So you’re out and about looking for ways to generate some moolah, and you stumbled upon the topic of t-shirt drop shipping. You’ve heard some guys make big bucks doing it, and you want in on the action. But you’re thinking:
- Is this the right business model for me? What kind of background do I need?
- There seems to be a lot of “operations” involved, can I really do this all by myself?
- What kind of investment do I need to make before I see returns?
- How much money can I really make?
- Do I need to be tech savvy?
- What can I do, step by step, to get this kind of business of the ground?
Alright that’s a lot of questions. Let’s take a deep breath here and start answering everything slow and easy. Okay, awesome. Some background information before addressing the questions directly, though:
What exactly is drop shipping?
The concept of drop shipping itself is not really new, it’s been online for over a decade. But it actually existed in the physical world way before it ever existed online. To understand drop shipping, let’s quickly go through how a typical retail shop works.
You buy items, usually in bulk from the manufacturer or wholesale distributor, then store them and sell them at a profit to the end customer. You’re essentially a middleman, and with drop shipping, you maintain that status but with one major difference: You don’t buy, store or manage inventory.
But then how would you sell the product to the end customer if it’s not even in your possession? Well, you take the order then have the manufacturer/supplier ship the order directly to the customer. So let’s summarize the process here.
Your supplier is invisible to the customer. A customer places an order with you for product X. You then essentially “buy” that product from the supplier at a lower price, profiting the difference. You give your supplier the customer’s details, and they ship the product directly to your customer (sometimes even with your own branded packaging/receipts/branding…etc).
As you can imagine, this model has a lot of very attractive advantages:
- No dealing with inventory.
- No dealing with shipping hassles.
- No tying up money upfront. You pay when the customer pays.
- You can literally run the business anywhere you have access to a laptop and an internet connection.
- You can have your supplier process the returns.
Essentially, your business is focused on just two main areas:
- Marketing and selling the product.
- Customer service.
Sounds awesome, right? Well, the model does come with quite a few caveats, unfortunately. We’ll cover them later in the “Considerations” section. But for now, you might be asking yourself: why would a supplier agree to carry all that risk, do everything for me while I just sit there and collect money?
It’s true that things can get pretty hectic for a supplier that embraces the drop shipping model, because instead of sending out a few bulk shipments to select distributors, they’re now shipping to customers directly which requires a different kind of infrastructure.
That said, there’s a big advantage for them too. By handling all the legwork for you, they’ve practically killed the high barrier to entry for selling their products. Now everyone and their mothers can sell their products, and they’re not limited to a few distributors.
They also typically charge you more than wholesale, because the risk is mostly on them. They can now focus on producing and shipping the product, while “outsourcing” marketing and customer service to hundreds or thousands of people from around the world.
The supplier could actually be a distributor too and not a manufacturer. If so, the manufacturing and production part is also removed from the equation. So in that case, they don’t manufacture or produce, they don’t deal with customers directly, they don’t do marketing. They just buy stock, pack and ship. Buy stock, pack and ship. Repeat. So as you can see, this model could be pretty attractive for suppliers as well.
Back to your questions!
Now that you have some background information, let’s go back to answering your original questions.
Is this business model for me?
If you’re looking to start an online business that has a low barrier to entry and can be highly profitable, then this might be a good choice. Note that the business model is built upon selling physical products, so you need to be comfortable with that, even though you’re not the one handling the products yourself.
Can I do it by myself? Do I need to be tech savvy?
For the first question, the short answer is yes. A drop shipping business can start as a one man show. In fact, that’s how most people start. As you grow, the customer service, order fulfillment and customer support aspects of the business grow with you, and that makes it a lot harder to stay a “one person operation”.
However, at that point, you should be more than capable, financially, to hire one or more people to handle the time consuming aspects of the business, while you focus on the “high level” stuff like strategy, scale, partnerships…etc.
As for having to be tech savvy, that’s not a requirement. You do need to be “internet savvy”, but not tech savvy as in having programming or coding skills. You need to be comfortable on the web, comfortable with search, learning new control panels/dashboards/platforms and you may need to learn a bit of digital marketing. But other than that, no special skill is required.
How much do I need to invest and how much will I make?
You will hate me for saying “it depends”, but I have to. Your needed investment and income will depend on: the products you’ll choose to sell, how you market them, and your margins. Since you almost have zero running costs, the majority of your investment will be poured into marketing.
That being said, I’ll give you an example just to satisfy your curiosity. Say you’re sourcing your t-shirt at $9. A good general rule of thumb is the 3X rule. You’ll have shipping, marketing and payment processing costs so the 3X rule aims to help you achieve at least 30% profit.
You can try selling the t-shirt at $29, $24.99 and $19.99 for instance. The third price is a little too low but you can always experiment with it. The reason for all the suggested 9s in the pricing is the psychological power of 9.
