To Produce or to Drop-Ship?

Still running on the high of my first orders yesterday!

One of the first major decisions I had to make once I decided to start an Etsy t-shirt side-hustle was whether I wanted to own the end-to-end production of my products, or outsource to a production/drop-ship partner. Well TBH it was a pretty easy decision for me based on the reasons I outline below, but it is a pretty critical decision.

First off – what exactly is drop-shipping? Drop-shipping is a supply chain term meaning that a retailer/seller is working with a manufacturer/production partner/fulfillment partner to directly ship products to customers. The retailer owns the customer interface & relationship – marketing, merchandising, accepting customer orders, and customer service. Once an order comes in, the seller/retailer forwards it to the drop-ship partner (either manually or automatically through an API/integration), and the drop-ship partner sends the product straight to the customer. A key advantage for a retailer/seller is they don’t have to hold any inventory themselves, while the drop-shipper can take a larger cut of the profits for providing this service.

How does this apply for an Etsy (or other platform) t-shirt/merchandise business?  If you’re looking to sell t-shirts/mugs/other pretty common merch on Etsy, there are a handful of drop-ship partners who will help support from the production/printing of the products all the way through mailing them to customers – so you never even touch the physical product.

What are the trade-offs to consider?

Using a Printing Production Partner / Drop-Shipper

Advantages:

  • Little to no up-front costs in equipment/inventory, making it an easy way to test the waters without a big investment of money/space/time
  • Wide variety of products to choose from, from different types / brands of shirts to mugs to tote bags to coffee mugs to iphone cases
  • Wide depth of sizes & colors within each product category – one of the challenges with apparel is the large number of color/size variants. Especially as you’re just starting out, there is a huge trade-off between offering your customers a wide range of options and maintaining inventory across these variants. Using a production service helps you to achieve this.
  • Little technical knowledge/skill required. Thankfully I’m comfortable enough with PhotoShop to throw some basic designs together (though if you aren’t, you can outsource this part too!). However, I’ve never done any screen printing or direct to garment printing. This saves me from having to learn & perfect a new skill before getting my side hustle up and running.
  • Minimal time required to run the business. Once your products are loaded into Etsy via your printing partner, if they are properly integrated the orders will feed directly from Etsy to the partner. This allows you to spend your time on designing new products and marketing to continue to grow your business while your partner fulfills orders in the background

Disadvantages

  • Lower profit margins, since obviously the partner will be taking a cut of the pie. By my rough estimate, for a given t-shirt, you’re giving up about $4-8 in profit per shirt. This will vary based on what wholesale price you’re able to get for your plain t-shirts. That’s a good amount of money on a ~$20 t-shirt!
  • Longer lead times to fulfill orders. My partner usually prints orders within 2-7 days, so it can easily be up to 2 weeks before my customer receives the product. Not ideal from a customer relationship perspective.
  • Less control over the entire process. When you run the entire process, you control everything from the materials used to the placement of the design on every garment to the printing/silk-screening process. I’m generally the type of person who likes control so letting go of all of that is tough! I got 2 orders yesterday, and I’ll never even see these before they go out to my customers!
  • Harder to test things. When you own the printing process, it’s much easier to test new designs, colors, and processes. With a printing partner, you can only test things by paying for sample merchandise. While they offer good discounts for a limited number of samples a month, this gets costly and requires waiting 2+ weeks to get your samples so it can be tough to be nimble.

Like I said, for me it was a fairly simple decision mostly because I live in a small New York City apartment so I don’t really have much extra space to hold inventory or equipment. Also, I’m not really too sure on how this will work out for me, so using a partner has made it much lower risk to get started.

Honestly, for most people it probably makes sense to use a production partner, at least until you scale up your business – unless you already happen to be a screen-printing pro and you have a ton of space to store inventory in your home!

I personally decided to use Printful for my Etsy t-shirt shop, and it’s been great so far. PrintAura is the other main option I considered. More to come later this week on my comparison of the two!

 

 

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2 thoughts on “To Produce or to Drop-Ship?

  1. Pingback: Printful vs PrintAura – which t-shirt printing partner to use for Etsy? – Diary Of A Side Hustler

  2. Pingback: Getting started with merch design – Diary Of A Side Hustler

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