I recently posted my first Amazon merch t-shirt design, and said that I would write a bit about Merch by Amazon:
What is Merch by Amazon?
Merch is a print on demand service from Amazon. You upload designs and they will list them on Amazon and print to order and ship them for you. You make a royalty fee from each t-shirt sold.
How much money can I make?
This is the current royalty structure from the Merch FAQ
From there you just need to sell lots of t-shirts.
How do I join Merch?
Just go to https://merch.amazon.com and enter the details they request. Note - they can take a really long time to process these (in some cases a few months). After that there are a whole lot of tax and bank forms to fill out - but once that is done you can start submitting designs.
The Tier System
A new user can have up to 10 designs (with one new design upload per day). Once you have sold 10 t-shirts you move up to the next tier where you can have up to 25 designs. There are also jumps at 100 and 500. Amazon do state in their FAQ that advancing up the tiers is based on quality of products, not just the making that number of sales.
Making Designs
Amazon give clear instructions on the file type, resolution, file size, and other technical details that your designs must comply with. They provide templates for Photoshop and a couple of other common design packages to help ensure you meet these requirements. For simple text only designs you should be able to manage yourself. If you want something fancier you might choose to get a freelancer (I have found http://fiverr.com to be good for this).
Any downsides?
Currently Merch only ships to the United States so if you live overseas you might struggle for sales and need a forwarding company to send you your t-shirt if you want one yourself. This also means that geo-focused themes might not get many sales if they aren't relevant to Americans. Also, you are competing with many many other designs. It is a two-edged sword - Amazon is the biggest marketplace for this kind of product and has the most customers but you are also competing with more designs. I haven't tried any of the other services yet so I haven't established whether the trade-off is worth it (although I believe some services let you use the same design).
Having said that, once you have your design this is passive income. If you want to do well there will be an amount of marketing to do, but other than that Amazon is taking care of all the fiddly stuff.