Say you’re running Facebook Ads and your cost per purchase (covered later) is $7, shipping cost is $3 and your transaction/payment costs are 4%. Taking the mid-pricing as an example, let’s calculate your net profit:
$24.99 – ($9 + $7 + $3 + $1) = $5
So in this particular case, our profit after subtracting all costs is $5 per t-shirt. Note that there may be additional “fixed costs” like website-related costs if you’re selling through your own website, these aren’t factored in here and we’ll talk about them later. But they could be something along the lines of $30-$50 per month on average.
Using this formula, we can calculate how many t-shirts we need to sell per day, on average, in order to achieve the target profits. Note that these are profits before taxes:
$1,000 = 7 t-shirts per day.
$3,000 = 21 t-shirts per day.
$5,000 = 35 t-shirts per day.
$10,000 = 70 t-shirts per day.
Needless to say, of course, that these are very rough numbers. Your profit per t-shirt could be $1, $10, more or nothing. It all depends on how well you optimize your costs and selling price.
What can I do to get started, step-by-step?
Can’t wait to get into the nitty-gritty, huh? Well, the step by step approach is covered in the next few sections and organized under these main topics/headlines/themes:
- What to sell (what kind of t-shirts, designs…etc)
- How to sell (customer-facing solutions to sell as well as sourcing and logistics solutions)
- How to find customers (marketing and advertising).
Once you get the first two bullet points “the technicalities” figured out, you’re then ready to market and sell your t-shirts.
T-Shirt Drop Shipping: What to sell
So you want to sell t-shirts. But is it just t-shirts? Or maybe tank tops too? Sleeve shirts? Hoodies? Maybe even pillows? Hats? Tote bags? There are a lot of merchandise to sell, and you can have customized designs printed on any of them, depending on the third-party service you partner with (covered later).
Since you’re not a brand name and printing a plain t-shirt with your logo is unlikely to garner any attention, you’re generally better off creating t-shirts with designs that resonate with people. Things people can relate to or are passionate about.
Things that make them think “Yes, I’m this person! I want to buy this!”.
Some categories that fall under this description:
- Personal Traits (State/City born, zodiac sign, birthday, first name…etc)
- Family and Relationships
- TV Shows and Movies
Here’s an example of a dog-related t-shirt design that got a lot of attention on Pinterest and was designed a freelance designer over at 99designs.com:
As you can see, the quote addresses dog owners directly and is likely to cause a lot of people to relate. Not just relate, but because a lot of people want to show off their love for their pets, they may be inclined to purchase such a t-shirt.
In case you want more inspiration, you can find thousands of similar examples on t-shirt selling platforms like teespring.
T-Shirt Alternatives and Selecting Material
While t-shirts are the typical “start”, don’t limit yourself to that type of clothing, or even to the clothing category at all. You can have unique designs printed on pillows, hats and even stationary using services like Printful. This can give you an edge in crowded niches where everyone is selling the same or similar t-shirts left and right.
Taking inspiration from a t-shirt design that has already run its course and then trying it out on another type of clothes or stationary can lead to an easy winning product.
As for materials, there are a number of popular brands that are commonly used for print-on-demand (POD) t-shirts. Some of the more popular ones are Gildan, Canvas and FOL. You can learn more about their material here.
While you mostly can’t go wrong with any of these t-shirts, your choice will depend on your typical customer’s taste and your (and hence their) budget. You can also try to see what competitors are doing and if you see a pattern, then it’s probably a good idea to follow the crowd there.
Print-on-Demand “POD” vs. “Ready-Made”
What are those and what’s the difference? In both situations, you’re drop shipping. But in the first situation, you’re “printing on demand”. Meaning, once you receive your customer’s order, you forward it to your supplier along with the required design. They will then print that design on your t-shirt and ship it over to your customer.
In the “ready-made” situation, the t-shirt is already printed and ready to ship. The supplier just ships it over. POD’s main advantage is that it allows great customization, which is an added value to your customers. Not only can you customize a single design and ship it to all customers, but you can also customize the design per customer. That means you can insert their name…etc.
The disadvantage there is that POD can take a bit more time because the t-shirt has to be printed first before it’s shipped. POD may often be pricier as well. To give you an example, while a POD t-shirt may cost you $8-$10, you can drop ship a ready-made t-shirt from aliexpress for $5-$6. This obviously leaves a lot more room for profit.
Of course, quality and brand name play a role here and are in question when shopping from aliexpress, but the point I was trying to make is that you can typically find ready-made t-shirts a lot cheaper to drop ship.
The research phase is where we go out there and surf the web endlessly for inspiration and ideas. At this point, we’re basically exploring designs in our niche and taking notes (or saving links). The next step would be to pick the top designs and have a designer use them for inspiration to create a unique design.
