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Blog / Beginner's handbook / Print-on-Demand vs. Inventory: The Secret Ingredient For Your Online Business Success

Beginner's handbook

Print-on-Demand vs. Inventory: The Secret Ingredient For Your Online Business Success

Print-on-Demand vs. Inventory: The Secret Ingredient For Your Online Business Success
Pauls Smiltiņš

By Pauls Smiltiņš

10 min read

Are you considering starting a clothing brand but don’t know which business model to pick?

The decision between print-on-demand and traditional inventory is a pivotal one. Today, we’ll explore the pros and cons of both methods, helping you decide which path aligns best with your entrepreneurial goals.

Starting and growing an online business isn’t easy. It requires thoughtful consideration as the e-commerce landscape continues to evolve. The choices available to online store owners have expanded. Print-on-demand and in-house inventory are the most popular models to start selling online.

Which one to pick? Let’s dive in.

Print-on-demand

Source: Printful

Who needs a crystal ball when you have on-demand manufacturing? It can anticipate your desires and conjure up products before you even realize you want them. Print-on-demand is a popular order fulfillment method where items are printed as soon as an order is made.

Let’s take a look at the pros and cons.

Print-on-demand pros

Low-risk model

Print-on-demand is often preferred for its low-risk nature.

Unlike the traditional inventory model, where significant capital is tied up in stock, with print-on-demand services such as Printful, you only invest in products as they’re sold. This approach mitigates the financial risk of maintaining product stock that might not find buyers.

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Environmental impact

Print-on-demand is recognized for its minimal environmental footprint. It significantly reduces the need to create unnecessary stock, making it a more sustainable choice for eco-conscious business owners.

By producing items on-demand, you align with the principles of environmental sustainability and reduce waste.

Time efficiency

With print-on-demand, you’re not responsible for the intricacies of printing, warehousing, or shipping the products. This means more time for the strategic and creative aspects of your business, as the production and fulfillment are expertly outsourced.

This time efficiency empowers you to concentrate on areas like product innovation and market outreach, which in return boosts your online business’s growth.

Simply put—more time designing custom t-shirts and less time dealing with all the logistics.

Source: Unsplash

Print-on-demand cons

Quality control

In a print-on-demand model, you give up some control over the manufacturing process. As you don’t physically see or inspect the products before they’re shipped, you’ll need to rely on your fulfillment partner’s quality standards.

Maintaining stringent quality control in the print-on-demand model often involves selecting trusted fulfillment partners and setting clear quality expectations in your partnership agreements.

When working with Printful, you get an in-house team of 1,000+ experts who will ensure your product meets the highest standards. Printful provides premium quality products to customers worldwide and service consistency regardless of products, designs, or fulfillment location.

Dependency on fulfillment services

Your business’s operational success can be influenced by the availability and performance of your chosen fulfillment services provider. While outsourcing the fulfillment process frees you from many responsibilities, it also means you won’t have full control over every aspect of your operation.

Collaborating with reliable fulfillment print-on-demand services is essential to ensure a smooth and dependable supply chain.

Concept development

In a market where dropshipping has excelled, creating a unique and appealing concept is important to stand out. When using print-on-demand services, most of the creation process is done remotely.

Nowadays, almost everyone has custom hoodies to sell.

The success of your print-on-demand business venture hinges on your ability to craft a compelling concept that resonates with your target audience, but this can be a challenge without having the hands-on aspect of product manufacturing.

That said, if you decide to partner up with Printful, you can order samples, which will allow you to test product quality and see how your designs look in real life.

Source: Unsplash

In-house inventory

The traditional inventory model’s become an industry staple that’s been around for a while. It’s simple—you buy the product in bulk and store it while trying to sell all of it over time.

What are the pros and cons?

In-house inventory pros

Quality control

Managing your own inventory allows you to see, touch, and inspect your products before they reach your customers. This hands-on approach enables you to maintain high quality standards, ensuring that each product meets your specifications.

Customers receive a level of assurance and consistency that can enhance brand loyalty.

Custom branding

You can incorporate branding elements and customer-engaging details in your packaging however you like. When customers unbox a product, an experience that includes personalized branding can leave a lasting impression.

Creating a memorable unboxing experience delights your customers and encourages them to share their excitement.

Bear in mind that with print-on-demand services, this aspect usually depends on the chosen service provider. With Printful, you can use custom packaging to make your customers adore your brand even more. You can even add a personalized note inside the package to create a truly exclusive unboxing experience. 

Stock control

In-house inventory management lets you control your stock levels, enabling better business strategy planning. This control allows you to make data-driven decisions about stock replenishment, ensuring you’re never “out of stock” when your customers want your products.

By effectively managing your stock levels, you can optimize your resources, reduce excess inventory, and allocate your budget strategically.

Source: Unsplash

In-house inventory cons

High initial investment

Creating an inventory requires substantial upfront costs. You’ll need to invest in a large production volume without guaranteed success. This high startup investment can hold back many entrepreneurs, especially those just starting.

Overcoming this obstacle often requires a well-thought-out business plan, solid market research, and a clear understanding of your target audience. It’s a leap of faith that, if successful, can yield long-term benefits.

Logistics costs

Inventory brings additional logistics costs, including storage space and staff for inventory management. Finding adequate storage facilities and ensuring efficient logistic operations can be complex and require time, effort, and money. To mitigate these costs, you may need to explore cost-effective storage solutions and efficient order fulfillment processes and consider outsourcing logistics to dedicated professionals.

