Latest / Influencer Marketing with Fexingo: Creators, Sponsorships, and Modern Endorsement Deals / Why Creators Are Selling Their Own Merch Lines
Transcript
- Lucas: So there's a YouTuber I've been following, four million subscribers, mostly tech reviews. Last week he posted a video titled 'I'm shutting down my merch line' and it got over a million views in two days. Luna: Wow. And I bet the comments were full of people asking why. Because fans love merch, right? It's like a physical connection to the creator. Lucas: Exactly. And his explanation was refreshingly honest. He said the merch line was doing about seven figures in annual revenue, but after production, shipping, returns, and customer service, the profit was maybe ten percent. And that was only on good months. Luna: Ten percent on seven figures is what, seven hundred grand? That's not nothing. Lucas: No, it's real money. But he pointed out that the time he spent managing it—hiring a designer, dealing with a warehouse, answering refund emails—could've been spent on two or three sponsored videos that would've netted him more, with way less headache. Lucas: And that's the thing. The opportunity cost is massive. He's a tech reviewer, not a fashion brand. Every hour on merch is an hour not making content or building his main business. Luna: I get that. And honestly, if today's episode helps you think about your own business or your own content strategy, that's the kind of thing that keeps us going. If it was worth a coffee to you, that's the link: buy me a coffee dot com slash fexingo. No pressure at all. Lucas: Yeah, exactly. It's just a small way to keep this show ad-free and independent. Anyway, back to the merch math. The thing is, he's not alone. I've seen more creators quietly sunsetting their own lines. Luna: Quietly? Are they announcing it or just letting it fade? Lucas: Mostly fading. They stop promoting it, then one day the store is gone. The ones that do announce it frame it as 'focusing on the channel,' which is true. But the underlying economics are shifting. Luna: So what's driving the shift? Is it just the operational hassle, or is there something bigger? Lucas: I think it's a combination. First, the margins on merch are thinner than fans assume. A typical t-shirt might cost eight dollars to make, but after shipping and platform fees, you're left with maybe ten to twelve dollars on a twenty-five dollar shirt. Then you're stuck with inventory that doesn't sell. Luna: And unsold inventory is just dead money sitting in a warehouse. Lucas: Right. So some creators are pivoting to print-on-demand, where you don't hold any stock. But the per-unit cost is higher, so you're making even less per item. The trade-off is zero risk, but the profit per sale is almost negligible. Lucas: Then there's the licensing angle. Instead of selling your own merch, you license your name and logo to an established retailer. They handle everything—production, distribution, returns—and you just get a royalty, usually around five to fifteen percent of wholesale. Luna: That sounds like a much better deal. But you lose that direct relationship with your fans, right? The merch feels less personal. Lucas: Definitely less personal, but for a lot of creators, that's fine. They're not in the business of selling t-shirts; they're in the business of making content. And licensing lets them monetize their brand without the operational drag. Luna: And we've seen that work for some huge names. Like, even before the shutdown trend, a lot of top creators were already testing licensing deals with big retailers. Lucas: Yeah, exactly. And what's interesting is that the creators who are most successful at merch are the ones who treat it like a media brand, not a side hustle. They build a whole identity around it, like MrBeast's Feastables or Logan Paul's Prime. Those are real companies with real margins. Luna: But those are the outliers. For the mid-tier creator, is merch even worth it anymore? Lucas: That's the million-dollar question. For a creator with a million subscribers, merch can still be a nice income stream. But the trend is clear: the ones who are good at it are treating it as a serious business, and the ones who aren't are getting out. Lucas: And there's another angle: the tax and accounting headache. Selling physical goods means sales tax in multiple states, maybe even internationally. That's a whole new level of compliance that a lot of creators just don't want to deal with. Luna: So by shutting down their own line, are they just admitting that they're not retailers? And that's fine? Lucas: I think it's more a matter of focus. You're a creator, not a logistics company. The smart ones are realizing that their time is better spent on content, which drives the brand value that licensing can then tap into. Luna: And that's where the real money is, right? Not in the t-shirt margin, but in the brand equity. Lucas: Exactly. And we're seeing that play out in how some creators are now launching what they call 'merch capsules'—limited runs, maybe a hundred units, just for a special occasion. It creates scarcity, sells out in minutes, and avoids the inventory trap. Luna: That's smart. It feels exclusive for the fans, and the creator doesn't have to store a thousand unsold hoodies. Lucas: Right. And some creators are even going a step further and just doing one-off drops with a print-on-demand partner, so there's zero upfront cost. The profit per item is lower, but the risk is basically nil. Luna: So what does this mean for the future of creator merch? Do you think we'll see fewer creator-owned stores? Lucas: I think we'll see a polarization. The top one percent will have full-fledged merch empires, and everyone else will either use print-on-demand or license their brand. The middle ground—running your own warehouse and shipping—is becoming less attractive. Luna: And for the fans, does it change anything? They still get the merch, just from a third party. Lucas: Maybe the authenticity takes a small hit, but the price could actually come down because the retailer has better economies of scale. And you're still getting the same design, the same branding, just not the same 'made by my favorite YouTuber' feeling. Lucas: But for the creator, the trade-off is often worth it. Less stress, a more predictable income, and more time to do the thing that actually grew the audience in the first place. Luna: So the next time we see a creator announce they're 'pausing' their merch line, we'll know the real story might just be about margins and focus. Lucas: Absolutely. And it's a reminder that the creator economy is maturing. The winners are becoming better businesspeople, not just better entertainers. Luna: That's a good note to end on. Thanks for listening, everyone.