The idea here is to not try to reinvent the wheel. Take a look at the industry, explore what’s popular and what’s getting engagement, then use it for inspiration to create your own designs. This makes it so much easier than starting from scratch.
So where do you start? Let’s go back to the dog niche and say we’re researching designs within that niche. Where would we go? There are several interesting resources.
SunFrog is a t-shirt marketplace focusing on just the type of designs we’re looking for. What makes them particularly interesting is their search filters’ capabilities. As the image shows, you’re able to sort results by “Recommended”, “Best Sellers” and “Trending” among other things.
These three filters can be a goldmine because they give you an idea about what’s working in this particular niche right now. Of course, what’s working on SunFrog isn’t necessarily going to work for you, but it gives you a good starting point as to where to go with your design ideas or where to point your designer.
Zazzle is a similar marketplace and like SunFrog, they have a “sort by popularity” feature that helps you see what kind of designs are doing well.
Using the query “dog” alone, TeeSpring was able to find more than 200,000 related t-shirts. That’s huge. The drawback with TeeSpring is that they do not offer any kind of sorting functions so while you can draw some inspiration from the results, you have no way of actually knowing whether people liked and bought that particular design or not.
The site is still useful because of the sheer number of available designs. There are often a lot of designs that are “born” on TeeSpring before making their way to other platforms.
Pinterest is a social media platform, not an apparel marketplace. However, because Pinterest is all about interesting and creative ideas, you can find a lot of inspiration here. Couple that with the number of “saves” as an indicator of popularity and you’ve got yourself some pretty useful insights.
TeeSpy is a platform that specializes in t-shirt design market research. Their pricing starts at $27/month and they do have a free version, though it’s severely limited. What’s really good about TeeSpy is that it’s a huge time saver.
It aggregates data from TeeSpring, Teezily, ViralStyle and many other print on demand companies in one place. It also allows you to sort this data by best selling items and more. They also have an engine that crawls Pinterest and other websites and allows you to sort content on them by popularity. It’s a no brainer if you have the budget.
At this point your brain should be buzzing with ideas from the inspiration you’ve seen on these websites. Take screenshots/links/notes and get ready to filter those images and send them to your designer.
How to sell
The next step is to get a designer to create the t-shirt design for you. Your instructions should be clear and you should make sure the technical specifications adhere to your POD platform requirements. For instance, TeeSpring has a list of design file best practices here.
Hiring a designer
There are several places online you can use to hire designers, the most suitable one will dependent on your budget and the complexity of the needed design. The most economic solution is Fiverr. You can get a t-shirt design from just 5 bucks. Of course having a little more to spend helps a lot. A budget of $20-$25 on Fiverr can get you something pretty decent.
If you want to go the high-end route, you can try creating a 99Designs contest. 99Designs is known for exceptional quality designs, but these designs do come at a hefty price tag. The content can cost you several hundred dollars.
The venue: marketplace vs your own store
Once you have your design, you need to put it online for people to see and purchase, right? But how do you create this order process? If you’re just starting out and are super tight on budget, you can simply create a Facebook or an Instagram account and sell directly through those social accounts.
Users would send you a message, then you’d manually create their order in a Google Spreadsheet for example, and then send their order to your supplier and keep track of it through the spreadsheet. You can also create a Google Form and ask them to fill it out when they message you asking about how to order.
This is obviously not the best way to go about doing this. Another relatively low budget approach would be to sell through a platform. These include TeeSpring, ViralStyle, SunFrog, Teezily…etc. Those platforms do everything for you from A-Z, you just provide the design. The problem with them, though, is that they eat quite a bit into your profit.
If you wish, you can also sell through more generic marketplaces such as Amazon and eBay. Beware though, since you won’t be shipping the product yourself, you risk getting in hot water with those platforms if your supplier screws up.
Your Own Store
This may be considered the most “professional” route. Selling directly through your own store gives you a lot more control and allows you to expose your customers directly to your branding and identity. They won’t remember buying the shirt from “SunFrog” but rather from “XYZ Store”. This could be better in the long run.
I know what your thinking. My own website? Isn’t that very complex? Don’t I have to hire developers and stuff? Well, no. Thankfully, platforms like Shopify and WooCommerce allow you to run a full-fledged online store with all the popular features without writing a line of code or needing to hire a developer. With Shopify, for instance, you simply sign up for an account and buy your domain name. They set everything up for you and you’ll be up and running managing your store through an online dashboard in less than 5 minutes.
Sourcing and fulfilment
So where do you find the supplier who’d print and ship your t-shirts for you? Thankfully, there are a range of services that offer this. First off, if you’re going the TeeSpring (or similar) route, you don’t need to worry about all that because it’s already taken care of for you. All you need to do is provide the design and market your t-shirt.
