For the fashion world, 2020 has forever changed the landscape of the industry. Supply chains were disrupted. Established retailers went under. Consumer behaviors shifted online. While many of the traditional forms of the fashion industry came to a grinding halt, one process skyrocketed: on-demand manufacturing.
On-demand manufacturing—a process by which goods are produced only when they are needed and in the quantities required—has made headway amongst smaller fashion entrepreneurs and eCommerce brands. Major retailers have slowly started to adopt the relatively new process which has emerged within the last decade. Outlets such as Vogue and Amazon have created a buzz around on-demand manufacturing as an answer to many of the fashion industry’s biggest challenges.
Below, we detail everything you need to know about this revolutionary new method and why the fashion industry needs to embrace on-demand manufacturing.
On-Demand vs. Traditional Wholesale Manufacturing
Traditional manufacturing requires products to be made and then warehoused until they are ready to be shipped, whereas on-demand makes it possible to manufacture goods only when needed and in the quantities required.
By eliminating the cost and effort of storing and managing inventory, more and more companies are turning to on-demand manufacturing. The recent eCommerce boom and shifting consumer preferences have largely driven the growth of the on-demand market. On-demand, also called cloud manufacturing, is expected to reach about $112 billion by 2024, growing at almost 20% annually, according to MarketWatch.
For the fashion industry specifically, there are many reasons why on-demand manufacturing is an appealing alternative or supplement to traditional wholesale.
1. A shift towards sustainability
In the past decade, the fashion industry, particularly fast fashion, has been heavily criticized for its detrimental effect on the environment. Because brands must estimate consumer demand for a product, many will end up with loads of unsold inventory at the end of a season. According to the Ellen MacArthur Foundation, 87% of the textile materials for clothing end up in a landfill or are incinerated.
Because on-demand manufacturing allows companies to produce only what consumers order, it eliminates unnecessary production and harmful waste—saving both the designer’s bottom line and the environment. On-demand is one of the key aspects of the burgeoning circularity movement, which urges fashion brands to design and produce apparel with purpose and have no significant waste. Additionally, many on-demand providers, like Gooten, localize production and shipping so that orders are automatically routed closer to the end customer, saving money and travel time.
2. Adapt to trends quickly and risk-free
The on-demand model provides the perfect solution for an industry dominated by ever-changing trends. In a social media world where memes can go viral in a matter of seconds, brands can quickly mockup design and add the product to their online store without prepaying for costly order minimums. If the product doesn’t fly off the shelf, then you can simply remove it from your store and not have to worry about piles of unsold inventory. Bigger brands like Superdry are adapting to this shortened go-to-market strategy through “Superdry Preview,” limited-edition collections that will go from design to delivery in just six weeks. Uniqlo’s parent company, Fast Retailing, is also jumping on board to produce on-demand knitwear at scale through its partnership with Shima Seiki. Simply put, on-demand helps businesses stay on track with what’s popular in fashion and allows for more creativity to try new designs and products without the risk of failing.
3. Get personal with your customers
Tailor-made products have always been customer favorites from bespoke suits to monogrammed hand towels. In recent years, e-commerce stores have been setting themselves apart by offering customized products within their niches.
For fashion brands wanting to offer more unique, customized experiences, they must turn to on-demand. Advancements in technology have made it much easier to create personalized products to meet consumer demand. When customers personalize their products, it allows them to take part in the design process and create a more tangible, engaging experience. Ralph Lauren ventured into the on-demand space last year with its Custom Packable Jacket, making it one of the first major fashion houses to apply the process to outerwear.
4. Improve your cash flow
Traditional manufacturing generally requires minimum order quantities, meaning brands and retailers have to tie up their cash flow in inventory. However, because on-demand manufacturing eliminates the need for carrying inventory, it also frees up a business’s cash flow. This liquidity allows brands to boost revenue-driving activities such as marketing, which increase sales, and ultimately grows their business. Some may argue that on-demand manufacturing results in a higher cost per unit price because orders are not produced at economies of scale. However, the risk with bulk inventory from traditional manufacturing is that brands may have to markdown or absorb items at the end of the season when trends change and styles have shifted, lowering their profit margin. Because on-demand produces an item when it is ordered, that item has a consistent margin throughout the year. This means companies will know exactly what their profit will be for each unit sold and can better plan and manage their overall cash flow.
5. Be better prepared for unexpected disruptions
One of the benefits of on-demand manufacturing that is unique to Gooten is the ability to diversify your suppliers. When COVID-19 disrupted supply chains across all industries last year, many companies in the fashion industry were forced to shut down. While Gooten wasn’t completely immune from these issues, we were still able to ship 95% of orders on time and maintain strong production and shipping times, averaging 2.8 days to produce and 3.8 days to ship orders.
This seamless fulfillment process is largely due to our distributed, global supply chain of 30+ manufacturing partners in 70+ locations. This allows us to carry a large number of our product SKUs in more than one facility, therefore orders of that product are able to be fulfilled in multiple locations. That means if one location closes— we can seamlessly move order fulfillment to another facility if that happens.
The best part about Gooten is that you can get connected to our global supply chain in just a few minutes. While we can integrate with all the major eCommerce platforms like Shopify, Etsy, Woocommerce, and BigCommerce (coming soon!), most fashion brands choose to connect directly through our API where we can support customized, out-of-the-box integrations.
Get Started with On-Demand Manufacturing
It has never been easier to embrace the on-demand model in your business. For many fashion brands, it can be used in conjunction with traditional manufacturing for bulk products that sell all year round, and then utilize on-demand for short-term collaborations and innovative, trending designs. Because on-demand doesn’t require a large amount of startup capital, it is a low-risk method that can lead to high returns. Get started today with Gooten!