If you’re sitting on a library of character images or looking to expand your apparel business in a unique and hassle-free way, you might want to check out Palo Alto, California’s Zazzle.com. The five-year-old company runs a Disney-branded e-tail site that lets kids create their own licensed T-shirts, and it’s looking to branch out beyond the House of Mouse.

Disneyinkshop.com, which has been up and running for about four months now, lets consumers use roughly 2,500 images from Disney’s character archive and current property roster to custom-design and inscribe a wide selection of colored T-shirts, hoodies, sweatshirts and infant onesies. The site then spits out an image of the garb for approval before sending the order into its factory, which ships the finished product directly to the customer’s door a few days later.

The manufacturing process employs a proprietary printing technique to create an ink-based image transfer that fuses with cloth and essentially acts as a permanent dye. Prices for the shirts range from US$19 to US$26.

Disney drives traffic to the site through both Disney.com and Disneychannel.com, and has taken the lead on the design and layout of the web environment. Zazzle carries out the traditional licensee functions of retail (or e-tail in this case) – manufacturing and order fulfillment. Zazzle’s director of business development, Matt Wilsey, says the licensing agreement differs a bit from the norm in that his company pays royalties on each item ordered and a referral fee for any customer that Disney drives to the site. Guarantees and advances don’t really work in this situation, he explains, because the product is made on-demand and there is zero inventory.

Disney Consumer Products manager of new business development Patrick Haley says about 75% of the ink shop’s business centers around kids clothing, and Wilsey confirms that under-13s visit the site on their own. But since the hub is COPPA-compliant, kids can’t place orders themselves. Instead, the site has an embedded feature kids can use to e-mail their parents messages along the lines of, ‘Hey, mom and dad. I designed this cool shirt. Can I have it?’

Two things about the arrangement are particularly exciting to Haley. One is that the site serves as the first on-line archive of Disney images. And secondly, it facilitates immediate feedback from consumers, several thousand of which hit the site each day. ‘It enables us to see if there’s a demand for a certain property right away in a low-risk environment, with no inventory to carry,’ he says, adding that the info gleaned from the orders can show DCP where there might be an opportunity to expand its current retail programs. For example, Haley was surprised to find that the third most popular character behind Mickey and Tinkerbell is Stitch from Disney’s 2002 2-D animated feature Lilo and Stitch.

For his part, Wilsey says Zazzle is actively looking to set up new web stores powered by the images of other entertainment companies. Right now, in addition to Disney, Zazzle has agreements with the Boston Public Library and the Library of Congress to reproduce posters, maps and images from their archives.