You may be researching some online businesses to start. You come across dropshipping and print on demand and wonder what the differences between the two are and which one has a higher chance of success.
Both print on demand and dropshipping are viable business models to kickstart your entrepreneurial dreams and potentially build a successful business. In this guide, we will compare different aspects of these two business models to help you choose the best fit for you.
What is Print on Demand?
Print on demand is a low-risk business model that allows you to sell items with your unique designs without an inventory. You create your designs, upload them to a POD service, and list them on your website. When customers make an order, the POD company you work with will print the designs on your items and ship them to your customers.
What is Dropshipping?
Dropshipping is a similar business to print ondemand, where you sell products without an inventory. You are essentially a middleman between suppliers and customers. You find products that are selling well, list them in your store at a markup, and when someone buys, you order from your supplier, who ships directly to your customers.
The Similarities Between POD and Dropshipping
Even though POD and dropshipping are two different business models, they are fundamentally the same and share many similarities.
Selling without an inventory
Both are essentially inventory-free business models. Whether you’re selling custom t-shirts or trending gadgets, you don’t have to buy products upfront and store them in your garage. Products are only created or purchased from suppliers after a customer places an order, significantly reducing your risk.
Third-party fulfillment
The third-party fulfillment aspect is identical too. In POD, companies like Printful or Gooten handle production and shipping. In dropshipping, your supplier does the same thing. You’re basically the middleman connecting customers with fulfillment services. This means you can run either business from anywhere with an internet connection.
Low barrier to entry
Low barrier to entry is another huge similarity. You don’t need a business degree or a huge upfront investment. You can start a basic Shopify store and learn everything through YouTube and a trial. The learning curve exists, but it’s achievable.
Marketing Strategy
Both models are heavily dependent on digital marketing. Whether you’re selling custom mugs or dropshipped phone accessories, affordable marketing strategies are crucial. For example, social media marketing strategy is widely used instead of expensive traditional marketing strategies such as billboards, TV commercials, or direct mail campaigns.
Scaling Strategy
Once you have validated your product idea or your design on POD. You will need to reinvest profits into testing new products or designs to drive more sales in order to grow your business. The timeline might be different, but the growth principles are the same.
Exit Strategy
POD and dropshipping are both just business models to test your products and designs; they are not the long-term solutions for maximizing profit margins. Once you have confirmed the market demand, you will have to consider alternative fulfillment strategies like working with 3PLs (third-party logistics) or even establishing your own production.
Now let’s go through the differences, pros, and cons of POD and dropshipping.
The Pros and Cons of Print on Demand
Let me give you the unfiltered truth about POD based on three years of running multiple stores.
The Pros of POD
Creative control
What you are selling in POD is not the products, but your creative designs. It allows you to fully express your creativity, create countless winning “products,” and is not limited by suppliers’ catalogs compared to dropshipping.
Scalable design assets
Once you create a winning design, it can generate income for years with minimal additional work. Unlike dropshipping, where the products can be easily saturated or copied by competitors, your designs are less susceptible to rapid market saturation.
Premium pricing potential
People are willing to pay more for custom, unique products or your brand. The same products can become unique and have higher perceived value that customers will happily pay for just because of your designs or brands. Whereas, in dropshipping, customers are prone to searching for cheaper alternatives.
The cons of POD
Design creation can be time-consuming
Unless you’re an experienced designer, you might spend hours creating multiple designs only to find a single one sells well. Getting inspiration can also be challenging, even for the most experienced POD owners, who sometimes struggle with coming up with fresh ideas.
Copyright problems
One aspect you have to be vigilant about in POD is copyright issues. You might think that your designs are original, but they may be products of subconscious influence, where previously seen concepts resurface as seemingly new ideas. If you are using an AI image generator to create your designs, you should also verify the terms of use for commercial applications of AI-generated content.
Quality control issues
To ensure the quality of the products you plan to sell, you might have to go through a process of testing different POD suppliers before nailing down your partners. Furthermore, occasionally, even a reputable POD company can send products that don’t meet the standard to your customers. When quality issues happen, it reflects on your brand even though you didn’t make the product.
Seasonal fluctuations
A POD business can be highly seasonal, especially if you are in the apparel niche. Some products, such as sweaters and hoodies, will experience a dip in demand in summer. You will need to develop strategies to adapt to these seasonal changes.
The Pros and Cons of Dropshipping
Before you make up your mind and choose POD, let’s go through the pros and cons of dropshipping.
