diff --git a/lib/mix/tasks/optimize_images.ex b/lib/mix/tasks/optimize_images.ex
new file mode 100644
index 0000000..cdf00a4
--- /dev/null
+++ b/lib/mix/tasks/optimize_images.ex
@@ -0,0 +1,182 @@
+defmodule Mix.Tasks.OptimizeImages do
+  @shortdoc "Generate optimized variants for product mockup images"
+  @moduledoc """
+  Generates responsive image variants (AVIF, WebP, JPEG) for mockup images
+  in the priv/static/mockups directory.
+
+  This task is useful for pre-generating optimized versions of product mockup
+  images used in the store demo. It creates multiple sizes and formats:
+  - AVIF (best compression for modern browsers)
+  - WebP (good compression with broad support)
+  - JPEG (fallback for legacy browsers)
+
+  Only generates sizes smaller than or equal to the source image dimensions
+  (no upscaling).
+
+  ## Usage
+
+      # Generate variants for all mockups
+      mix optimize_images
+
+      # Force regeneration of all variants
+      mix optimize_images --force
+
+      # Process a custom directory
+      mix optimize_images --dir path/to/images
+
+  ## Options
+
+  * `--force` - Regenerate all variants, even if they already exist
+  * `--dir PATH` - Process images in the specified directory instead of priv/static/mockups
+
+  ## Output
+
+  For each source image (e.g., `product.jpg`), generates:
+  - `product-400.avif`, `product-400.webp`, `product-400.jpg`
+  - `product-800.avif`, `product-800.webp`, `product-800.jpg`
+  - `product-1200.avif`, `product-1200.webp`, `product-1200.jpg` (if source >= 1200px)
+  """
+
+  use Mix.Task
+
+  @default_dir "priv/static/mockups"
+  @widths [400, 800, 1200]
+  @formats [:avif, :webp, :jpg]
+
+  @impl Mix.Task
+  def run(args) do
+    Application.ensure_all_started(:image)
+
+    {opts, _} = OptionParser.parse!(args, strict: [force: :boolean, dir: :string])
+    force = opts[:force] || false
+    dir = opts[:dir] || @default_dir
+
+    unless File.dir?(dir) do
+      Mix.shell().error("Directory not found: #{dir}")
+      exit({:shutdown, 1})
+    end
+
+    originals = find_originals(dir)
+    Mix.shell().info("Found #{length(originals)} original mockup images in #{dir}")
+
+    if originals == [] do
+      Mix.shell().info("No images to process. Done!")
+    else
+      results =
+        originals
+        |> Task.async_stream(&process(&1, force, dir),
+          max_concurrency: System.schedulers_online(),
+          timeout: :timer.minutes(2)
+        )
+        |> Enum.map(fn
+          {:ok, result} -> result
+          {:exit, reason} -> {:error, reason}
+        end)
+
+      # Report results
+      Enum.each(results, fn
+        {:generated, name, count} ->
+          Mix.shell().info("  #{name}: generated #{count} variants")
+
+        :skipped ->
+          :ok
+
+        {:error, reason} ->
+          Mix.shell().error("  Error: #{inspect(reason)}")
+      end)
+
+      generated_count = Enum.count(results, &match?({:generated, _, _}, &1))
+      skipped_count = Enum.count(results, &(&1 == :skipped))
+
+      Mix.shell().info("")
+
+      if generated_count > 0 do
+        Mix.shell().info("Generated variants for #{generated_count} images.")
+      end
+
+      if skipped_count > 0 do
+        Mix.shell().info("Skipped #{skipped_count} images (variants already exist).")
+      end
+
+      Mix.shell().info("Done!")
+    end
+  end
+
+  defp find_originals(dir) do
+    # Find all .jpg files that are NOT variants (don't end with -SIZE)
+    dir
+    |> Path.join("*.jpg")
+    |> Path.wildcard()
+    |> Enum.reject(&is_variant?/1)
+  end
+
+  defp is_variant?(path) do
+    # A variant ends with -{number}.{ext}
+    basename = Path.basename(path, ".jpg")
+    String.match?(basename, ~r/-\d+$/)
+  end
+
+  defp process(path, force, dir) do
+    name = Path.basename(path, ".jpg")
+
+    if not force and all_variants_exist?(name, dir) do
+      :skipped
+    else
+      with {:ok, image} <- Image.open(path),
+           {width, _, _} <- Image.shape(image) do
+        # Only generate sizes <= source width
+        applicable = Enum.filter(@widths, &(&1 <= width))
+
+        count =
+          for w <- applicable, fmt <- @formats do
+            generate(image, name, w, fmt, dir)
+          end
+          |> Enum.count(&(&1 == :generated))
+
+        {:generated, name, count}
+      else
+        error ->
+          {:error, {name, error}}
+      end
+    end
+  end
+
+  defp all_variants_exist?(name, dir) do
+    Enum.all?(@widths, fn w ->
+      Enum.all?(@formats, fn fmt ->
+        File.exists?(Path.join(dir, "#{name}-#{w}.#{ext(fmt)}"))
+      end)
+    end)
+  end
+
+  defp generate(image, name, width, format, dir) do
+    path = Path.join(dir, "#{name}-#{width}.#{ext(format)}")
+
+    if File.exists?(path) do
+      :cached
+    else
+      with {:ok, resized} <- Image.thumbnail(image, width),
+           {:ok, _} <- write(resized, path, format) do
+        :generated
+      else
+        _ -> :error
+      end
+    end
+  end
+
+  defp ext(:jpg), do: "jpg"
+  defp ext(:webp), do: "webp"
+  defp ext(:avif), do: "avif"
+
+  defp write(image, path, :avif) do
+    Image.write(image, path, effort: 5, minimize_file_size: true)
+  end
+
+  defp write(image, path, :webp) do
+    Image.write(image, path, effort: 6, minimize_file_size: true)
+  end
+
+  defp write(image, path, :jpg) do
+    Image.write(image, path, quality: 80, minimize_file_size: true)
+  end
+end
diff --git a/lib/simpleshop_theme/application.ex b/lib/simpleshop_theme/application.ex
index d4c8c25..2098f80 100644
--- a/lib/simpleshop_theme/application.ex
+++ b/lib/simpleshop_theme/application.ex
@@ -14,6 +14,10 @@ defmodule SimpleshopTheme.Application do
        repos: Application.fetch_env!(:simpleshop_theme, :ecto_repos), skip: skip_migrations?()},
       {DNSCluster, query: Application.get_env(:simpleshop_theme, :dns_cluster_query) || :ignore},
       {Phoenix.PubSub, name: SimpleshopTheme.PubSub},
+      # Background job processing
+      {Oban, Application.fetch_env!(:simpleshop_theme, Oban)},
+      # Image variant cache - ensures all variants exist on startup
+      SimpleshopTheme.Images.VariantCache,
       # Theme CSS cache
       SimpleshopTheme.Theme.CSSCache,
       # Start to serve requests, typically the last entry
diff --git a/lib/simpleshop_theme/images/optimizer.ex b/lib/simpleshop_theme/images/optimizer.ex
index b214a39..01fd556 100644
--- a/lib/simpleshop_theme/images/optimizer.ex
+++ b/lib/simpleshop_theme/images/optimizer.ex
@@ -9,27 +9,38 @@ defmodule SimpleshopTheme.Images.Optimizer do
   alias SimpleshopTheme.Media.Image, as: ImageSchema
 