Time-consuming tasks

Handling inventory can be time-consuming, especially if you’re new to e-commerce. Managing stock levels, preparing orders for shipment, and overseeing the entire logistics chain can be challenging for those unfamiliar with the intricacies of online business operations.

Time management and operational efficiency are critical to successfully navigating these challenges, so entrepreneurs often benefit from learning best practices and implementing time-saving tools.

Source: Pixabay

Print-on-demand vs. inventory

Now, let’s dive into a more in-depth comparison to see which suits your business model better.

Upfront investment

Regarding upfront investment, print-on-demand undoubtedly offers a more cost-effective option.

Traditional inventory models require you to buy products in bulk, which can be expensive. These upfront costs might be too much for small businesses, as you need to invest heavily in producing items before knowing if they’ll reach potential customers and sell.

In contrast, print-on-demand is the champion of low initial investment. You produce items only as customers order them, eliminating the need for significant upfront spending. This approach cuts the financial risks of starting a new online store.

Print-on-demand is the ideal choice if you’re looking to enter the market without the burden of high initial expenses.

Profit margin

The profit margin is critical when choosing between print-on-demand and in-house inventory business models. Traditional inventory models potentially offer higher profit margins per unit, but the key factor here is economies of scale. When you order products in bulk, your per-unit cost decreases, allowing you to enjoy a higher sales ratio.

However, it’s essential to balance this advantage against the high initial investment and the potential risks of unsold inventory. In some cases, especially for smaller businesses or startups, the high initial investment can outweigh the advantages of a higher margin.

While print-on-demand models might have slightly lower per-unit profit due to the nature of producing items on demand, this is often offset by the reduced risk. The absence of unsold inventory and the cost savings in warehousing and managing stock can lead to competitive profit margins.

Source: Unsplash

Scalability

Scalability is a crucial factor for your online business growth and success. Both print-on-demand and in-house models offer unique advantages in this regard.

Still, print-on-demand does take the lead in scalability. It’s incredibly adaptable to your business needs and market demand. When you create print-on-demand products, you’re not limited by warehouse size or storage constraints, as you don’t need to worry about stock.

This makes it easy to introduce new products or scale up existing ones as soon as you identify the market demand. The scaling speed is remarkable, allowing you to react swiftly to trends and customer preferences, giving you a competitive edge.

On the contrary, in-house inventory models require planning and investment to scale. To grow your business, you’ll need to allocate significant resources to buy more inventory, expand warehousing, and manage additional logistic tasks. Scaling is a slower and more complex process in this model.

Source: Unsplash

Risks

The risk factor is pivotal in deciding between print-on-demand and inventory business models.

Unsold inventory is one of the primary concerns for traditional inventory businesses. When you buy items in bulk, there’s always a risk of being unable to sell them, leading to dead stock and financial losses. It’s a significant consideration, particularly for businesses with limited capital or those operating in dynamic markets with ever-changing trends.

In contrast, using print-on-demand services like Printful eliminates the risk of unsold inventory. That’s because you only produce items when there’s a confirmed order. This approach is advantageous if you’re concerned about financial risks and want to minimize waste and losses.

Product variety and flexibility

Offering a diverse product range and being flexible in your offerings is a valuable strategy for many online businesses. Here’s how print-on-demand and inventory models compare.

Print-on-demand offers unlimited product variety and flexibility. Since you can produce items on demand, you can effortlessly expand your product catalog without worrying about stocking constraints. This is particularly beneficial if your target market is diverse or if you want to test a wide range of product ideas.

On the other hand, inventory models might limit your product range due to stocking constraints. Each product variation would require a separate inventory, making it less flexible for businesses aiming for a wide variety of offerings. The necessity to stock each product can hinder your flexibility when responding to market changes.

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Environmental impact

In an era where environmental sustainability is a growing concern, businesses are increasingly looking for eco-conscious practices.

Print-on-demand is often considered a more sustainable choice. Dead stock can lead to waste and a negative environmental impact, and POD eliminates that. With print-on-demand, you only produce items when there’s a confirmed order, contributing to a more nature-friendly approach.

In-house production is less environmentally friendly due to the bulk manufacturing and the potential for unsold products that go to waste. The need for warehousing and storing inventory can also lead to higher energy consumption, worsening the environmental impact.

Source: Unsplash

Which business model should you pick for your online store?

Now that we’ve reviewed these business models from A–Z, which one should you pick?

Here’s a quick breakdown to help you decide.

Choose print-on-demand if you:

  • Seek a low-risk business model

  • Prioritize environmental sustainability

  • Want more time for creative and strategic aspects

  • Are testing new markets or product concepts

Choose in-house inventory if you:

  • Are confident in the demand for your products

  • Have the capital for upfront investment

  • Prioritize quality control and a hands-on customer experience

In the end, the decision between print-on-demand and in-house inventory hinges on your unique business needs, financial capacity, and objectives.

Print-on-demand is your best bet if you’re just starting or want a flexible, sustainable, and low-risk approach. However, if you’re willing to invest upfront, have quality control as a top priority, and are eyeing potential market expansions, the inventory model could be your path to success.

When using Printful, you’re met with flexibility, consistent quality standards, and global reach, making it an excellent choice for custom printing businesses of all sizes. 

And that’s a wrap—time to create your products and sell online!

author

By Pauls Smiltiņš on Dec 21, 2023

Pauls Smiltiņš

Guest author

Pauls is a content writer with a background in the radio. He has a degree in communication sciences, and in his free time, Pauls loves to entertain crowds by playing live music on stage.

Pauls is a content writer with a background in the radio. He has a degree in communication sciences, and in his free time, Pauls loves to entertain crowds by playing live music on stage.