When starting an ecommerce business, you will face many important decisions that can impact the long-term success of your company. One is which business model to use - dropshipping vs. print on demand.
Both of these business models are great options as you launch an online store, but knowing the standout differences between the two will make a world of difference in your profitability, presence in the market, and customer loyalty.
This post explores dropshipping and print on demand to help ecommerce businesses determine the right option to help them achieve their goals.
Dropshipping allows sellers to offer in-demand products and quick fulfillment with minimal upfront costs.
Print on demand is a sustainable, profitable, cost-effective business model with minimal heavy lifting for sellers.
While dropshipping is an effective way to establish an ecommerce business, print on demand offers more creative freedom and customization for sellers and customers.
Dropshipping is a business model where a store or brand doesn't hold any inventory of the products it sells on its website but instead buys them from third-party suppliers.
The dropshipping supplier holds inventory to sell to customers, but the store hosts the website, markets the products, and interacts with the customers.
Once you receive an order and pass it along to the dropshipping company, they package the product and ship it to the customer from one of their fulfillment centers.
Running a dropshipping business has plenty of perks, particularly for store owners who are just starting their business and want to test new products in the market to find their niche.
As a company, you'll want to be able to offer the latest trends in your store, whether you have a clothing line, jewelry collection, beauty products, or any other inventory.
Dropshipping makes it simple to pivot to other products because your supplier can offer those items quickly. This will entice customers to become loyal shoppers because they know your store has the latest and greatest.
Since a dropshipping supplier holds all the products rather than keeping your own inventory, there are minimal upfront costs should you choose the dropshipping route.
You won't have to worry about buying products in bulk, having the space to hold your inventory, or dealing with shipping costs.
Keeping your store fresh by adding new products is a great way to grow and cast a wider net of interested shoppers.
Without inventory management and the risks associated with adding new inventory to your store, you can test the waters with your audience and see what they will buy.
Branded dropshipping can offer businesses custom packaging and products for a more personalized customer experience.
With dropshipping, the products are ready to go; they're just waiting to be purchased on the consumer end. Once an order is made, the dropshipping supplier is responsible for shipping the products.
Since the items are already printed, and ready, order fulfillment and shipping are more efficient than in other business models.
There are a few flaws and drawbacks to the dropshipping business model. Explore the setbacks you may encounter with dropshipping in this section.
When something is easy and efficient, it gains popularity quickly. This rings true with the dropshipping business model; you'll find the market is saturated with similar products. Sellers may find it difficult to stand out against the competition in their dropshipping niche, regardless of how targeted the audience is.
With steep competition and limited ways to stand out, many businesses struggle to create connections with their target audience. Dropshipping suppliers offer consistent pricing across the board, so there's a minimal incentive for consumers to shop at one store over another for the best price.
Building a strong brand and fostering loyalty amongst customers can be a significant challenge without the ability to offer unique or customized products.
Handing over order fulfillment is a huge relief for some business owners but has downsides. Without quality control in the fulfillment process, you aren't holding the reins as products ship out to your customers.
You won't be able to control shipping, which means there is a more significant margin for error. Product quality may be inconsistent; you won't know until a customer receives the product and reaches out. By the time these mistakes are brought to your attention, you may have lost a loyal customer.
Some dropshipping companies have minimum order requirements for every business to meet profit margins.
Particularly if you are a new company, it's difficult to know how much product you'll need to meet the demands of your growing customer base. This can lead to ordering more products than you need, losing money, or not ordering enough and missing out on potential sales.
Since the products are already manufactured, and orders aren't fulfilled individually, dropshipping often results in over-calculating the demand for a product, leading to excess and waste.
Some dropshipping suppliers have locations in select factories worldwide, meaning an order made in Connecticut may ship from China rather than a local manufacturer. This requires more carbon emissions, higher shipping costs, and longer delivery times for customers.
When orders are placed, print on demand suppliers print the individual products, package the orders, and ship them out from their warehouses.
Print on demand is an ideal business model for many online stores in various markets. Let's explore the advantages in this section.
POD companies handle all the printing of your in-demand products, saving you thousands of dollars up-front by investing in technology for printing.
