As mentioned in a previous post The Album is Marketing Material, a band doesn't make its money on music. The margins necessary to finally support five or so smelly musicians come from touring and merch. Once you've got your music up to the standards it needs to be, you must get merch details right if you want a stable career in music.
Picture this for a second: you just decided to see a friend of a friend's band at some dingy bar that smells worse than a harbor at low tide. You're not expecting to enjoy the show, but you promised to go see them at least once.
Turns out the band is amazing.
So much so that you make the conscious decision to open your wallet and throw dollars at the band. Excited, you walk over to the merch table and... their merch blows.
The shirts look like an iron-on decal of a toddler's finger painting. They don't have shirts in your size. No change, "Sorry dude."
How do you feel about the band now?
When you mess up merch, you:
-Insult your current fans.
-Lose new fans. (If they don't have something to remember you by, it's possible you'll be forgotten)
-Lose revenue from the sale. (Bad sizes, ugly/cheap merch is the same as taking the money the fan was going to give you and throwing it in the toilet).
-Miss the opportunity for advertising. (A fan wearing the shirt passively increases your name recognition and mindspace.)
How much thought do you put into your merch?