The pros of dropshipping
Explosive scaling potential
Dropshipping has higher scaling potential because when you find a winning product, you can go from $100/day to $1,000/day in weeks just by increasing ad spend. One reason for this is that the products you find can be appealing to a larger audience; think about a viral gadget compared with a t-shirt with a “protect the earth” design.
Another factor that limits the scaling potential of print-on-demand is, as discussed, the design speed as well as the production speed. In POD, your products are only created when a customer places an order, but in dropshipping, the products are created and ready to be shipped.
No design skills required
Although you can succeed in POD without design skills, it can put you at a disadvantage when facing competition. But with dropshipping, that problem is out of the equation. You’re selling existing products; you don’t need creative talent; you just have to find them!
Profit from Trends
Unlike print on demand, following the trends and selling viral products is literally one of the strategies of most dropshippers. Viral TikTok products, seasonal items, and trending gadgets create temporary goldmines for fast-moving dropshippers. Being first to market with trending products can generate massive profits quickly.
However, it’s important to note that it can get saturated quickly if you don’t improve the product and maintain your competitive edge.
The cons of dropshipping
Customer service
Dropshipping has higher refund and return rates than print on demand. Apart from quality issues, customers often request refunds when they find the same product available at a lower price elsewhere. Dealing with shipping delays, quality complaints, and return requests will consume a significant amount of your time and resources.
Supplier reliability issues
I’ve had a supplier send the wrong sample products twice, couldn’t imagine what problem that would cost me if it happened to my customers. Furthermore, finding good-quality products can be challenging too, as there is competition among the suppliers, and they often compromise on quality to win bids.
Intense competition
Every winning product gets flooded with copycats within weeks. Profitable products will become unprofitable overnight when you don’t have a sustainable competitive advantage and when 50 other stores are selling them.
Shipping time complaints
Most of your products will be sourced from China. Although local suppliers are a solution, the product variety is often limited. Customers expect Amazon-level shipping speeds, and most suppliers won’t be able to compete with that. Long shipping times will lead to complaints, chargebacks, and negative reviews. Clear communication before customers place an order is important.
Constant product hunting
Unlike POD, where successful designs can sell for years, dropshipping products have short lifecycles. As we have emphasized numerous times, if you don’t quickly solidify a strategy to secure a competitive edge
You might be thinking POD is the winner here, as it has fewer cons than dropshipping. Not necessarily. Both models can work, but they require different skills, mindsets, and risk tolerances.
Continue reading as we delve deeper and compare POD and dropshipping.
Print on demand and dropshipping comparision
Startup Costs
None of the business models is completely free to start; both will require you to invest some money upfront before you can start making a profit. Let’s go through the expenses for each business model.
Print on demand expenses
Some of the costs are optional, but most of them are necessary in order to run a POD business.
Essential:
- Platform costs: Shopify basic plan ($29)
- Sample product: can range from $5 to $100
- Domain fee – $10/year
Optional:
- Various Shopify apps
- Canva Pro subscription: $12.99/month
You can see why print on demand has a low barrier to entry, you can potentially start a business with under $100. No inventory, no minimum orders, no warehousing costs. Every product is made to order, so you’re never stuck with unsold inventory gathering dust in your garage.
But here’s the catch, your profit margins are lower compared to bulk manufacturing because the production costs are higher. You’re paying for convenience and flexibility.
Dropshipping expenses
Dropshipping startup costs are higher than print on demand, here is the breakdown of the expenses:
Essential:
- Platform costs: Shopify basic plan ($29)
- Sample orders: range from $20 to $100
Optional but RECOMMENDED:
- Product research tools: e.g. Minea for $49/month
- Various Shopify Apps
First of all, dropshipping has higher startup costs because the products themselves are generally more expensive. Apart from that, though free product research methods can help you find winning products, they are more competitive and less effective. Investing in a product research tool like Minea can significantly increase your chance of success, and hence it’s strongly recommended. Lastly, if you wish to rapidly test various products in a short time frame, running ads is the only way to do that. These all add up to the startup cost of dropshipping, making it a more expensive option compared to print on demand.
Profit Margins
Print on demand gives you a higher profit margin potential. Think about testing the idea you have about creating a unique brand. Many brands are using the same material and have similar designs, but some are able to price their items higher, while others opt for more affordable pricing. The difference lies in their brand identity.
Print on demand provides a potential for greater profit margins because you can create a brand that resonates with your target customers, offering them more than just a product or a unique design, but also a status or identity.