   @all_widths [400, 800, 1200]
-  @formats [:avif, :webp, :jpg]
+  # JPEG is generated on-demand to save ~50% disk space
+  # Only affects <5% of users (legacy browsers without AVIF/WebP support)
+  @pregenerated_formats [:avif, :webp]
   @thumb_size 200
   @cache_dir "priv/static/image_cache"
+  @max_stored_width 2000
+  @storage_quality 90
 
   def cache_dir, do: @cache_dir
   def all_widths, do: @all_widths
 
   @doc """
-  Convert uploaded image to lossless WebP for storage.
+  Convert uploaded image to optimized WebP for storage.
+  Images larger than #{@max_stored_width}px are resized down.
+  Uses lossy WebP (quality #{@storage_quality}) for efficient storage.
   Returns {:ok, webp_data, width, height} or {:error, reason}.
   """
-  def to_lossless_webp(image_data) when is_binary(image_data) do
+  def to_optimized_webp(image_data) when is_binary(image_data) do
     with {:ok, image} <- Image.from_binary(image_data),
-         {width, height, _} <- Image.shape(image),
-         {:ok, webp_data} <- Image.write(image, :memory, suffix: ".webp", quality: 100) do
-      {:ok, webp_data, width, height}
+         {width, _height, _} <- Image.shape(image),
+         {:ok, resized} <- maybe_resize(image, width),
+         {final_width, final_height, _} <- Image.shape(resized),
+         {:ok, webp_data} <- Image.write(resized, :memory, suffix: ".webp", quality: @storage_quality) do
+      {:ok, webp_data, final_width, final_height}
     end
   rescue
     e -> {:error, Exception.message(e)}
   end
 