Aside from saving money on printing technology, you'll also enjoy the cost benefits of partnering with a print on demand company because they hold all the inventory for their white-label products. You won't have to stock physical products or rent space to store your inventory.
The primary benefit of running a print on demand business is the creative freedom and customization you'll enjoy.
The artist or designer creates the designs and selects the products they want to sell. From tote bags to t-shirts, wall art, hoodies, phone cases, and more, stores that work with a printing company can effectively offer their customers impressive customization options for the products they want.
Offering your own custom products will differentiate you from the competition and create a strong, memorable brand. With total creative freedom, you can connect with your audience through your own designs and build a loyal following.
With print on demand suppliers, orders are only fulfilled once customers place them, so you won't ever deal with minimum order requirements. Major bonus!
Some online stores hesitate to add new products because they have to invest up-front in the inventory and aren't confident about what will sell until their customers see the designs.
With a print on demand business model, you can test and experiment with new designs without the risk of wasting money on a poor-selling item that customers don't want.
Partnering with a print on demand company means you can easily add white-label products to your store in minutes.
If you want to sell products in new categories, like tote bags or t-shirts, just a few clicks of the mouse can add new inventory to your online store.
Since you are cutting substantial costs by not managing inventory or printing equipment, you can scale your business much faster. This also means you can offer competitive product prices and stand out against other brands in your niche.
Print on demand companies significantly reduce the amount of waste and excess produced in the retail industry. Orders are not fulfilled until they are placed, meaning nothing is ordered in bulk or printed beforehand.
As a print on demand business, Gelato is committed to offering sustainable printing and manufacturing processes around the globe. Our network of printing partners supports Gelato members by printing locally, reducing carbon emissions, shipping costs, and delivery times.
Gelato's printers use DTG printing, a sustainable method for creating print on demand products using less ink and energy consumed during the printing process.
There are a handful of drawbacks to utilizing print on demand that you should be aware of. Let's discuss those here.
One drawback POD business owners commonly face is reduced control over production and shipping when working with a POD company. As with any online business, shipping errors are possible and may cost you a repeat customer or a poor review.
That's why it's essential to partner with a reliable print on demand business like Gelato, the only POD provider with a localized production network. Our unique approach to local production lowers shipping rates and enables over 90% of orders to be produced and delivered to customers within five days; you can rest assured that your products are made with sustainable practices and delivered to your customers faster.
Like any savvy business owner, you're probably wondering how you will be able to enforce the branding you worked so hard to create when working with a print on demand provider. When you partner with Gelato, all our products and services are completely white-labeled. Your customer will only see your store information, and you will remain the face of your business. With a paid subscription you can even opt for custom packaging and personalized inserts to take your branding to the next level!
Let's recap the main differences between these two different business models.
Minimal upfront costs
No inventory management
No printing technology required
Easy to scale
Test different products with your audience
There is more competition for dropshipping businesses
Print on demand offers custom products and unique designs
Easier to create a brand with print on demand
Print on demand fosters brand loyalty, while dropshipping is highly saturated
Both dropshipping and print on demand can power up an ecommerce business and drive sales in no time.
When choosing between the two, it's essential to understand the key differences to make the right choice for your business.
While running a dropshipping store can be lucrative, the customization options and brand promotion that print on demand products offer can't be beaten.
Get started with a successful ecommerce business using Gelato for reliable and sustainable print on demand services.
For ecommerce businesses, print on demand is a more viable option for long-term success than dropshipping. Sellers can create their own unique designs, select the product types they know will sell, and offer a variety of customization options for their audience.
Print on demand and dropshipping have a few key similarities, but they are different business models.
Dropshipping suppliers offer a limited amount of customization in products and packaging, which can limit the growth of your brand. Competition is steep; many other sellers are likely offering the same products at the same price point as you, so it's challenging to differentiate your business.
Print on demand offers much more customization in products and packaging so sellers can showcase their brands and what makes them unique. You can create experimental designs and see what sticks without buying products in bulk and losing money if something doesn't sell.
The profitability of dropshipping vs. print on demand depends on your niche, what you are selling, your target audience, and your advertising skills.
The customization that print on demand products offer to customers likely improves a company's profit margins because they can stand out against the competition with more options and personalization.