The web is a goldmine for those brand owners eager to learn how to make an income from all the bountiful resources. Whether it is via social media, blogs or/and business websites these traditional methods are above, yet there is even more to know about what is really happening below. We are studying about dropshipping vs affiliate marketing.
In this resource today, we’re going to explain the concept behind these two different income opportunities.
Introduction To Dropshipping
Dropshipping involves operating a storefront on an online store without having to carry the inventory. In dropshipping, you don’t have to ship the product. Here, when you get an order, you place the identical order with the original distributor who has a wholesale price. The profit you’re to make hugely depends on your selling price minus the wholesale price. You will accept payment when the customer’s order is placed on your storefront.
The unique thing about Dropshipping is the part of not having to manage inventory or engage in product fulfillment. You’re primarily the main company’s advocate, sales force, middleman, and advertiser. However, you’re still responsible for customer support because you’re selling the product under your own store name.
Dropshipping, however, could become a profitable venture when you join in partnership with a vendor who manages the warehousing and logistics of the product all the way to the customers door. With dropshipping, you can price the products at whatever you desire, typically staying within a reasonable selling price. The payment goes to you first. Well, either a check to the dropshipper after your customer has purchased your product or sometimes the vender will have a different payment process.
The best strategy in securing more profit is to discover a low priced dropshipper, like wholesale or bulk. The markup is better, but make use of competitive pricing on products so that you price accordingly for a swift product sale.
Introduction To Affiliate Marketing
Affiliate marketing involves referring a customer to another business and receiving a percentage commission after the client places an order. Basically your website is a marketing tool to send referrals to other websites specializing in sales, products/services. Here, you’re not involved in marketing any item, your work is just referring customers to visit their site for purchase purpose.
The commission is quite different with affiliate marketing as well. You don’t collect any money until the sale has been made; then the affiliate business will pay you your commission, normally monthly (though some companies do pay weekly).
Now, It’s through link building on your websites which tracks the customer from your site to the item on sale. Once they click on that link on your site, it quickly opens to the item. Should the customer buy the item, the commission is tracked into your affiliate account.
Regardless, both have their merits and demerits (Pros & Cons). People that participate in one or the other find their own comfort zone and work manageability in what each has to offer. This could also be referred to as ‘niche marketing’.
Merits Of Affiliate Marketing
- The entire sales process is hands off, once the customer purchases, your part is completed
- You don’t have to be actively involved in product fulfillment.
- You’re not involved in customer service engagement
- Being an affiliate marketer, when things go south, the customer falls back to the main company not you
- By being an affiliate marketer, you can mix things up a little, earn profits and launch your online store with your stock and your customers
- Starting up an affiliate website is way much simpler and requires less maintenance
- Most importantly, you can begin your affiliate journey with little or no investment
The Demerits Of Affiliate Marketing
- When you act as an affiliate marketer, you’re not a real business. Why? Because when a customer makes a purchase using your affiliate link, you don’t get any long term benefits after the sale
- Again, If the customer desires to make another purchase, he’s not going back to your blog, but straight to the purchase website. In addition, he will refer friends to the place he made the purchase, and not where he found the link on your website
- Whenever you make a sale as an affiliate marketer, it’s pretty much a one-time kind of transaction
- Being an affiliate marketer, you’ll constantly have to create new business and referrals because of lack of return customer base, there’s no foundation
So you see? All the reasons given above have to do with the desired ideology of “second income streams” or “multiple income streams” or even “passive income streams”.
The Merits Of Dropshipping
- Dropshipping is more about ease of setting up and maintaining, this would be a second income stream. Here, the customer places the order from your storefront, but you send the order to the main store
- The amount of profit that you’re bound to make in dropshipping has potential to be much higher than if you are just an affiliate. With an online store, you get to set your own prices
- Basically you could possibly make a 50% gross profit on your dropshipped goods, although some report 20 to 30 percent gross profit to move the product faster
- With an online store, you have the opportunity to establish a reputation and a brand to get repeat business. Again, with an online store, whenever a customer raves about your items or profession, you will be the one to get the credit for it. This goes on to word of mouth marketing when other asks for a referral, your store will be the one referred
- A unique online store will grow organically over time with a strong foundation of returning customers, referrals, website content and maintenance. So, if you’ve got the time and knowledge of the niche, a dropship store may be much more profitable
The Demerits Of Dropshipping
- You are solely responsible if the customer doesn’t get their shipment on time
- You are also responsible if the product is defective or arrives broken. This implies that you’ve got to be professionally prepared for this
- You’re going to have to devote a certain amount of time dealing with customer issues, especially if you have unreliable and unavailable dropship vendors
- Having a Dropshipping store means you have to setup a complete storefront that allows credit cards and other forms of payment (affiliate marketing where all you have to do is throw up an informational site or blog)
- The amount of work required to start a dropshipped online store is going to mean way more effort than that is required as an affiliate marketer
Building an online store will take considerable work and is less “passive” nevertheless, the difference is that you’re launching a true business. If you can go in for the long haul, you will own something with infinite potential to grow.
So you must have known or heard that there have been success stories and nightmare stories from these two (2) income opportunities. The best way to decide is by studying as much as you can about both as well as what your comfort zone provides.
Finally, There’s more cash and risk in dropshipping, therefore, if you don’t know what you are doing, it would be wise to begin as an affiliate. This way you can study the basics, and grow your ideas from the experience.