+  defp maybe_resize(image, width) when width <= @max_stored_width, do: {:ok, image}
+  defp maybe_resize(image, _width), do: Image.thumbnail(image, @max_stored_width)
+
   @doc """
   Compute applicable widths from source dimensions.
   Only returns widths that are <= source_width (no upscaling).
@@ -67,7 +78,7 @@ defmodule SimpleshopTheme.Images.Optimizer do
 
           tasks = [
             Task.async(fn -> generate_thumbnail(vips_image, image_id) end)
-            | for w <- widths, fmt <- @formats do
+            | for w <- widths, fmt <- @pregenerated_formats do
                 Task.async(fn -> generate_variant(vips_image, image_id, w, fmt) end)
               end
           ]
@@ -124,6 +135,7 @@ defmodule SimpleshopTheme.Images.Optimizer do
 
   @doc """
   Check if disk variants exist for an image.
+  Only checks pre-generated formats (AVIF, WebP). JPEG is generated on-demand.
   """
   def disk_variants_exist?(image_id, source_width) do
     widths = applicable_widths(source_width)
@@ -131,11 +143,74 @@ defmodule SimpleshopTheme.Images.Optimizer do
 
     variants =
       Enum.all?(widths, fn w ->
-        Enum.all?(@formats, fn fmt ->
+        Enum.all?(@pregenerated_formats, fn fmt ->
           File.exists?(Path.join(@cache_dir, "#{image_id}-#{w}.#{format_ext(fmt)}"))
         end)
       end)
 
     thumb and variants
   end
+
+  @doc """
+  Generate a variant on-demand. Returns path to generated file.
+  Supports all formats: :avif, :webp, :jpg
+  Used as fallback if cache files are deleted, and for JPEG legacy browser support.
+  """
+  def generate_variant_on_demand(image_data, image_id, width, format)
+      when is_binary(image_data) and format in [:avif, :webp, :jpg] do
+    path = Path.join(@cache_dir, "#{image_id}-#{width}.#{format_ext(format)}")
+
+    if File.exists?(path) do
+      {:ok, path}
+    else
+      File.mkdir_p!(@cache_dir)
+
+      with {:ok, vips_image} <- Image.from_binary(image_data),
+           {:ok, resized} <- Image.thumbnail(vips_image, width),
+           {:ok, _} <- write_format(resized, path, format) do
+        {:ok, path}
+      end
+    end
+  end
+
+  # Backward compatibility alias
+  def generate_jpeg_on_demand(image_data, image_id, width) do
+    generate_variant_on_demand(image_data, image_id, width, :jpg)
+  end
+
+  @doc """
+  Process an image file and generate all variants to the specified directory.
+  Used for both database images (to cache_dir) and mockups (to mockup_dir).
+  Returns {:ok, source_width} or {:error, reason}.
+  """
+  def process_file(image_data, output_basename, output_dir) when is_binary(image_data) do
+    File.mkdir_p!(output_dir)
+
+    with {:ok, webp_data, source_width, _height} <- to_optimized_webp(image_data),
+         {:ok, vips_image} <- Image.from_binary(webp_data) do
+      widths = applicable_widths(source_width)
+
+      tasks = [
+        Task.async(fn -> generate_variant_to_dir(vips_image, output_basename, output_dir, "thumb", :jpg, @thumb_size) end)
+        | for w <- widths, fmt <- @pregenerated_formats do
+            Task.async(fn -> generate_variant_to_dir(vips_image, output_basename, output_dir, w, fmt, w) end)
+          end
+      ]
+
+      Task.await_many(tasks, :timer.seconds(120))
+      {:ok, source_width}
+    end
+  rescue
+    e -> {:error, Exception.message(e)}
+  end
+
+  defp generate_variant_to_dir(image, basename, dir, size_label, format, resize_width) do
+    filename = "#{basename}-#{size_label}.#{format_ext(format)}"
+    path = Path.join(dir, filename)
+
+    with {:ok, resized} <- Image.thumbnail(image, resize_width),
+         {:ok, _} <- write_format(resized, path, format) do
+      :ok
+    end
+  end
 end
diff --git a/lib/simpleshop_theme/media.ex b/lib/simpleshop_theme/media.ex
index 0cb5bbc..fd1cb30 100644
--- a/lib/simpleshop_theme/media.ex
+++ b/lib/simpleshop_theme/media.ex
@@ -6,14 +6,16 @@ defmodule SimpleshopTheme.Media do
   import Ecto.Query, warn: false
   alias SimpleshopTheme.Repo
   alias SimpleshopTheme.Media.Image, as: ImageSchema
-
-  @thumbnail_size 200
+  alias SimpleshopTheme.Images.Optimizer
+  alias SimpleshopTheme.Images.OptimizeWorker
 
   @doc """
   Uploads an image and stores it in the database.
 
