region as the sales are made. ________________________________________________________________________________________ The Business Case for On Demand Products Page 4 of 22 Types of On Demand Products On demand products can be classified into the following categories based around the way they can be displayed and ordered online Just like with the production of the finished product there is no need to actually create the product to display it on the web just use software like the Gateway CPP (Custom Product Platform) to create product thumbnails and production artwork 1. Gallery Driven - people are able to apply a range of fixed designs to a product - this has the advantage of being very quick to create (no need to create extra thumbnails or individual products for each design option) and lets the user feel more involved in the product creation process but without allowing any alteration to the design 2. Preset Designs - designs are added to a product to create a thumbnail image so to the consumer the products looks like it has already been printed and is being kept in stock. From a display perspective this looks like a standard ecommerce product but the product image is created with automated artwork tools rather than photographing the actual printed product 3. Preset Design with Colour Options - same as option 2 but because it is print on demand and stock not needed can be offered in a wider range of colours. To take advantage of this feature a colour selector that changes the image colour is required, again this is achieved with a personalisation app rather than printing and photographing an example of every combination. 4. Preset Design with Other Options - same as option 3 but with a range of other selectable options that do not change the image display on screen (like colour) just the attributes of the product being ordered like size or packaging options. 5. Same Size Design on Multiple Products - if products have the same aspect ratio for the print or decoration area then the same design can be displayed on a full range of products - like mugs & matching coasters Example website interfaces can be found on the next page of this paper ________________________________________________________________________________________ The Business Case for On Demand Products Page 5 of 22 Interface Options On demand products can look just like any other eCommerce product however as they are produced on demand they do enable you to offer extra options to help drive sales volumes Based on the categories explained on the previous page here are some example interfaces Standard - looks just like a normal ecommerce Change Colours - fixed design but as you click on ​ ​ product just a good quality computer generated the colour icons the t-shirt changes colour and the thumbnail to help sell the product design stays in place - easy way to increase choice but not have to add lots of new SKUs Change Colours & Sizes - same as change colour Load Fixed Images (Gallery) - just upload some ​ ​ but allows you to change other attributes too. images to a gallery and this enables the user to add Same benefits as change colour just more options. them to a product - an easy way to have hundreds You can still use this interface if you have no of options and only one new SKU options just using an add to cart button All of these interface options can be created from any blank customisable product template supplied by print on demand suppliers See the Software Needed for Creating On Demand Products sections for more details on product creation options ________________________________________________________________________________________ The Business Case for On Demand Products Page 6 of 22 The Commercial Case There is a strong commercial case for the adoption of on demand products which is detailed below. Buying mass produced products in bulk does not necessarily represent the cheapest option ● Unlimited design choice - when a product can be produced on demand it removes the commercial restrictions of needing to keep stock of hundreds of different options. So ranges can be expanded to include an almost unlimited choice ● More product options - unlimited choice does not just mean designs but can also mean an increased range