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1. Understanding production capacity in ecommerce

How to increase production capacity: 5 effective strategies

Scaling an ecommerce business is a complex yet crucial endeavor. As a company expands, it is often met with an escalating demand for its products or services. However, failing to match this demand by increasing production capacity properly can lead to many operational issues, such as stockouts, delayed deliveries, and increased costs. These issues can significantly tarnish the reputation of a business, leading to decreased customer satisfaction and potential loss of market share.

The solution to these challenges is. Still, if implementing effective strategies to increase production capacity. By doing so, ecommerce businesses can ensure they can meet increasing customer demand while maintaining operational efficiency and quality. This article delves into the lean manufacturing principles and five effective strategies for increasing production capacity and scaling your ecommerce business.

Main takeaways from this article:

  • Production capacity, the maximum output an ecommerce business can achieve, influences the business's ability to meet customer demand, control costs, and drive profitability. It encompasses the entire supply chain, from procurement and manufacturing to storage, order fulfillment, and delivery.

  • Increasing manufacturing production capacity is vital for scaling ecommerce businesses, allowing them to meet growing demand, maintain operational efficiency, enhance market competitiveness, and boost profitability.

  • Key strategies for increasing production capacity include streamlining operations with technology, optimizing inventory management, enhancing supply chain efficiency, upgrading or expanding physical resources, and adopting print on demand services.

  • Calculating production capacity involves identifying key constraints, measuring current output, considering peak times and seasonality, and regularly monitoring and adjusting capacity to ensure optimum performance.

  • In the dynamic world of ecommerce, it's essential to regularly review and adjust production capacity, use demand forecasting tools, and maintain flexibility in production capacity to meet varying demands while optimizing costs and resources.

Understanding production capacity in ecommerce

02_Understanding production capacity in ecommerce

In the ecommerce sector, production capacity measures a business's ability to produce and deliver products or services over a certain period. It's not just the ability to create a product but also the capability to fulfill orders and provide customer services. Essentially, it's the maximum output that an ecommerce business can achieve under optimal conditions.

The scope of production capacity

Production capacity for ecommerce businesses is more comprehensive than just the manufacturing process or sourcing of goods. It encompasses every supply chain step, from procurement of raw materials or goods to storage, order fulfillment, shipping, and delivery. For example, an ecommerce business could have the capability to produce or procure 100 units per day, but if its shipping capacity is only 50 units per day, then its effective production capacity is just 50 units per day.

The importance of production capacity in ecommerce

Production capacity is fundamental to the functioning of any ecommerce business because it directly influences the business's ability to meet customer demand, control costs, and ultimately, drive profitability. If demand outstrips capacity, it can lead to situations where customer orders can't be fulfilled, resulting in stockouts and delayed deliveries, negatively impacting customer satisfaction and loyalty. On the other hand, if capacity far exceeds demand, it can result in unnecessarily high inventory carrying costs, waste, and inefficiencies. Striking the right balance between production capacity and demand is crucial for an ecommerce business's success.

Managing production capacity

Understanding production capacity is the first step; the real challenge lies in effectively managing it.  Machine hour capacity planning and management involve making strategic decisions about scaling production up or down in response to anticipated demand. This could involve investing in more advanced production or order fulfillment technologies, hiring additional staff, or expanding into larger storage or fulfillment spaces. In the ever-evolving world of ecommerce, having a robust strategy to manage production capacity is crucial to staying competitive, responsive, and profitable.

The role of production capacity in ecommerce growth

03_The role of production capacity in ecommerce growth

Increasing production capacity is an essential strategy for scaling ecommerce businesses. As the business expands and customer demand grows, the ability to meet this demand becomes crucial. Enhancing production capacity ensures the business can handle increased customer orders without compromising quality or delivery times.

Meeting increased demand

As an ecommerce business grows, the demand for its products or services often escalates. Without a corresponding increase in production capacity, this surge in demand could lead to stockouts or delays in delivery, negatively affecting customer satisfaction. An adequately scaled production capacity ensures that the business can promptly cater to increased customer demand, maintaining customer satisfaction and loyalty.

Maintaining operational efficiency

A significant increase in demand can put considerable strain on a business's existing operations if not properly managed. Scaling up production capacity helps maintain operational efficiency, ensuring orders are processed, packaged, and shipped in a timely manner. This could involve investing in advanced technology, increasing labor, or enhancing supply chain management. Keeping operational efficiency high while growing reduces the risk of bottlenecks, delays, and errors that could harm the business's reputation.

