Thinking between print-on-demand and dropshipping for your brand-new online venture?
Many other business owners consider the two options and their advantages and disadvantages. To help you decide, I am going to do the same.
What is Print on Demand?
Print on demand (POD) is a business model in which an online retailer partners with a custom printing company that produces a certain item and ships it only when someone orders it. This allows business owners to sell unique custom clothing, accessories, custom stationery, etc., without maintaining a large stock.
Process: A customer places an order in an online store. POD provider will receive the order, and they will:
- Find a Whitelabel item,
- Customize its design,
- Pack it up, and
- Send it to the consumer.
Print on Demand Pros and Cons
What the POD business model has to offer often catches the new entrepreneur’s eye. However, to make the most of it, you must understand its advantages and disadvantages to get the whole picture.
Customizable: A business owner works with POD providers to create original product designs. You have much more control over what the end product looks like. Many business owners work with designers, illustrators, and freelancers to create original designs.
Less Competitive: POD allows businesses to offer original designs on products. Even while POD companies compete to sell t-shirts, custom mugs, wallets, etc., there is still potential to attract customers as no two stores will offer the same original designs.
Can support brand building: Since your products have a chance to stand out as unique in the market due to the customizability option, the POD business model supports brand building. Say you are an Etsy print-on-demand business offering socks with superhero prints. You can market your brand with unique designs and set yourself apart.
Cross/Upselling is easier: With POD, you save money on shipping bulk purchases. You can use cross-selling and up-selling to keep the shipping prices down and attract more customers. Offer a free accessory with two t-shirts or create a product bundle to entice more purchases at lower costs.
Expensive: While print-on-demand allows for unique designs, the profit margins are low due to expenses. In addition to the higher base price, shipping is often high. Most shoppers value free delivery; thus, providing it may boost sales. However, paying for delivery costs can considerably eat into your profit margin.
Design quality matters: The most significant part of the POD business is the design. Therefore, the quality of design is a deciding factor in the purchase. The POD business model costs more, so you must set good margins to profit considerably. Your designs must do justice to the price to attract customers to sell with those margins.
What is Dropshipping?
Dropshipping is very similar to the POD business model. It is the POD business model sans the customization part.
Retailers use the dropshipping fulfillment technique because it enables them to offer items without worrying about stocking inventories.
Once a customer places an order on your store, your supplier will send the product to your customer on your behalf.
The Process: After a customer places an order on your online shop, your drop shipping provider will:
- Get the item from the stock,
- Pack it up, and
- Ship it to your customer.
Dropshipping Pros and Cons
We already know the pros and cons of print-on-demand. To compare the two business models fairly, we must also understand the pros and cons of dropshipping.
Quick order fulfillment: Since there is no product customization in dropshipping, vendors can ship the products as soon as they receive an order. Therefore, fulfilling orders in dropshipping is quicker than print-on-demand.
More profits: Because no printing or customization is involved, suppliers may launch the product at a cheaper price point. You may provide free shipping to customers since the shipping expenses are cheaper than they would be with POD. Therefore, your net margins will improve.
Diverse product range: Offering choices is crucial in dropshipping. You may stock it with either trending items or evergreen classics. Your store will appeal to a larger customer base because of the customization options.
No customization: The dropshipping model doesn't offer customization. This means you don't enjoy creative freedom over the products and can't differentiate yourself from others selling the same.
While you can get around this by negotiating with your supplier to include your logos on the items you sell, it won't always be enough to keep up with the competition.
Very competitive: Since you have little say over the look of the final product, it might be hard to convince customers to buy from you instead of a competitor. You either provide a difficult-to-deny low price point or work with suppliers that promise high quality and help you build a reputation over time.
Difficult to brand: Branding is sometimes an issue for dropshipping businesses since their items are often too similar to their competitors. If you're betting on quality, it usually takes time and strong marketing efforts to imbibe that in the brand image.
What to Consider When Choosing Between Dropshipping and POD?
By this time, you should understand that every business model has its pros and cons. However, it doesn't necessarily mean that all the above advantages and disadvantages may affect you. To choose wisely, you must consider:
1. The Goal of Your Business
When you're trying to pick between the two options, think of the following:
- Do you want to build a brand quickly?
- Do you want to make money quickly?
If your choice is number 1, then the obvious answer for you is the POD business model. The unique designs will help you rise above the competition and make a name for yourself.
However, if your choice is number 2, POD might not be the best. High product costs, shipping costs, and additional costs of creating unique designs (if you hire a designer) will tighten your profit margins. In that case, it's a good idea to choose dropshipping.
2. The Target Audience
Another aspect to consider when starting a business is what kind of audience you want your business to call for. Print-on-demand business will:
- Narrow down your niche and
- Call for a very specific group of people looking for particular things.
