T-shirt Seller on Licensing, Drop-shipping, More

The first step in selling t-shirts imprinted with pop-culture items is obtaining permission from rights holders. Kevin Stecko has been doing that since 2000 when he launched, his t-shirt business. But receiving that permission is not easy.

He told me, “I started the company with impressions of He-Man, a toy cartoon. I obtained that license, and then they wouldn’t approve hardly any of my designs.”

Fast forward to 2023, and carries 120,000 SKUs with images from movies, television shows, comic books, and more. He and I recently discussed his journey — licensing,  warehousing, drop-shipping, and more.

The audio of our entire conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Tell us about your company.

Kevin Stecko: It’s I started the business in 2000. We sell t-shirts with pictures of cartoons, toys, and video games. I’m wearing my Karate Kid shirt today.

We have to obtain licenses from the creator to use many of those images. Early on I had to buy from the manufacturers that owned the rights. Some of them would keep stock, and I could buy three of a size. Some wouldn’t keep stock, and I had to buy an entire print run.

My warehouse had at least one of everything we sold. I purchased the space, 45,000 square feet. As soon as I bought the building, Amazon sellers started eating away at our business. We never needed the entire space. Now almost everything’s printed on demand and drop-shipped. For the most part, as long as there’s no licensing issue, I send the orders to our suppliers electronically, and they send them to our customers.

There are roughly 10 companies that ship orders for us. They’ll license to us and print on-demand, and we list it on our website.

Bandholz: How do you find the rights holders and negotiate the rates?

Stecko: There are a couple of ways to find them. I often start by going to the website and sending an email asking who I talk to about licensing. There’s a big trade show in Las Vegas called Licensing Expo that’s helpful.

If you’re willing to spend $3 million, Disney will probably talk to you for a license — whether it’s classic Disney, Star Wars, or Marvel, they’re all going to cost a ton of money licensing-wise.

Hasbro is not as greedy. I have a deal with that company for Transformers and G.I. Joe.

The big companies have similar legal agreements. Some will want the typical 10% royalty for t-shirts. Some will want more, but it’s usually between 10% and 12%. In the standard approval process, we generate a mock-up of the design and then send it to them. If that gets approved, the next step is a production sample. Once they approve the sample, we can go live with it.

Bandholz: How do they know how many sales you have?

Stecko: It is essentially a trust thing. In the agreement, I would agree to an audit. If my numbers are wrong, I would have to pay for the audit and for mistakes or under-reporting. It usually doesn’t matter to us because we’ve guaranteed such a large amount of sales. I would pay a royalty only if sales exceed that amount.

For accounting to the rights holder, we’ll download a quarterly report of our sales for that item. It shows what we sold the product for and how many. Then we send them those reports and pay the royalty if applicable.

Buying a license is always a risk. We never know what will sell or whether the license holder will approve our designs. I’ve signed deals where we couldn’t get anything approved.

I started the company with impressions of He-Man, a toy cartoon. I obtained that license, and then they wouldn’t approve hardly any of my designs. We would make a design and send it to them for their approval. They nearly always responded, “Nope, can’t do that.” So we let that deal expire. I’m pretty sure we lost money on it because we had so little merchandise to sell.

Bandholz: How many SKUs are on your website?

Stecko: We have over 10,000 designs. Every design has from five to 12 sizes. So 120,000 SKUs. The navigation for our site is unique. It’s set up for browsing. We have a huge menu bar that expands into an accordion-style menu. We want visitors to see all our stuff, not just one item.

Bandholz: You advertise on Facebook.

Stecko: Before the pandemic, we spent less than $100 per day on Facebook. When the stimulus checks went out, we saw how well the Facebook Ads were doing, so we kept increasing the budget to the point where it was our best month ever in May 2020.

Some days, even now, the ads will suck, or we don’t get the number of conversions as the prior week. But overall, nothing comes close to Facebook. We now spend upwards of $500 per day.

Bandholz: You’re semi-retired now.

Stecko: Correct. I don’t have a pet project. I support my employees, and my wife and I are often free during the day, and we go on a hike or go out to lunch. I worked hard for a very long time, so I don’t mind the downtime.

Bandholz: Where can people support you?

Stecko: Our site is I’m on Twitter and LinkedIn.

Eric Bandholz
Eric Bandholz
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