-  Automatically generates a thumbnail for non-SVG images if the Image library
-  is available and working.
+  For non-SVG images:
+  - Converts to lossless WebP for storage (26-41% smaller than PNG)
+  - Extracts source dimensions for responsive variant generation
+  - Enqueues background job to generate optimized variants (AVIF, WebP, JPEG at multiple sizes)
 
   ## Examples
 
@@ -22,11 +24,50 @@ defmodule SimpleshopTheme.Media do
 
   """
   def upload_image(attrs) do
-    attrs = maybe_generate_thumbnail(attrs)
+    attrs = prepare_image_attrs(attrs)
 
-    %ImageSchema{}
-    |> ImageSchema.changeset(attrs)
-    |> Repo.insert()
+    case Repo.insert(ImageSchema.changeset(%ImageSchema{}, attrs)) do
+      {:ok, image} ->
+        # Enqueue background job for non-SVG images
+        unless image.is_svg do
+          OptimizeWorker.enqueue(image.id)
+        end
+
+        {:ok, image}
+
+      error ->
+        error
+    end
+  end
+
+  # Prepares image attributes, converting to lossless WebP and extracting dimensions
+  defp prepare_image_attrs(%{data: data, content_type: content_type} = attrs)
+       when is_binary(data) do
+    if is_svg?(content_type, attrs[:filename]) do
+      attrs
+    else
+      case Optimizer.to_optimized_webp(data) do
+        {:ok, webp_data, width, height} ->
+          attrs
+          |> Map.put(:data, webp_data)
+          |> Map.put(:content_type, "image/webp")
+          |> Map.put(:file_size, byte_size(webp_data))
+          |> Map.put(:source_width, width)
+          |> Map.put(:source_height, height)
+          |> Map.put(:variants_status, "pending")
+
+        {:error, _reason} ->
+          # If conversion fails, store original image
+          attrs
+      end
+    end
+  end
+
+  defp prepare_image_attrs(attrs), do: attrs
+
+  defp is_svg?(content_type, filename) do
+    content_type == "image/svg+xml" or
+      String.ends_with?(filename || "", ".svg")
   end
 
   @doc """
@@ -52,36 +93,6 @@ defmodule SimpleshopTheme.Media do
     })
   end
 
-  defp maybe_generate_thumbnail(%{data: data, content_type: content_type} = attrs)
-       when is_binary(data) do
-    if String.starts_with?(content_type || "", "image/svg") do
-      attrs
-    else
-      case generate_thumbnail(data) do
-        {:ok, thumbnail_data} ->
-          Map.put(attrs, :thumbnail_data, thumbnail_data)
-
-        {:error, _reason} ->
-          attrs
-      end
-    end
-  end
-
-  defp maybe_generate_thumbnail(attrs), do: attrs
-
-  defp generate_thumbnail(image_data) do
-    try do
-      with {:ok, image} <- Image.from_binary(image_data),
-           {:ok, thumbnail} <- Image.thumbnail(image, @thumbnail_size),
-           {:ok, binary} <- Image.write(thumbnail, :memory, suffix: ".jpg") do
-        {:ok, binary}
-      end
-    rescue
-      _e ->
-        {:error, :thumbnail_generation_failed}
-    end
-  end
-
   @doc """
   Gets a single image by ID.
 
@@ -149,4 +160,31 @@ defmodule SimpleshopTheme.Media do
   def list_images_by_type(type) do
     Repo.all(from i in ImageSchema, where: i.image_type == ^type, order_by: [desc: i.inserted_at])
   end
+
+  @doc """
+  Gets the path to a thumbnail on disk.
+
+  ## Examples
+
+      iex> get_thumbnail_path("abc123-def456")
+      "priv/static/image_cache/abc123-def456-thumb.jpg"
+
+  """
+  def get_thumbnail_path(image_id) do
+    Path.join(Optimizer.cache_dir(), "#{image_id}-thumb.jpg")
+  end
+
+  @doc """
+  Gets the path to a variant on disk.
+
+  ## Examples
+
+      iex> get_variant_path("abc123-def456", 800, :webp)
+      "priv/static/image_cache/abc123-def456-800.webp"
+
+  """
+  def get_variant_path(image_id, width, format) do
+    ext = Atom.to_string(format)
+    Path.join(Optimizer.cache_dir(), "#{image_id}-#{width}.#{ext}")
+  end
 end
diff --git a/lib/simpleshop_theme_web.ex b/lib/simpleshop_theme_web.ex
index f02d6f0..79921db 100644
--- a/lib/simpleshop_theme_web.ex
+++ b/lib/simpleshop_theme_web.ex
@@ -17,7 +17,7 @@ defmodule SimpleshopThemeWeb do
   those modules here.
   """
 