In contrast, the problem with dropshipping is that you are selling products that can be sourced easily (most of the time). That means your competitor can sell the exact same product. They look the same and function the same, making it nearly impossible to brand the product itself as unique.
The only way you can differentiate from your competitors is the quality of the product and pricing/offers. Customers usually don’t buy the same item from multiple dropshippers to compare quality, meaning they often won’t discern if your product is superior. Therefore, quality can’t be your primary competitive edge.
It then all comes down to your pricing/offers. Whoever offers the cheaper version of the same product will win the sale, making it a battle of price, eroding your profit margins.
Time Investment
If you have a full-time job and are thinking of starting a side hustle from one of these business models, time investment will be a major factor to consider.
Out of the two, POD will require a greater time investment in comparison to dropshipping. Effective market research is a prerequisite for both ventures. In dropshipping, market research is the process of finding promising products that can go viral or that can solve people’s problems.
In POD, market research is where you find inspiration by studying others’ designs, checking the trends, and finding out what sells well.
Once you have found a couple of products to test, you can start creating content to get reach and drive traffic to your store. The same process is required for POD, however, an extra step of creating your own designs is needed before, and it’s probably the most time-consuming step for most people. As you are creating something, instead of just searching for products.
Getting inspiration and ideas to create your own products may not be as straightforward as you have imagined. Even experienced POD entrepreneurs struggle to create successful, fresh designs, let alone beginners. Spending hours in front of your laptop, staring at a blank screen or endlessly tweaking, scrapping, and recreating a new design is common. You can shorten this timeframe, but it comes with higher costs for hiring design help from websites like Fiverr.
Market Saturation
Here’s an honest truth that will surprise you – both markets are actually quite competitive. POD is less saturated than dropshipping, with a higher opportunity of finding a gap in the market.
Yes, there are millions of t-shirt designs on Amazon, but there are also thousands of untapped niches waiting for the right design. It may seem saturated to you because you are trapped in a bubble by only seeing what’s currently popular or visible.
Coming up with a completely novel idea and hence associated designs is possible, but the chance is slim. It’s much easier to go narrow. For example, instead of “ funny cat shirts,” maybe think about targeting a smaller niche, such as “ Maine Coon cat owners.” (That’s just an example, but let me know if it turns out to be a successful niche for you.) The audience is smaller, but they pay premium prices for designs that speak directly to them.
Dropshipping saturation is more obvious. Every trending product gets flooded with sellers within weeks. However, it doesn’t suggest that it’s impossible to make it work. There are still many dropshippers out there making a fortune by becoming quicker at finding trending products and giving better deals.
Scalability
Finally, we will compare both POD and dropshipping in terms of their capacity to grow. We will examine two key aspects of scalability: speed of growth and ultimate growth potential.
First, speed of growth. POD has lower scalability potential due to the time investment required to create products. Dropshipping allows you to test different products more rapidly, and hence, it takes less time to find winning products. Furthermore, when you have found your winning products, you can start spending money on social media ads and potentially 10x your sales overnight. This is unlikely with POD, since it’s more like building a brand; it generally takes more time to attract your ideal audience and convert them into your customers.
Second, ultimate growth potential. The markets for each business model are different. In POD, the success lies in niching down and resonating with a specific, smaller audience. In dropshipping, your products generally appeal to a broader, more general audience. Due to this market size disparity, POD typically has a more limited growth ceiling than dropshipping.
In conclusion, POD has less scaling potential than dropshipping due to the design creation speed and niche size.
Which Business Model Should You Choose?
Both dropshipping and print on demand are viable online businesses to start, but which one should you choose? Here are considerations to help you decide:
Choose Print on Demand if:
- You’re creative and enjoy design work
- You prefer building long-term assets over quick wins
- You want more predictable, sustainable income
- You enjoy connecting with niche communities
Choose dropshipping if:
- You’re comfortable with high-risk, high-reward scenarios
- You have higher startup capital
- You’re good at spotting trends and moving fast
- You want potential for rapid scaling
- You can handle customer service demands
Conclusion
Both print on demand and dropshipping can make you money, but neither is the “get-rich-quick” solution that social media gurus make them out to be. There will be an initial period of learning and potential financial losses from failed products or designs before you achieve consistent profitability in these businesses.
And remember, these business models are not your long-term solutions; they are a low-risk way to explore market demand. Once you have validated market demand, you have to transition to a more sustainable model, often by optimizing your supply chain, improving product quality, and building a stronger brand.
Ready to transform your designs into a thriving business? Shopify is the best platform for starting a print-on-demand business, offering unmatched tools and support for your creative journey.
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