Example: Fan merchandise for a band called Odesza will only be Odesza's fans.
On the other hand, dropshipping often:
- Targets a broad, generic group of people.
- Offers a wide range of products.
Example: Selling all types of clothes will appeal to everyone looking to buy clothes.
It's important to understand that having a wide target audience may not always work in your favor. A broad market comes with some hard-to-beat challenges, such as:
- A very competitive landscape
- Difficulty in finding unique ways to market yourself
- Increased marketing and customer acquisition costs
- Tough time building a community and customer loyalty
- Ability to brand yourself as an industry leader
3. Your Budget and How Much Can You Invest
The last thing you must consider when choosing between the two is how much money you will put into your business.
We already know that there are zero to minimal upfront payments in both business models:
- There's no need to hold an inventory
- You only pay for the item when the customer places an order.
However, over time, you'll understand that the amount of money invested in each business differs.
In the POD business model, you invest money in:
- Higher shipping rates and product costs
- Selling on a platform or building a website
- Design tools
- Design professionals/freelancers (if you hire)
- Marketing efforts
In the dropshipping business model, you invest money in:
- Lower shipping rates and product costs
- Selling on a platform or building a website
- Higher marketing efforts
Because the POD business model has higher shipping rates, product costs, and other design-associated costs, the profit margins will be tight in the initial time frame. However, the uniqueness of your designs and lower competition in the market allows you to set yourself apart more easily. This means marketing costs will be lower.
On the other hand, the dropshipping business model provides higher profit margins in the initial time frame. Yet, due to its generic nature, marketing is the most expensive part of running a dropshipping business.
Brand Building and Controlling Your Production Process
Using print-on-demand (POD), companies may differentiate themselves from rivals by selling unique products and simplifying brand development. Dropshipping also provides brand expansion opportunities but in a different way.
- Your unique designs can be your unique selling point (USP), and you can focus on establishing a reputation founded on creativity and innovation.
- You can niche down and speak to a specific audience, making marketing your products easier.
- Your creative designs can help distribute the load of marketing expenses and inspire how to display oneself across multiple promotional mediums best.
- Lack of customization means less focus on design and more focus on customer experiences. Stress on quality and customer service.
- Narrow down your target audience by speaking to certain interests. For example, call for eco-friendly folks with sustainable items.
- Use storytelling to connect with customers emotionally and give your brand more depth.
Both the POD and dropshipping models rely heavily on quality assurance. Quality assurance in POD must be rigorously practiced at all times. Choosing suppliers that consistently utilize premium white-label items is the best method to guarantee the quality of your products. It's important to check out a sample of your work before putting it out into the world.
Similarly, when dropshipping, find reliable suppliers with proper due diligence. Choose suppliers that have a track record of timely delivery of high-quality products. Ensure lines of communication are open so that any problems with the goods can be dealt with promptly and clear terms can be negotiated for damaged or broken items.
Explore Which Business Model Would Attract More Sales Based on Your Marketing Strategy
Dropshipping and print-on-demand are both viable options for entrepreneurs. However, the time it takes to realize a return on investment (ROI) varies.
With dropshipping, it's easy to make more money quickly. You can attract more sales by offering highly competitive prices in the market. Adding a unique selling proposition (such as being eco-friendly or owned by women) to undeniable prices is hard to resist. Use creativity in selling your USP in your marketing plan.
Meanwhile, with print-on-demand, marketing is a breeze. The unique products in itself are a selling factor. However, as was said before, it may be much more effective when combined with a USP. There will be more chances to sell across channels as the business grows and its client base becomes more loyal, ultimately raising the potential for sustained profitability.
Whether you choose a POD or Dropshipping business model, your marketing strategy will significantly impact your bottom line. Here are some potential advertising strategies for each product line:
- Narrow down your audience: Find online forums, social network groups, and pages that share an interest in your one-of-a-kind works and join in the conversation there.
- Influencer marketing: Join hands with influencers that speak to your audience and market your products to reach more people.
- Content marketing: Generate more content with blogs or social media posts. You may write about your process, videotape your design creation, and more.
- SEO: Increase your website visibility on search engines using keywords, meta tags, etc.
- Use paid ads: Use Google or social media to showcase your diversified product range and get more customers.
- Use trends: Spotlight specific items by capitalizing on shifts in consumer tastes and buying habits.
- Flash sales and promotions: Use time-sensitive discounts and promotions to create demand and boost sales.
With this article, you should clearly understand the differences between the POD and dropshipping model. Both have pros and cons, but the ideal for you as an entrepreneur will rely on your needs and the resources you have at your disposal.
I hope that this article helps in your decision-making. However, new business owners should be aware that either choice is excellent, affordable, and competitive in their ways.
Interested in starting a dropshipping business? I've bought and reviewed the best dropshipping courses to help you choose the best training.
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