This is a guest post from Henrik Johansson, Co-founder and President of Gembah. Henrik believes human beings are creators by nature, and that ability separates us from all other species on the planet. Gembah’s mission is to bring that power of creation back to entrepreneurs and innovators everywhere. They help companies and inventors take their ideas from conception to reality faster, better, and at a lower cost than ever before, with the long-term vision to democratize product innovation.

Every brand and eCommerce business faces the same challenge: how to identify, produce, and launch new, successful products that make them more money faster.

It’s relatively easy to capitalize on a product that others are already selling, but it typically becomes a race to the bottom, with your competitors trying to win on price and you having no other way to differentiate your product. At the other end of the spectrum, you can develop a completely new offering that only you sell, but this typically consumes a lot of time and capital and often requires expensive tooling and engineering.

However, an approach exists for quickly identifying, creating, and selling highly differentiated products that generate high profit margins without all the up-front investment. Curious how it works? Keep reading!

The traditional eCommerce product development method

Traditional product development comprises four avenues:

1. Wholesale: Resell other brands’ products.
2. White label: Resell an existing product customized with your branding or packaging.
3. Private label: Alter an existing product to make it yours.
4. Unique: Develop a brand-new product from scratch.

The pros and cons and cost-benefit analyses for these options are well known and straightforward:

Wholesale: “Easy to buy, hard to sell”

• Zero differentiation
• High competition
• High margin pressure
• Low profit margins
• Low customer lifetime value

White label: “Low budget, quick to market”

• Minimal differentiation
• High competition
• High margin pressure
• Low profit margins
• Mid-to-low customer lifetime value

Private label: “Moderate budget and differentiation”

• Short-term differentiation
• Risk of copycats
• Relatively short shelf life
• Becomes a race to achieve ROI before quick followers erode margins

Unique product: “Higher budget and ROI”

• Requires investment in both product development and marketing to establish new product
• High level of differentiation
• Higher risk in development and market demand
• Longer path to profitability
• Greater opportunity
• Longer shelf life
• Chance to build real enterprise value in your company since unique products are highly attractive to potential acquirers

The more you invest into research, design, and development, the more likely you are to realize a significant return (the “no risk, no reward” rule applies across the board). The following graph shows the direct relationship between the amount of time and money invested and the opportunity profit and lifetime value for traditional product development.

This approach typically generates proportional returns on investment dollars; a greater focus on differentiation and innovation typically creates more market opportunity and generates higher profits over a longer period of time. As a result, small businesses with limited budgets often fall on the left side of this graph (i.e., making small investments and earning smaller profits), while larger brands with the capital to invest in innovation can create highly differentiated items that yield higher margins and have a longer shelf life.

But what if there was a way to hack the graph — that is, produce unique offerings that generate more profit over time without making a huge investment in development?

A new way to develop eCommerce products

Experienced product developers and entrepreneurs have used the traditional methodology for decades, but until recently, nobody has taken the time to decode that approach, document the processes they use, and share the findings with the rest of the world.

Gembah, a company that provides global product development and manufacturing solutions, has come up with a simple approach called D2M (short for “Design to Manufacturing“) to close this gap. It’s designed to help entrepreneurs and product people everywhere access a faster, better, and cheaper path to product innovation and differentiation.

The following graph shows how D2M enables new product development that requires less up-front investment in time and money but still offers the same potential for lifetime profits as traditional, “from scratch” product development.

Unlock fresh possibilities for product development

Design-to-manufacturing delivers the differentiation of a unique product at the price of a private-label offering, thus providing more market opportunity and profit potential for less investment. Compared to traditional product development, design-to-manufacturing typically costs less than half of those types of projects, finishes in less than half the time, and reduces the risk of project delays and product quality issues by more than 50%.

This approach leverages data-driven consumer research to identify essential features to evolve an existing product into a differentiated offering. The goal is to redesign specific elements or functionalities, rather than spend significant time and money to craft a detailed specification for a completely new item. With a fresh, updated design, you can go directly to qualified factories and solicit their feedback on what implementation approach would allow them to create that product quickly with minimal engineering and tooling costs.

So, instead of starting with a blank canvas, you begin with what’s feasible for your customers’ budgets and your specific product goals, then iterate quickly to identify the optimal approach to bring that offering to market.

4 Key differentiating factors of design-to-manufacturing

While the product development phases of both methods share many similarities, there are four defining characteristics that make design-to-manufacturing stronger than its traditional counterpart:

1. Data-driven research: Identifies the exact features and functions consumers are looking for in a specific product. This ensures you only spend money on designing and developing elements that’ll drive demand and differentiate your item from the competition.
2. Expert-led design: Employs an expert designer with proven experience in the specific product category to translate research insights into a functional and beautiful design. This gives the new product a unique look and feel, instead of copping out with a surface-level or aesthetic change — something many private-label products experience when using a generic designer or asking the factory to handle the design.
3. Factory-led engineering: Leverages existing factory product design and engineering capabilities to shorten the path to product creation without having to start from scratch. This prevents you from introducing unnecessary complexity and cost into the new design, as well as allows you to maximize the factory’s capabilities. You also reduce risk by enabling the factory to adopt proven processes, methods, and trained skilled labor.
4. Rapid iteration: Traditional product development uses a sequential “waterfall” approach, where you first tackle conception, then design, sourcing, and, finally, manufacturing. As a result, design decisions center around capturing the envisioned idea perfectly, with little regard to the desirability, complexity, or cost implications. Then, in sourcing, you face the difficult and expensive task of finding a factory that can construct the product exactly as planned.

In contrast, D2M capitalizes on rapid iteration to hone in on and design attractive features, then assess the viability of implementing them into the product within the desired budget and in close collaboration with qualified factories. Quick iteration enables you to discover the optimal way to bring a new product idea to life while considering all aspects of product development at the beginning.

Wrapping up — When to use design-to-manufacturing versus traditional approaches to product development

D2M isn’t the best approach for every project. When creating a fresh, innovative offering that has no comparable competitor on the market, the only option is to take a traditional approach to product development. In this scenario, extensive prototyping is often required to prove the feasibility of the new design and assess the viability and affordability of implementing solutions in different ways.

However, for most DTC and eCommerce brands, the design-to-manufacturing approach can be highly advantageous. Companies looking to expand an existing product line and craft highly differentiated but not necessarily wholly unique inventions will find design-to-manufacturing provides a superior cost-benefit ratio compared to any other method available.