Are you selling or planning on selling physical merchandise like t-shirts, hoodies, hats, and accessories? Have you purchased your inventory in bulk to save some money?
Validate your products BEFORE buying inventory with dropshipping or print-on-demand. This way you can avoid inventory problems and save your money.
If the idea of taking advantage by buying your inventory wholesale is appealing to you, but running a warehouse is not, I have some tips that will help you out. You might be familiar with the fact that bulk orders are cheaper than individual purchases for your business. So, it seems like a very straightforward way to save money with each sale.
What could be the issue with that?
There are several reasons why buying in bulk is a good idea, but there are a lot of reasons why it might be better to make the purchase per order (at least when you first create the products). Here are some questions to ponder when you’re trying to validate your products before buying inventory and piling up boxes.
- What happens when you run out of inventory?
- What if you order too many of the incorrect sizes?
- What if the product doesn’t sell at all?
You’ll need to accurately manage your inventory levels and the amount of time it will take for you to get more items when you run out.
Bulk quantities are usually expensive and require a larger upfront amount of money to place an order. This means that the investment made in the product is larger and it will be a bigger deal if you end up with a lot of excess inventory.
To help you prevent this from happening, run some tests first before going all-in on bulk orders for your business. This is how you can validate your products before buying inventory.
What is dropshipping and print-on-demand?
Dropshipping is a process where you sell items (usually from a different seller) and you do not keep the inventory yourself. Instead, each order is sent to another company that will ship it directly to your customer for you.
Print-on-demand (P.O.D.) is pretty much the same thing, except the products are personalized before being shipped. Like a t-shirt being printed on with a custom graphic or a hat with an embroidered logo.
By utilizing a print-on-demand dropshipping service, you’ll be able to create your products, list them for sale, promote the products to your audience, sell the products, and keep the profit.
I’m a big fan of delegating time-consuming tasks, and print-on-demand dropshipping eliminates a lot of the grunt work required for e-commerce. Since you’re not responsible for printing, warehousing, shipping, or customer service for physical items, you can build the business without the added headache of owning inventory.
The difference between wholesale and dropshipping is that when you sell wholesale (buying in bulk), you own the stock and are responsible to provide support to your customers. When you dropship, your customers still purchase directly from you, however, the supplier prints the products, packages the products, ships the products, and takes care of any problems that may come up in the process.
When you validate your products before buying inventory with print-on-demand first, you’ll be able to know which products are selling the most, which products are the most profitable, and if there is any demand for your products before investing in inventory.
This process will also allow you to test different price points for your audiences rather than getting stuck with expensive bulk items that aren’t selling due to an incorrect pricing strategy or unlikeable style.
Here’s a scenario that’ll break down how to validate your products before buying inventory perfectly:
Let’s say you’re looking at selling t-shirts for your business. You’re debating on buying your shirts in bulk or selling via dropshipping. We’re going to sell the shirt for $20.
Buying in bulk, you’ll have a minimum order quantity requirement, but the cost per t-shirt will be cheaper.
With print-on-demand dropshipping to validate your products before buying inventory, on the other hand, you don’t have a minimum quantity requirement, but it’s more expensive per shirt.
Product: Core 100% Cotton T-Shirt
Colors: white shirt, 1 print color on the front (price goes up per color added)
Price: $5.13/per shirt.
Upfront Cost: $128.25
Additional Specs: You must pick colors and guess the sizes of the shirts that you wish to sell.
It’s your job to package and ship the product to the customer.
Product: Unisex Staple T-Shirt | Bella + Canvas 3001
Colors: 47 t-shirt base colors and unlimited print colors
Price per shirt: $12.95
Upfront Cost: $0.00
Additional Specs: You can offer any size from xs to 5xl and have every color available in your shop.
The print company packages and ships the product to the customer for you.
Profit Breakdown: P.O.D. vs. Wholesale
Down to the nitty-gritty here. When you’re learning how to validate your products before buying inventory, you’re going to want to calculate your costs for both wholesale and print-on-demand.
Wholesale: A cost of $5.13 per shirt. If you sell 25 shirts at $20 each, you’ll pocket $500 in revenue which nets you $371.75 in profit… but you do all the packaging and shipping.
Print-on-demand: A cost of $12.95 per shirt. If you sell 25 shirts at $20 each, you’ll pocket $500 in revenue which nets you $176.25 in profit… and you just collect the money. No additional labor is involved.
$371.75 in profit from buying in bulk, $176.25 in profit when dropshipping. That’s a profit difference of $195.50!
You’ll notice that this is a huge difference in profit when you buy in bulk instead of dropshipping.
Why should you get less profit when you validate your products before buying inventory?
When you are first validating your products, profit isn’t the goal, sales are the goal. That means that you first just want to make sure that your products SELL before all else. That way you don’t dump a bunch of money into your inventory in hopes of sales, only to find out that you won’t be able to hit your sales goal.
So what you’ll want to do is first set up some print-on-demand products and see which ones sell. Once you’ve determined which are selling the most, you should place a bulk order for those products.
By validating the products’ selling ability first, you eliminate the need to purchase your inventory in bulk to get started. You’ll be able to make more profit through this process, but you can also make sure that your target audience is willing to purchase the product before placing an order in bulk.
Print-on-demand dropshipping has proven to be very profitable for many of my clients. It’s worth testing out if you’re curious about wholesale buying, but don’t want the hassle of maintaining an inventory.
My recommendation for a print-on-demand platform
If you’re interested in learning more about print-on-demand dropshipping, I recommend Printful. I’ve been with them for several years (they fulfill my “No Excuses” t-shirt orders) and it’s nice to know that my orders are in their hands.
I like to think of Printful as an employee when it comes down to the process. I could order the products in bulk and then hire someone to take care of packaging and shipping… Or I can leave it to the pros that do this day-in and day-out for a small price ($7.82 per shirt). They’re pretty much like my below-minimum wage employees. 😂
I’m not a big fan of buying boxes, packaging products, and running to the post office. I’d rather let someone else take care of all of the work for me so that I can just sit back and collect the profits.
Validate Your Products Before Buying Inventory Recap
To recap, wholesale is buying in bulk and selling individual items. Dropshipping is selling individual items without having any inventory yourself. By doing print-on-demand first, you’re able to validate your products before buying inventory and investing a lot of money upfront. This makes it easy to understand which products are selling the most and to correct any problems before buying your inventory wholesale.
If you have any questions, drop a comment below! If you need assistance integrating a print-on-demand platform with your website so that you can validate your products before buying inventory, reach out to me so that we can work together, one-on-one.