Dropshipping or Affiliate Marketing? My Online Store Decision
Updated: Apr 22, 2020
In this week's blog, we are going to discuss the differences between Dropshipping and Affiliate Marketing and which model is right for your online business.
It's April of 2020, and Covid-19 has definitely impacted every one of us in some way.
Maybe you are working from home, or your job decided to layoff some employees and you were part of the list. (Sad face emoji) However, some personal positive side effects could also have been felt while everything else is in chaos...for instance, you came to the realization you really enjoy the extra time you have with your kids, or that it would be perfect if you can always work from home. Great, so now you are scrambling on ideas on how to generate money working from home and you hit a roadblock between two business ideas, Dropshipping or Affiliate Marketing.
On this latest blog post we will breakdown the difference between the two, and make your decision-making experience easier.
In simple words drop shipping is a supply chain management method. The retailer in this case, your e-commerce store, sells directly to the consumer, but does not fulfill the actual shipping and handling of the products. Dropshippers in some cases don’t even keep stock of the inventory, the product is sent directly to the end-user via a third-party company, who fulfills the order on your behalf.
Affiliate Marketing is an advertising model in which a company compensates the third-party (In this case you) to promote their services and products. Once a consumer clicks and makes a purchase using your affiliate link or website, a commission is received for generating the sale.
Benefits of Dropshipping
Variety of Products: Dropshipping is a very popular business model and many companies offer a wide range of products for you to choose from when creating your e-commerce store. A good way to see what products are available for dropshipping is to visit Aliexpress.
Higher Margins: With dropshipping your margins will likely be higher compared to Affiliate Marketing because, you're selling the products instead of just promoting it. Another advantage of dropshipping is since it's your store, you can dictate the price of your products thus increasing or in some cases balancing your margins in accordance with your business goals.
White Label: Another advantage of using dropshipping is taking advantage of white label. White label is your dropship supplier sending the actual products with your brand and information on it, instead of their own. This is great to increase the branding aspect of your business, but also increase customer satisfaction and retention.
Benefits of Affiliate Marketing
Ultra-Low Cost: Both dropshipping and affiliate marketing are very cost effective. However, when it comes down between the two, affiliate marketing definitely wins. As an affiliate, you're only in charge of promoting the products, there is no inventory to think about, no white labeling, no returned items, providing immediate cost saving from day one.
Easier Learning Curve: You guessed it; affiliate marketing is easier to learn than dropshipping. There is no need to be a marketing expert to start generating income via affiliate marketing, all you need to do is determine which products or services you would like to promote, create a strategy on how to generate clients for that particular product and stick to your plan. Nevertheless, keep evaluating your approaches to keep driving traffic to your links.
Greater Flexibility: Another benefit of affiliate marketing is the flexibility to constantly promote different products and services. This advantage enables you to quickly promote unexpected trends (did anyone say face masks) and generate an immediate profit from them.
What is The Best Model
Personally, to me there is no "best" model, it all depends on exactly what type of business you intend to have. Are you more of a hands-on person that likes to build relationships with your future customers? Then Dropshipping sounds more like you, in the other hand, do you enjoy more flexibility to promote any product or services and not be committed to the end result? Then Affiliate Marketing would be your choice. There are also other criteria to consider for instance, your budget, time available, experience, and goals. At OnServe, we can help you, in starting either your own dropshipping business or affiliate marketing program from scratch, if you're interested and would like to hear more about it, please click here.