Also called merchandise
Merch is physical branded product sold to an audience — clothing, prints, accessories — usually as much a token of belonging as a purchase.
Merch works when the audience wants to signal the affiliation, not when they need the object. That is why an in-joke on a plain shirt outsells a logo: the buyer is buying membership, and a logo makes them an advertisement.
The economics are the opposite of digital products. Margins are thin, inventory is capital, and returns are real. Print-on-demand removes the inventory risk and takes most of the margin with it, which is a reasonable trade at small volumes and a poor one at large ones.
It also fails at small audience sizes more often than creators expect, because a low single-digit percentage of a small number is not a production run.
In practice
A phrase only the audience understands sells where a logo does not, because the buyer is signalling to other members rather than advertising.
Common mistake
Launching merch before there is a shared vocabulary to put on it. Without one, the only design available is the logo.
Read more on this
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