If you’re running your own store, though, there are several services online that make it a breeze. One of the most popular services around is Printful. Printful integrates directly with Shopify which means once the customer places an order on your website, it’s automatically taken care of without you lifting a finger (well, maybe just a few clicks). There are a lot of competing services online that operate in a similar fashion.
Here are some others:
Marketing and customer support are the cornerstones of a drop shipping business, and this is why you need to make sure you’ve got them covered. If you’re running your own store, it’s probably a good idea to provide live chat.
The T-shirt is ready and the online selling venue is ready. Time to get customers! But before you do, there are some key metrics you need to be aware of.
Know your numbers
In addition to the usual revenue and profit metrics, you should be able to work out your “cost per purchase” or “CPP” if you’re running paid traffic. It’s pretty simple. Just divide what you’ve paid by the number of orders you got. So you paid Facebook $100 and got 10 orders. This means that your average cost per purchase was $10. You will need to add that cost to your other COGs (cost of goods) in order to estimate the total money you PAY per t-shirt. Once you’re able to do that, you can easily calculate your average net profit per shirt by subtracting all your costs from the selling price.
This will really help you keep your finger on the business’ pulse, as it’s easy to mistake big revenue figures for “success”, when in reality you might barely breaking even or losing money.
Paid Advertising (banners, google, Facebook, Instagram influencers)
If you know of a forum or website where your audience frequently hangs out, it might be a good idea to buy banner space or other types of ads on the website. You can even get in touch and ask them how much it would cost to be featured in their email newsletter (if they have one). You can also use a website like BuySellAds that lets you quickly buy banner space on hundreds of websites across dozens of categories.
Instagram influencers are also very big, especially in the visual industries like travel, pets, fitness, food…etc. One tool that helps you with influencer outreach is NinjaOutreach.
Affiliates and partners
You can try reaching out to influencers and bloggers in the niche but rather than paying them “per post”, you can opt to pay them a percentage of sales. They’d work with you as “affiliates”. You can also work with an affiliate network such as PeerFly, where they recruit affiliates for your offer and have them promote it in exchange for a flat compensation or a percentage of the sale.
Important things to consider
While it may seem like the drop shipping business model is a “no brainer” because of all the advantages, there are some issues you need to carefully consider before deciding to jump in. Here’s a summary:
- Competition. Because of the low barrier to entry, it’s relatively easy for anyone to get access to the very same resources you use to run your business. They simply need to copy your designs (or create variations) and then use your POD partner or one of their competitors to print your t-shirts. Done! Your whole business model copied in a jiffy.
- Supplier dependency. You do not control your supply chain. You’re directly facing the customer when they aren’t. You’re the face of the business, so when they screw up, you’re the one who’s really on the hook. When things go wrong, you just promise your customers that you’re “gonna take care of it” and then “hope” your supplier is able to fix it while you just sit on the sidelines, watch, and pray.
- Sizes. This is applicable mainly if you’re buying from China. Because Asian sizes are very different from European or North American apparel sizes, a lot of confusion can happen leading to customers ordering wrong sizes and then blaming you for it. Even if you include a size chart, customers will often be used to a certain kind of “Medium” or “Large” size, and order blindly without checking the size chart.
- Shipping time. Also mainly applies when you’re shipping from overseas. China shipments can take weeks to arrive to the US. Between the customer placing the order and actually receiving it, you might have to deal with a lot of angry emails. Again, it’s out of your control at the end of the day so all you can do is apologize, ask them for patience and hope for the best. To help minimize this, ensure you’re very clear on shipping times with the customers. Have it written down clearly on product pages, on dedicated pages, in the thank you email/page and make sure the shipping policy is linked to on every page (in the footer for instance).
- Payment partners. Some payment processors consider drop shipping to be “high-risk” or “grey area”. This is because they know that the merchant has minimal control over most of the business and hence they fear this would attract chargebacks and credit card disputes which may damage their reputation and relationships with banks and credit card issuers. Keep a close relationship with your payment processors and maintain excellent customer service to avoid chargebacks and disputes.
- Copyrights and trademarks. This is especially problematic for people who work a lot with movie/TV show related designs. Also designs related to sports teams or practically anything that has a large public following. Things get be tricky in this area and a lot of designs that you’d think don’t violate any laws may actually trigger cease and desist letters or even a lawsuit. To be safe, always consult a professional attorney when in doubt.
Drop shipping is a low-barrier to entry business model that could be a great starting point for anyone who wants to start a location independent online business. Once you’ve established your business, though, it might be wise to start buying wholesale or going the private label route.
While these business models require more capital and quite a bit of infrastructure, they give you a lot more control over your business and hence allow you to scale more safely. It also allows you to optimize and improve every aspect of your business continuously, because everything is completely under your immediate control, unlike drop shipping.
All that’s left to do now is to choose your niche, research winning designs, create your design, upload and start selling!