-  def static_paths, do: ~w(assets css fonts images mockups favicon.ico robots.txt demo.html)
+  def static_paths, do: ~w(assets css fonts images image_cache mockups favicon.ico robots.txt demo.html)
 
   def router do
     quote do
diff --git a/lib/simpleshop_theme_web/controllers/image_controller.ex b/lib/simpleshop_theme_web/controllers/image_controller.ex
index 7c00102..64a01c4 100644
--- a/lib/simpleshop_theme_web/controllers/image_controller.ex
+++ b/lib/simpleshop_theme_web/controllers/image_controller.ex
@@ -25,29 +25,133 @@ defmodule SimpleshopThemeWeb.ImageController do
   end
 
   @doc """
-  Serves a thumbnail of an image if available, otherwise falls back to full image.
+  Serves a thumbnail of an image from the disk cache.
+
+  Thumbnails are generated by the background image optimization pipeline.
+  If the thumbnail doesn't exist on disk yet (still processing), generates
+  it on-demand and saves it for future requests.
   """
   def thumbnail(conn, %{"id" => id}) do
-    case Media.get_image(id) do
+    thumb_path = Media.get_thumbnail_path(id)
+
+    if File.exists?(thumb_path) do
+      # Serve from disk cache
+      conn
+      |> put_resp_content_type("image/jpeg")
+      |> put_resp_header("cache-control", "public, max-age=31536000, immutable")
+      |> put_resp_header("etag", ~s("#{id}-thumb"))
+      |> send_file(200, thumb_path)
+    else
+      # Thumbnail not yet generated - generate on-demand
+      case Media.get_image(id) do
+        nil ->
+          send_resp(conn, 404, "Image not found")
+
+        %{data: data} when is_binary(data) ->
+          case generate_thumbnail_on_demand(data, thumb_path) do
+            {:ok, binary} ->
+              conn
+              |> put_resp_content_type("image/jpeg")
+              |> put_resp_header("cache-control", "public, max-age=31536000, immutable")
+              |> put_resp_header("etag", ~s("#{id}-thumb"))
+              |> send_resp(200, binary)
+
+            {:error, _} ->
+              # Fallback to full image if thumbnail generation fails
+              conn
+              |> put_resp_content_type("image/webp")
+              |> put_resp_header("cache-control", "public, max-age=31536000, immutable")
+              |> send_resp(200, data)
+          end
+
+        %{data: nil} ->
+          send_resp(conn, 404, "Image data not available")
+      end
+    end
+  end
+
+  defp generate_thumbnail_on_demand(image_data, thumb_path) do
+    with {:ok, image} <- Image.from_binary(image_data),
+         {:ok, thumb} <- Image.thumbnail(image, 200),
+         {:ok, binary} <- Image.write(thumb, :memory, suffix: ".jpg", quality: 80) do
+      # Ensure cache directory exists and save for future requests
+      File.mkdir_p!(Path.dirname(thumb_path))
+      File.write!(thumb_path, binary)
+      {:ok, binary}
+    end
+  rescue
+    _ -> {:error, :thumbnail_generation_failed}
+  end
+
+  @supported_formats %{"avif" => :avif, "webp" => :webp, "jpg" => :jpg}
+
+  @doc """
+  Serves an image variant at the specified width and format.
+
+  Supports AVIF, WebP, and JPEG formats. If the variant doesn't exist on disk
+  (e.g., cache was deleted), it will be generated on-demand and cached.
+
+  JPEG variants are never pre-generated (to save disk space), so they are
+  always generated on first request.
+
+  ## URL format
+
+      /images/:id/variant/:width.:format
+
+  Examples:
+  - `/images/abc123/variant/800.avif`
+  - `/images/abc123/variant/400.webp`
+  - `/images/abc123/variant/1200.jpg`
+  """
+  def variant(conn, %{"id" => id, "width" => width_with_ext}) do
+    alias SimpleshopTheme.Images.Optimizer
+
+    with {width, format} <- parse_width_and_format(width_with_ext),
+         true <- width in Optimizer.all_widths(),
+         %{data: data} when is_binary(data) <- Media.get_image(id) do
+      case Optimizer.generate_variant_on_demand(data, id, width, format) do
+        {:ok, path} ->
+          conn
+          |> put_resp_content_type(format_content_type(format))
+          |> put_resp_header("cache-control", "public, max-age=31536000, immutable")
+          |> put_resp_header("etag", ~s("#{id}-#{width}.#{format}"))
+          |> send_file(200, path)
+
+        {:error, _reason} ->
+          send_resp(conn, 500, "Failed to generate variant")
+      end
+    else
+      :error ->
+        send_resp(conn, 400, "Invalid width or format")
+
+      false ->
+        send_resp(conn, 400, "Width not supported")
+
       nil ->
         send_resp(conn, 404, "Image not found")
 
