When space and money are tight, launching an ecommerce business can feel like a moonshot. You can rack up costs by either manufacturing your own products or placing wholesale orders, waiting for sales to come through while your living room fills with product. And you’ll still need the time and funds to take product photos for your online store, market your brand, and hand-pack each box for shipping.
Luckily, there are two ecommerce business models to simplify your set-up: print-on-demand and dropshipping, two cost-efficient and space-saving ways to get your business going. Read on to compare the print-on-demand vs. dropshipping business models and decide which approach is best for you.
What is dropshipping?
Dropshipping is a retail fulfillment method that allows you to launch an ecommerce brand without having to manufacture, buy, store, or ship inventory yourself. Instead, sellers use dropshipping suppliers—businesses that maintain and ship a large portfolio of products. By outsourcing order fulfillment, online business owners reduce overhead costs and the need for storage space.
In a dropshipping business model, ecommerce business owners, or “sellers of record,” select products from a dropshipping supplier and list them in their online store. Once a customer places an order, the seller forwards it to the dropshipping supplier, who fulfills the order on the seller’s behalf. Shopify store owners can use powerful apps available in the Shopify App Store to source products from suppliers. Apps include DropCommerce for dropshipping in the US and Syncee for the EU and the rest of the world.
What is print on demand?
Print on demand (POD) is a type of dropshipping business model that allows you to sell products without purchasing or managing inventory, but with a custom-designed element.
In print on demand, sellers create a design, like custom artwork or a brand logo, then select products from a print-on-demand supplier to apply the design to. Apparel, accessories, mugs, and posters are popular print-on-demand products. The seller lists the products and artwork options in their online store, and once a customer places an order, the supplier prints, packages, and ships it to the customer. Shopify store owners can integrate with suppliers like Printful to easily start their POD businesses.
Print on demand vs. dropshipping: similarities
Both dropshipping and print-on-demand business models shift the work of managing stock and fulfilling orders to third-party suppliers. Here’s how the models are similar:
No physical store or warehouse
A key component of both dropshipping and print-on-demand models is the absence of a physical store. Suppliers ship products directly to the customer after an order has been placed, so there’s no need for you, the ecommerce business owner, to store it either. This is a large part of what makes it so easy for individuals to launch either style of business. The overhead costs associated with leasing, furnishing, and staffing a retail store or warehouse are nonexistent.
Limited inventory management
Since both dropshipping companies and print-on-demand companies create, store, and ship products to customers, ecommerce business owners don’t need to devote resources to traditional inventory management. However, you can still follow inventory management best practices to improve your operations.
Use real-time inventory management tools to:
- Sync with your suppliers and prevent stockouts
- Forecast demand and plan for increases or decreases
- Keep open lines of communication with suppliers to stay abreast of product trends and potential issues
Supplier reliability
Both print-on-demand and dropshipping businesses rely on suppliers not just for the products they sell, but for packing and shipping as well. Which is why it’s important to choose a supplier you trust to represent your brand experience, with high-quality products that you feel you can stand behind.
Before contracting with a supplier, ask about product samples and packaging to assess product quality yourself before listing them for sale. It may also be a good idea to have multiple suppliers on your roster, even for the same product, so a single supplier’s shortfall doesn’t impact your business.
Low startup costs
By outsourcing supply and shipping, both models have far fewer startup costs than a traditional wholesale business, allowing you to direct more time and budget toward marketing, branding, and customer service.
Print on demand vs. dropshipping: differences
Though the order fulfillment flow of both models is almost identical, print on demand and dropshipping differ in a few ways:
Customization
Print on demand relies on unique custom designs that translate your brand personality into tangible products. Some dropshipping suppliers offer custom packaging for business owners using branded dropshipping, but you can dropship products without doing any customization. The design is the product you’re responsible for in POD, while in dropshipping, you aren’t responsible for any product creation.
Product selection
Dropshipping suppliers offer a wide variety of ready-to-ship products, often categorized into niches, like home goods or electronic accessories. Some suppliers, like DropCommerce, feature small independent brands and businesses in their portfolios.
Print-on-demand suppliers provide a variety of ready-to-customize products. Printful, for example, features a range of familiar, comfortable t-shirt brands that customers recognize, like Gildan or American Apparel, alongside blank tote bags, phone cases, and more.
Competition
Chances are, your dropshipping supplier is providing products to multiple ecommerce stores. That means many stores may have the same products, or very similar ones, at roughly similar prices.
Because of this, ecommerce businesses relying on dropshipping benefit from an increased focus on merchant differentiation. This could mean curating unique product portfolios or creating a brand identity that draws customers to their site, rather than relying on the pull of the products alone.
Because print on demand applies a custom design to different products, the inventory is unique and more likely to find its niche.
Branding
In print on demand, branding is front and center, since it’s a way for brands to create apparel and merchandise emblazoned with their logo, slogans, limited-edition capsules, and more. Dropshipping offers fewer branding opportunities. Packaging and delivery leave little room for personalization, and dropshipping products are rarely exclusive to a single retailer.
Return support
Most dropshipping suppliers have return policies allowing refunds, exchanges, or returns, especially due to supplier error or damaged goods. Dropshipping products are selected from an existing catalog, so replacing them is relatively easy.
Because dropshipping stores are not in charge of inventory, they act as an intermediary between customers and suppliers, communicating policy details and order statuses as needed. Check with your supplier about returns and refunds, and shape your customer-facing policy accordingly.
By contrast, the custom nature of print-on-demand products makes returns tricky. Since each order is created as it comes in, some print-on-demand suppliers may require customers to cover the return cost or may not offer full refunds. This could require you, as the seller, to cover the cost of the return or exchange, for example, or enforce a strict return policy.
Print on demand vs. dropshipping FAQ
Is print on demand or dropshipping better?
Print on demand is a better fit if you want to sell your own custom products or branded merchandise, you’re brand-focused, and you enjoy the design process. Dropshipping is best suited to retailers who are sales-driven, not brand-focused, and skilled in marketing and driving traffic. Depending on your business, you may combine the two approaches.
Is print on demand the same as dropshipping?
Print on demand is a type of dropshipping model. Dropshipping includes any arrangement where the supplier packages and ships goods as individual orders come in from the retailer’s online store. For example, you can dropship anything from shoes and soccer balls to portable vacuums and ring lights. POD specifically refers to businesses where custom items are printed based on incoming orders. These can include art prints, tote bags, and t-shirts customized with logos, branding, or illustrations.
Is dropshipping more profitable than print-on-demand?
Though both models are low risk and have a low cost to enter, print-on-demand businesses can face less pricing competition. That’s thanks to the unique nature of POD products—if you have unique designs in mind, print on demand may be a profitable venture to consider.
