What do you need to start a small business? In the past, the answer would have been, “money, money, money.” Opening a store used to mean leasing a building, hiring employees, and stocking up on inventory. But business models like dropshipping and print on demand have turned startup requirements upside down. This guide shows you what you can realistically expect with print on demand versus dropshipping — the good, the bad, and the beautiful.
Print on Demand Vs. Dropshipping: What Do the Statistics Say?
Before getting into the day-to-day differences between print on demand and dropshipping, it’s good to look at the big picture. Global statistics show the massive opportunities available for Shopify sellers:
- Just in the United States, the e-commerce market is worth over $1 trillion.
- Global e-commerce sales are more than $5 trillion a year, with a compound annual growth rate of 8%.
- The global market for dropshipping in 2024 is over $340 billion, and the CAGR is nearly 25%.
- Digital print on demand sales for clothing items are $1.5 to $2.5 billion globally and around $350 million in the United States.
- Custom T-shirt printers make over $5 billion in sales a year.
What are the takeaways from these statistics? First, there’s plenty of room for newcomers in both print on demand and dropshipping. Second, it’s obvious that consumers like this method of shopping, and sales are continuing to grow, not shrink. Billions of people buy products online every year, providing many opportunities for your Shopify store to attract new customers.
What is Dropshipping?
Dropshipping is a business model where you make the sale, but the product manufacturer ships the items to customers. You don’t handle inventory or shipping at all, except to verify that your customers received their orders.
Here’s what the process looks like step by step:
- You add ManufacturerX’s catalog of scented candles to your Shopify store.
- A visitor decides to order a box of 12 VanillaX candles.
- Your Shopify store processes the order, receives the payment, and sends the shipping address to ManufacturerX.
- ManufacturerX gets everything ready, ships the item, and your customer receives it.
Put simply, when you dropship products, you outsource the shipping and inventory management process. That way, you don’t have to rent a warehouse, hire employees, pay building insurance, or carry boxes around. You can run your Shopify store from your living room in pajamas if you feel like it.
What Is Print on Demand?
Print on demand is similar to dropshipping but with the ability to customize products. There are several variations of this business model:
- White-label products: You put unique designs and branding on clothing, beauty products, home decor, and other items, but you don’t need to manufacture any of them.
- Gift customization: You sell a wide variety of base products and let shoppers add personalized messages to them.
- Promotional items: You sell personalized items for B2B advertising in bulk, such as pens, calendars, shirts, mouse pads, etc.
- Embroidered work apparel: Your store specializes in design and print on demand services for uniforms, including employee names and business names on dress shirts, polos, long-sleeve tees, aprons, and other apparel.
Your supplier takes care of the entire creation process, though you can handle graphic design yourself to save money. When a customer orders from your store, the PoD business prints every item, packages it, and ships the order.
White labeling takes customization a step further. In addition to printing your messaging on items, PoD suppliers ship products in branded packaging. From your customers’ point of view, your brand creates everything. This adds value and helps you build a loyal customer base.
What Do Print on Demand and Dropshipping Have in Common?
In both PoD and dropshipping, you outsource manufacturing, warehousing, inventory management, and shipping. This provides several benefits:
- You don’t need much startup capital.
- You have less month-to-month overhead.
- You can offer a wide range of products without worrying about unsold inventory costs.
- Your store is more flexible, letting you adapt to trends quickly.
- You can gradually grow your business instead of needing to risk it all at the start.
Many manufacturers and suppliers work with orders of any size, though you get better pricing by ordering in bulk.
Is Print on Demand More Profitable Than Dropshipping?
Both PoD and dropshipping can be profitable with hard work and a unique brand identity, but they have differences you need to be aware of.
Competition
There are way more dropshipping stores out there than PoD stores. That means you have more competition with a pure dropshipping business. It’s easier to stand out with PoD, especially because the sky is the limit for customization and branding.
Product Selection
The pool of available products for your store is much higher with dropshipping. PoD suppliers offer high-quality items, but the base products tend to be standard instead of attention-grabbing. Most of the wow factor comes from your customization.
Costs
PoD items are more expensive. With dropshipping, your profit is the sale price minus the manufacturer’s item cost, shipping fees, and handling fees. With PoD, your profit is the sale price minus the cost of the base item, printing costs, design costs (optional), and shipping fees. On Etsy or Amazon, you must also pay a platform fee, but not with your Shopify store.
Profit Margins
Every store is different, but PoD usually lets you set a higher profit margin. With dropshipping, the goal is to sell a high volume of popular items at a lower markup. PoD has higher costs, but you can charge a premium price because of the customization.
Build a Successful Print on Demand or Dropshipping Business
Which model wins when comparing print on demand vs. dropshipping? Actually, many Shopify stores do both. PoD items are great for standing out and building an awesome brand. At the same time, dropshipping products let you capitalize on trends. Browse our favorite Shopify apps that offer smooth dropshipping, gift customization, and PoD services simultaneously.