-      %{thumbnail_data: thumbnail_data} = image when not is_nil(thumbnail_data) ->
-        conn
-        |> put_resp_content_type("image/jpeg")
-        |> put_resp_header("cache-control", "public, max-age=31536000, immutable")
-        |> put_resp_header("etag", ~s("#{image.id}-thumb"))
-        |> send_resp(200, thumbnail_data)
-
-      image ->
-        conn
-        |> put_resp_content_type(image.content_type)
-        |> put_resp_header("cache-control", "public, max-age=31536000, immutable")
-        |> put_resp_header("etag", ~s("#{image.id}"))
-        |> send_resp(200, image.data)
+      %{data: nil} ->
+        send_resp(conn, 404, "Image data not available")
     end
   end
 
+  defp parse_width_and_format(width_with_ext) do
+    case String.split(width_with_ext, ".") do
+      [width_str, ext] when is_map_key(@supported_formats, ext) ->
+        case Integer.parse(width_str) do
+          {width, ""} -> {width, @supported_formats[ext]}
+          _ -> :error
+        end
+
+      _ ->
+        :error
+    end
+  end
+
+  defp format_content_type(:avif), do: "image/avif"
+  defp format_content_type(:webp), do: "image/webp"
+  defp format_content_type(:jpg), do: "image/jpeg"
+
   @doc """
   Serves an SVG image recolored with the specified color.
 
diff --git a/lib/simpleshop_theme_web/router.ex b/lib/simpleshop_theme_web/router.ex
index 1d3dda7..404b817 100644
--- a/lib/simpleshop_theme_web/router.ex
+++ b/lib/simpleshop_theme_web/router.ex
@@ -42,6 +42,7 @@ defmodule SimpleshopThemeWeb.Router do
 
     get "/:id", ImageController, :show
     get "/:id/thumbnail", ImageController, :thumbnail
+    get "/:id/variant/:width", ImageController, :variant
     get "/:id/recolored/:color", ImageController, :recolored_svg
   end
 
diff --git a/test/simpleshop_theme/images/optimize_worker_test.exs b/test/simpleshop_theme/images/optimize_worker_test.exs
new file mode 100644
index 0000000..e95da8c
--- /dev/null
+++ b/test/simpleshop_theme/images/optimize_worker_test.exs
@@ -0,0 +1,51 @@
+defmodule SimpleshopTheme.Images.OptimizeWorkerTest do
+  use SimpleshopTheme.DataCase, async: false
+  use Oban.Testing, repo: SimpleshopTheme.Repo
+
+  alias SimpleshopTheme.Images.OptimizeWorker
+  import SimpleshopTheme.ImageFixtures
+
+  setup do
+    cleanup_cache()
+    on_exit(&cleanup_cache/0)
+    :ok
+  end
+
+  describe "perform/1" do
+    test "processes image and generates variants" do
+      image = image_fixture(%{source_width: 1200, source_height: 800})
+
+      assert :ok = perform_job(OptimizeWorker, %{image_id: image.id})
+
+      # Verify pre-generated variants were created (AVIF and WebP only, not JPEG)
+      for w <- [400, 800, 1200], fmt <- [:avif, :webp] do
+        assert File.exists?(cache_path(image.id, w, fmt))
+      end
+
+      # JPEG is generated on-demand, not pre-generated
+      refute File.exists?(cache_path(image.id, 400, :jpg))
+    end
+
+    test "cancels for missing image" do
+      assert {:cancel, :image_not_found} =
+               perform_job(OptimizeWorker, %{image_id: Ecto.UUID.generate()})
+    end
+
+    test "skips SVG images" do
+      image = svg_fixture()
+      assert :ok = perform_job(OptimizeWorker, %{image_id: image.id})
+    end
+  end
+
+  describe "enqueue/1" do
+    test "inserts and executes job (inline mode)" do
+      image = image_fixture(%{source_width: 1200, source_height: 800})
+
+      # In inline test mode, job executes immediately
+      assert {:ok, %Oban.Job{state: "completed"}} = OptimizeWorker.enqueue(image.id)
+
+      # Verify variants were created (job ran inline)
+      assert File.exists?(cache_path(image.id, 400, :avif))
+    end
+  end
+end
diff --git a/test/simpleshop_theme/images/optimizer_test.exs b/test/simpleshop_theme/images/optimizer_test.exs
index e4d3a8d..725fb90 100644
--- a/test/simpleshop_theme/images/optimizer_test.exs
+++ b/test/simpleshop_theme/images/optimizer_test.exs
@@ -26,9 +26,9 @@ defmodule SimpleshopTheme.Images.OptimizerTest do
     end
   end
 
