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By Yaroslav Rohach
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An online retailer can sell hundreds of products, report impressive revenue growth, and still struggle financially. The problem is often not a lack of customers, but the capital tied up in inventory before those customers arrive. Slow-moving stock creates storage costs, restricts cash flow, and eventually forces discounts that can eliminate the savings of bulk production.
The scale of the opportunity makes this an increasingly important issue. According to the U.S. Census Bureau, American retail e-commerce sales reached $1.23 trillion in 2025, increasing 5.4 percent from the previous year. Online transactions accounted for 16.4 percent of total retail sales.
Independent merchants are capturing a substantial share of this activity. Amazon's 2025 Small Business Empowerment Report states that more than 75,000 independent sellers exceeded $1 million in annual marketplace sales. Yet revenue alone reveals little about profitability or how efficiently businesses manage their capital.
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After more than nine years working across e-commerce, wholesale, and product development, I have come to view inventory management as one of the most consequential decisions an online business makes. Sellers must determine which products justify holding stock and which should only be manufactured after a customer places an order.
Print on demand offers greater flexibility, particularly for apparel, accessories, and personalized merchandise. The decision, however, must be guided by actual demand, its consistency, and the capital a business can afford to commit.
Popular Products Are Not Always Predictable Products
One common mistake in product selection is confusing strong sales with dependable demand. A product selling 500 units in a month may appear to justify a substantial inventory investment. However, the calculation changes if most purchases occurred during a promotional campaign or seasonal surge.
Monthly sales totals provide only part of the picture. Weekly orders, seasonal variations, repeat purchases, and sales across product variations offer better forecasting opportunities. A design generating 50 orders consistently for six months presents a different proposition from one selling 300 units during a holiday promotion before demand disappears.
This is particularly relevant to printed merchandise, where individual designs can have dramatically different commercial lifespans. Some maintain demand for years, while others depend on temporary cultural trends.
Marketplaces such as Amazon, Etsy, and Faire, alongside Shopify storefronts, provide transaction information that can help merchants identify consistent performers. Through my company, I have worked across wholesale and retail channels supplying printed apparel and related merchandise.
One important lesson is that identical sales volumes do not necessarily justify identical inventory decisions. Repeated wholesale orders from business customers may offer greater forecasting confidence than consumer purchases driven by changing tastes.
Why Cheaper Production Can Become More Expensive
Bulk manufacturing generally reduces unit costs and improves potential margins. Those savings, however, only materialize when the merchandise sells.
Consider a retailer selling printed T-shirts for $30 each. A print-on-demand supplier charges $17 per shirt, including production and direct-to-customer fulfillment. A bulk manufacturer offers a $10 production cost but requires an initial order of 500 units, with storage and individual shipping charged separately.
The bulk arrangement requires $5,000 upfront. If every shirt sells, the lower production cost offers a meaningful advantage. If only 150 sell before demand fades, the retailer has spent $5,000 manufacturing merchandise that generated just $4,500 in revenue, before shipping, marketplace fees, advertising, and storage.
Print on demand costs more per completed sale but eliminates the financial exposure associated with the remaining 350 units.
Returns add another consideration. The National Retail Federation's 2025 Retail Returns Landscape estimated that 19.3 percent of online sales would be returned that year. This figure highlights the additional costs of returns, replacements, and unsellable merchandise.
For smaller businesses, inventory commitments also restrict the capital available for advertising and product development. Revenue can grow while cash flow deteriorates if inventory purchases increase faster than the money recovered from customers.
Print on Demand as a Testing Strategy
Print on demand is often presented as a way to launch an online store without purchasing inventory. Its greater commercial value, in my view, is the opportunity to test demand before committing to larger production runs.
A retailer introducing 20 apparel designs might initially offer all of them through on-demand manufacturing. After several months, sales data could reveal that three designs generate most purchases. The strongest performers can then move into bulk production, while less predictable products remain available individually.
The decision should account for supplier minimum order quantities, production lead times, available cash, and storage costs. A product selling 100 units monthly might justify inventory if the manufacturer accepts small orders. The same demand could be insufficient if the supplier requires 2,000 units, potentially leaving the retailer with 20 months of stock.
Smaller production batches and negotiated replenishment schedules offer a middle ground. The objective is not to eliminate inventory indefinitely, but to establish enough evidence to justify the investment.
What Data and AI Cannot Tell You
Marketplace data can support forecasting, but it cannot explain every aspect of commercial performance. Increasing sales do not reveal whether competitors are preparing similar products, whether suppliers can maintain quality at higher volumes, or whether customers will accept longer delivery times.
These considerations become particularly important across wholesale and retail channels. Wholesale customers may expect consistent availability, while retail consumers often purchase personalized merchandise spontaneously. Supplier delays and inconsistent quality can undermine repeat business, regardless of the savings achieved through bulk production.
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Artificial intelligence is also changing how merchants evaluate product performance. Amazon's 2025 seller report states that its AI-powered Seller Assistant had more than 230,000 monthly users during the year, reflecting growing interest in automated commercial analysis.
However, AI recommendations remain dependent on the information available. A system may identify increasing sales without distinguishing sustained demand from a temporary promotion. It may also recommend larger purchases without adequately accounting for cash constraints, production lead times, or holding costs.
I see the greatest value of AI in helping sellers evaluate alternatives rather than making decisions on their behalf. Technology can identify patterns and estimate outcomes, but retailers must determine whether improved margins justify the capital at risk.
Growth Without Unnecessary Inventory
Expanding a retail business has traditionally meant purchasing more merchandise, securing storage, and increasing distribution capacity. Print on demand has changed that equation by allowing merchants to expand their catalogues without proportionally increasing physical inventory.
An effective strategy can combine different fulfillment models. Established products with consistent demand can be stocked where the economics support it, while new designs, personalized merchandise, and unpredictable products remain available through print on demand.
These decisions must also evolve. A product that justified inventory six months ago may no longer do so if demand declines. Conversely, an on-demand design may eventually become popular enough to warrant bulk production.
After nine years in e-commerce, I have become increasingly convinced that knowing when not to purchase inventory is as important as knowing which products to sell. In a market where consumer preferences can change faster than manufacturing cycles, waiting for evidence before committing capital is not a limitation on growth. It is a way to protect a business's ability to keep growing.
Yaroslav Rohach is a Ukrainian entrepreneur and e-commerce specialist with more than nine years of experience in online retail, wholesale, and product development. All views are the author's own.
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