Build-to-order (BTO) products and services are surging in popularity among eCommerce businesses. BTO products and services provide eCommerce firms new ways to tackle inventory and design issues. For eCommerce businesses interested in growing profits and revenue over time while simultaneously staving off competitors, BTO offers potential that other manufacturing processes don’t.
What is BTO?
Build-to-order (BTO) – also referred to as make-to-order (MTO) – is a manufacturing process in which customers can customize the items they purchase from a manufacturer. For example, a knife collector might go to a high-quality local blacksmith and ask that blacksmith to make a knife with an elk-antler handle, Damascus steel blade and an inscription in the handle in gold. This would be considered a BTO product.
The Problem of The Manufacturing B2C Supply Chain
For manufacturers of any stripe, eCommerce or otherwise, the business-to-consumer (B2C) chain – in which a manufacturer sells goods to a retailer to sell to consumers – can be notoriously inefficient. As a result, many manufacturers have started to implement “lean factory solutions” that focus on streamlining the manufacturing process. While these production methods do offset some of the costs manufacturers regularly experience in the standard B2C chain, they fail to rework the system in a way that’s beneficial to manufacturers over the long term.
For example, according to research from Goldman Sachs conducted in 2001, automobile companies were losing roughly $2 billion annually on storage and shipping costs for vehicles that were sitting in storage as inventory, despite reworking the efficiency of factories and store floors. Even though that same report concluded 18 years ago that moving to a BTO production process would save manufacturers roughly $1,200 per vehicle in “phantom costs,” very little has changed.
The question is no longer whether or not BTO works. It does. The question is whether or not manufacturers will be savvy enough to implement BTO into their production processes.
Designing a Specialized UX for BTO Will Enhance and Grow eCommerce
When consumers purchase a product, they typically have three questions in mind:
- Does this product fit my needs?
- Can I afford it?
- Will I have it when I want it?
In almost every circumstance, consumers are willing to make trade-offs between these options – 42% of consumers were interested in BTO technology, according to a 2017 survey by Deloitte. Manufacturers can leverage this knowledge – particularly in the eCommerce sector – to improve profits by offering BTO products and services. Here are three major ways BTO benefits eCommerce manufacturers:
- Better scalability. When products and services are constructed as they’re ordered, manufacturers have more leeway to scale production up or down depending on demand without having to worry about pushing excess stock or rushing production on oversold units.
- On-the-fly product and service revisions. With BTO products and services, QA managers and engineers are free to interface and perform revisions as needed. This ensures that customers always get the most improved versions of products and services without having to worry about old iterations of products or services being unnecessarily held in back-stock or trashed entirely.
- Increased customer satisfaction. With BTO, customers get the product they want down to a T. This can drastically increase customer satisfaction.
While large manufacturers may seem unsuitable for BTO, that is not always the case. For example, Adidas’ storefactory was a pilot project that allowed consumers to customize clothes and receive BTO products quickly and easily. Dell also famously offers BTO computers, which it can turn around in only a few days thanks to a streamlined customization and ordering process.
In order to implement BTO successfully, however, manufacturers need to prioritize what customers are allowed to customize. While many customers may want to customize the color of pants, they’re unlikely to care about the pattern of the in-seam stitching. Manufacturers should offer enough customization to entice consumers, but avoid overcomplicating their supply chains. With the right research into production technology such as automated knitting machines or 3-D printing, manufacturers of any size can benefit from the site-performance increases and other benefits BTO brings to the table.
If you’re an eCommerce manufacturer interested in maximizing profits and customer satisfaction by implementing BTO into your production pipeline, Terrace Consulting can help! We specialize in helping leaders in eCommerce unlock the true potential of their business. Visit our website to learn more.