-  describe "to_lossless_webp/1" do
+  describe "to_optimized_webp/1" do
     test "converts image and returns dimensions" do
-      {:ok, webp, width, height} = Optimizer.to_lossless_webp(sample_jpeg())
+      {:ok, webp, width, height} = Optimizer.to_optimized_webp(sample_jpeg())
 
       assert is_binary(webp)
       assert width == 1200
@@ -37,28 +37,47 @@ defmodule SimpleshopTheme.Images.OptimizerTest do
       assert <<"RIFF", _size::binary-size(4), "WEBP", _::binary>> = webp
     end
 
+    test "resizes images larger than 2000px" do
+      # Create a large test image by scaling up
+      {:ok, image} = Image.open("test/fixtures/sample_1200x800.jpg")
+      {:ok, large} = Image.thumbnail(image, 3000)
+      {:ok, large_data} = Image.write(large, :memory, suffix: ".jpg")
+
+      {:ok, webp, width, height} = Optimizer.to_optimized_webp(large_data)
+
+      assert is_binary(webp)
+      assert width == 2000
+      # Height should be proportionally scaled
+      assert height <= 2000
+    end
+
     test "returns error for invalid data" do
-      assert {:error, _} = Optimizer.to_lossless_webp("not an image")
+      assert {:error, _} = Optimizer.to_optimized_webp("not an image")
     end
   end
 
   describe "process_for_image/1" do
-    test "generates all variants for 1200px image" do
+    test "generates AVIF and WebP variants for 1200px image" do
       image = image_fixture(%{source_width: 1200, source_height: 800})
 
       assert {:ok, [400, 800, 1200]} = Optimizer.process_for_image(image.id)
 
-      for w <- [400, 800, 1200], fmt <- [:avif, :webp, :jpg] do
+      # Only AVIF and WebP are pre-generated (JPEG is on-demand)
+      for w <- [400, 800, 1200], fmt <- [:avif, :webp] do
         assert File.exists?(cache_path(image.id, w, fmt)),
                "Missing #{w}.#{fmt}"
       end
 
+      # JPEG should NOT be pre-generated
+      refute File.exists?(cache_path(image.id, 400, :jpg))
+
+      # Thumbnail is still pre-generated as JPEG
       assert File.exists?(cache_path(image.id, "thumb", :jpg))
     end
 
     test "generates only applicable widths for smaller image" do
       # Create fixture with smaller source width
-      {:ok, webp, _w, _h} = Optimizer.to_lossless_webp(sample_jpeg())
+      {:ok, webp, _w, _h} = Optimizer.to_optimized_webp(sample_jpeg())
 
       image =
         %SimpleshopTheme.Media.Image{}
@@ -106,10 +125,11 @@ defmodule SimpleshopTheme.Images.OptimizerTest do
   end
 
   describe "disk_variants_exist?/2" do
-    test "returns true when all variants exist" do
+    test "returns true when all pre-generated variants exist" do
       image = image_fixture(%{source_width: 1200, source_height: 800})
       {:ok, _} = Optimizer.process_for_image(image.id)
 
+      # Should return true even without JPEG (only checks AVIF/WebP)
       assert Optimizer.disk_variants_exist?(image.id, 1200)
     end
 
@@ -118,4 +138,36 @@ defmodule SimpleshopTheme.Images.OptimizerTest do
       refute Optimizer.disk_variants_exist?(image.id, 1200)
     end
   end
+
+  describe "generate_jpeg_on_demand/3" do
+    test "generates JPEG variant and caches to disk" do
+      image = image_fixture(%{source_width: 1200, source_height: 800})
+
+      # JPEG shouldn't exist yet
+      refute File.exists?(cache_path(image.id, 400, :jpg))
+
+      # Generate on-demand
+      {:ok, path} = Optimizer.generate_jpeg_on_demand(image.data, image.id, 400)
+
+      assert File.exists?(path)
+      assert path == cache_path(image.id, 400, :jpg)
+    end
+
+    test "returns cached path if JPEG already exists" do
+      image = image_fixture(%{source_width: 1200, source_height: 800})
+
+      # Generate first time
+      {:ok, path1} = Optimizer.generate_jpeg_on_demand(image.data, image.id, 800)
+      {:ok, %{mtime: mtime1}} = File.stat(path1)
+
+      Process.sleep(1100)
+
+      # Generate second time - should return cached
+      {:ok, path2} = Optimizer.generate_jpeg_on_demand(image.data, image.id, 800)
+      {:ok, %{mtime: mtime2}} = File.stat(path2)
+
+      assert path1 == path2
+      assert mtime1 == mtime2, "File was regenerated instead of cached"
+    end
+  end
 end
diff --git a/test/simpleshop_theme_web/controllers/image_controller_test.exs b/test/simpleshop_theme_web/controllers/image_controller_test.exs
index 67af055..0894f88 100644
--- a/test/simpleshop_theme_web/controllers/image_controller_test.exs
+++ b/test/simpleshop_theme_web/controllers/image_controller_test.exs
@@ -3,8 +3,10 @@ defmodule SimpleshopThemeWeb.ImageControllerTest do
 