Enhancing market competitiveness

In the highly competitive ecommerce landscape, businesses that can quickly and efficiently fulfill customer orders often have a competitive edge. By increasing production capacity, an ecommerce business can cater to a larger customer base, potentially entering new markets. Moreover, a business that can maintain a high level of service even during peak demand periods will stand out from its competitors, enhancing its market competitiveness.

Boosting profitability

Ultimately, the goal of scaling any business is to increase profitability, and this is no different for ecommerce businesses. Increasing production capacity allows for larger sales volumes, leading to higher revenue. Moreover, with improved operational efficiency and potentially better procurement and production arrangements, the cost per unit may decrease, leading to increased profit margins. Therefore, strategically increasing production capacity plays a pivotal role in the growth and profitability of an ecommerce business.

Calculating production capacity for your ecommerce business

Understanding the current production capacity of your ecommerce business is crucial to make informed decisions about scaling and managing operations. Here's a step-by-step guide on how to measure production capacity for an ecommerce business.

Identify key capacity constraints

In ecommerce, capacity constraints could be anything from the number of products you can source or manufacture in a day to the number of orders you can process, pack, and ship. In order to calculate production capacity, start by identifying these constraints and defining the maximum output for each stage of your supply chain.

Measure current output

Once you've identified your constraints, you must measure your current output. This involves tracking and quantifying the number of products your manufacturing business can source, produce, process, or ship within a given period. This data is often available from your inventory management system, order management system, or shipping provider.

Calculate the production capacity

After determining your key constraints and current output, you can calculate your production capacity. If your capacity constraint is the number of products you can produce or source per day, your production capacity is simply this number. However, if your capacity constraint is the number of orders you can process and ship per day, your production capacity is the number of orders times the average number of items per order.

Consider peak times and seasonality

Remember that demand for ecommerce businesses can be highly seasonal or subject to peak times. Therefore, when calculating your production capacity, consider these fluctuations. This will help you understand whether you have enough capacity to handle peak periods or if you need to make arrangements to increase your capacity during these times.

Monitor and adjust regularly

Production capacity isn't static; it can and should change as your business evolves. Regularly monitoring your output, understanding changes in demand, and adjusting your capacity calculations accordingly will ensure you have an accurate understanding of your production capacity at all times. This will enable you to make informed decisions about scaling your business and meeting customer demand effectively.

Five strategies for increasing your production capacity

04_Five strategies for increasing your production capacity

To effectively scale an ecommerce business, increasing production capacity is vital. Here are five effective strategies to boost your production capacity:

1. Streamlining operations with technology

Utilizing advanced technology can dramatically enhance production capacity and operational efficiency. For example, an automated order management system can speed up processing and reduce human errors. Additionally, AI-powered forecasting tools can help predict future demand trends, allowing you to adjust production capacity accordingly. Leveraging robotics in warehouses for packing and sorting can also increase the speed of operations and maximize output. Therefore, investing in technology not only increases capacity but also enhances the quality and speed of service.

2. Optimizing inventory management

Effective inventory management is crucial to increase production capacity. A well-managed inventory ensures optimal stock levels are always maintained, avoiding stock outs and overstocking. Stockouts can harm your reputation and customer satisfaction while overstocking can tie up capital and result in waste. Implementing a smart inventory management system can help forecast demand, track product levels in real time, and automatically reorder products when they run low, ensuring your production capacity is used effectively.

3. Enhancing supply chain efficiency

Improving supply chain efficiency can significantly increase production capacity. This could involve everything from finding more reliable suppliers to implementing just-in-time manufacturing or delivery processes to improving the coordination between different supply chain stages. A more efficient supply chain can respond more quickly and flexibly to changes in demand, allowing you to increase or decrease production capacity as needed.

4. Upgrading or expanding physical resources

Expanding or upgrading your physical resources can directly contribute to increased production capacity. For instance, investing in larger or more technologically advanced warehousing facilities can enable faster order fulfillment. Similarly, acquiring more or better production equipment can allow you to produce or process more products simultaneously. While this strategy requires significant investment, it can pay off in terms of increased capacity and efficiency in your business processes.

