From William T Lasley,
Your Guide to Arts / Crafts Business.
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An important task in maintaining your online storefront is managing inventory and fulfillment of orders. In a perfect world, you should only list items that are already created, pre-packaged and ready to ship. However, this is an ideal that is not easily accomplished by most creators of handmade products. Here are some considerations for managing your online inventory.

• Ready to Ship

As mentioned above, this method of orders and fulfillment is ideal in the online world where consumers want to receive ordered items promptly. Only items that are in stock are listed. These products can be already packaged and ready to slap on a shipping label.
• Orders Only

Many craftspeople, especially those who carry high-end unique products, will only accept orders for their creations. Customers place the order, usually paying in advance and then receive the item after it is created. The major drawback to an "order only" system is that online shoppers tend to dislike waiting. Typically impulse buyers, a person shopping online will likely order from vendors who can ship the fastest.
• Combination

For the handmade industry, a mixture of both methods is an excellent way to handle online (and off too!) sales. List any items that you carry many of as "in stock" and high-end, unique, custom and personalized items as "place order". In the case of custom and personalized pieces, people expect to wait and will not mind the delay. But by keeping a good supply of other items in stock and availible for immediate shipment, you will also be able to satisfy the needs of visitors who want to receive your work right away.

A Note About Deadlines

An important point to make about any type of mail-order sale, but even more so with online ordering, is meeting your shipping deadline. When a customer places an order, vendors should always tell them when it is scheduled for shipment. Then you must make every attempt to meet that deadline.

If, for some reason a shipping deadline cannot be met, contact the customer to notify them of the delay, apologize for the inconvenience and offer a full refund. Most people will understand and will not mind waiting a little longer. But by contacting someone in advance, you may avert missed future sales with a little communication. Remember, the best way to gain repeat business is by providing superior customer service to your current clientele!