   alias SimpleshopTheme.Media
 
+  # Minimal valid PNG (1x1 transparent pixel)
   @png_binary <<137, 80, 78, 71, 13, 10, 26, 10>>
   @svg_content ~s(<svg xmlns="http://www.w3.org/2000/svg"><circle fill="#000000" r="10"/></svg>)
+  @sample_jpeg File.read!("test/fixtures/sample_1200x800.jpg")
 
   describe "show/2" do
     test "returns 404 for non-existent image", %{conn: conn} do
@@ -13,19 +15,21 @@ defmodule SimpleshopThemeWeb.ImageControllerTest do
     end
 
     test "serves image with proper content type and caching headers", %{conn: conn} do
+      # Upload a real JPEG which gets converted to WebP
       {:ok, image} =
         Media.upload_image(%{
           image_type: "logo",
-          filename: "test.png",
-          content_type: "image/png",
-          file_size: byte_size(@png_binary),
-          data: @png_binary
+          filename: "test.jpg",
+          content_type: "image/jpeg",
+          file_size: byte_size(@sample_jpeg),
+          data: @sample_jpeg
         })
 
       conn = get(conn, ~p"/images/#{image.id}")
 
-      assert response(conn, 200) == @png_binary
-      assert get_resp_header(conn, "content-type") == ["image/png; charset=utf-8"]
+      assert response(conn, 200)
+      # Image is converted to WebP for storage
+      assert get_resp_header(conn, "content-type") == ["image/webp; charset=utf-8"]
       assert get_resp_header(conn, "cache-control") == ["public, max-age=31536000, immutable"]
       assert get_resp_header(conn, "etag") == [~s("#{image.id}")]
     end
@@ -37,7 +41,27 @@ defmodule SimpleshopThemeWeb.ImageControllerTest do
       assert response(conn, 404) =~ "Image not found"
     end
 
-    test "falls back to full image when no thumbnail available", %{conn: conn} do
+    test "generates thumbnail on-demand and serves as JPEG", %{conn: conn} do
+      # Upload a real image to test thumbnail generation
+      {:ok, image} =
+        Media.upload_image(%{
+          image_type: "logo",
+          filename: "test.jpg",
+          content_type: "image/jpeg",
+          file_size: byte_size(@sample_jpeg),
+          data: @sample_jpeg
+        })
+
+      conn = get(conn, ~p"/images/#{image.id}/thumbnail")
+
+      assert response(conn, 200)
+      # Thumbnail is served as JPEG
+      assert get_resp_header(conn, "content-type") == ["image/jpeg; charset=utf-8"]
+      assert get_resp_header(conn, "cache-control") == ["public, max-age=31536000, immutable"]
+    end
+
+    test "falls back to full image when image data is invalid", %{conn: conn} do
+      # This uses an invalid PNG header that can't be processed
       {:ok, image} =
         Media.upload_image(%{
           image_type: "logo",
@@ -49,8 +73,8 @@ defmodule SimpleshopThemeWeb.ImageControllerTest do
 
       conn = get(conn, ~p"/images/#{image.id}/thumbnail")
 
-      assert response(conn, 200) == @png_binary
-      assert get_resp_header(conn, "content-type") == ["image/png; charset=utf-8"]
+      # Falls back to WebP since that's what we tried to convert to
+      assert response(conn, 200)
     end
   end
 
diff --git a/test/support/fixtures/image_fixtures.ex b/test/support/fixtures/image_fixtures.ex
index 685c49d..4ac6d48 100644
--- a/test/support/fixtures/image_fixtures.ex
+++ b/test/support/fixtures/image_fixtures.ex
@@ -11,7 +11,7 @@ defmodule SimpleshopTheme.ImageFixtures do
   def sample_jpeg, do: @sample_jpeg
 
   def image_fixture(attrs \\ %{}) do
-    {:ok, webp, w, h} = SimpleshopTheme.Images.Optimizer.to_lossless_webp(@sample_jpeg)
+    {:ok, webp, w, h} = SimpleshopTheme.Images.Optimizer.to_optimized_webp(@sample_jpeg)
 
     defaults = %{
       image_type: "product",