5. Using print on demand services

For ecommerce businesses selling custom-printed products, adopting print on demand services like Gelato can dramatically increase production capacity while reducing overheads. Print on demand allows you to produce products only when they are ordered, eliminating the need for large inventory spaces and reducing the risk of overstocking. It also allows for easy scaling during peak times, as the printing is outsourced to a company that can work at full capacity to handle large volumes of orders. Thus, print on demand can effectively increase production capacity for certain ecommerce businesses.

Monitoring and adjusting your ecommerce production capacity

05_Monitoring and adjusting your ecommerce production capacity

In the dynamic manufacturing industry, production capacity is not a set-it-and-forget-it figure. It must be monitored and adjusted regularly to ensure optimum performance and customer satisfaction. Here are some strategies for effectively doing this:

Implement real-time monitoring

To monitor production capacity effectively, implement real-time monitoring systems. These can continuously track your output, inventory levels, and order fulfillment speed. Such systems provide instant visibility into bottlenecks or inefficiencies, allowing you to react quickly and adjust your operations accordingly.

Regularly review key performance indicators (KPIs)

Key Performance Indicators (KPIs) such as equipment effectiveness, order fulfillment speed, order accuracy, and stock turnover rate can provide valuable insights into your production capacity. Regularly reviewing these KPIs can help you understand how effectively your current capacity is meeting demand and whether any adjustments are needed.

Use demand forecasting tools

Advanced AI-powered forecasting tools can predict future demand trends with high accuracy. By comparing these forecasts with your current capacity, you can identify potential capacity shortfalls or excesses in advance and adjust your operations accordingly. This proactive approach can help prevent stock outs or overstocks and ensure you have sufficient usable machines always to meet customer demand.

Regularly review and update capacity plans

Your production capacity plans should not be static but evolve with your business. Regularly review your capacity plans and update them based on changes in demand, business strategy, and available resources. This will ensure that your production capacity always aligns with your business needs and objectives.

Stay flexible and responsive

In the fast-paced ecommerce world, demand can fluctuate rapidly due to seasonal trends, marketing campaigns, or external factors. Therefore, it's important to maintain a certain level of flexibility in your production capacity. This could mean outsourcing production to quickly scale up capacity during peak times or scaling down operations to avoid waste and inefficiencies during slower periods. By staying flexible and responsive, you can ensure your production capacity always meets demand while optimizing costs and resources.

Leveraging Gelato to boost your ecommerce Production Capacity


Scaling an ecommerce business is a complex yet rewarding endeavor. By understanding your production capacity and implementing strategies to increase it, you can successfully meet growing demand, enhance operational efficiency, boost market competitiveness, and increase profitability.

In the realm of print on demand services, Gelato stands apart. As the world's largest platform for local print on demand solutions, Gelato enables entrepreneurs, creators, and global brands to sell their products globally and produce them locally in 34 countries, reaching up to five billion potential consumers overnight. Using Gelato, you can dramatically increase your production capacity while reducing overheads.

What's more, Gelato offers free usage and subscription options with additional benefits, catering to the varying needs of businesses. With Gelato+ and Gelato+ Gold, businesses can enjoy benefits such as discounted shipping, premium tools, and early access to newly-launched products, such as mugs, t-shirts, wall art, etc. This makes Gelato not just a service, but a strategic partner for your ecommerce business, helping you turn your creative dreams into reality.

As a critical player in the creator economy, our main task is to enable creators to build their success. Signing up for Gelato gives you a powerful ally in scaling your ecommerce business. So why wait? Sign up for Gelato today, and take the first step towards effectively increasing your production capacity and scaling your ecommerce business to new heights.

Production capacity FAQs

What happens when production capacity increases?

When production capacity increases, a business can produce more goods or services within a given timeframe. This enables the business to meet higher demand, potentially increasing sales and revenue.

What are the benefits of increasing production capacity?

Increasing production capacity offers several benefits, including the ability to meet growing customer demand, the potential for capturing a larger market share, improved customer satisfaction through reduced delivery times, and increased profitability.

What is an example of production capacity?

An example of production capacity could be an ecommerce business that can process, pack, and ship 200 orders daily. This is their maximum output under optimal conditions.

What determines production capacity?

Production capacity is determined by various factors, including the efficiency of the production process, available resources (like raw materials and labor), the technology used, and the efficiency of the supply chain from procurement to delivery.


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