Drop Shipping Vs Affiliate Marketing: Everything You Need to Know about the Two Business Models

Drop Shipping Vs Affiliate Marketing:

 

Dropshipping or affiliate marketing? If you are looking to make good money online, you have probably contemplated these two options. The good thing is that all can make you a lot of money. They are profitable ways to make money online. But which is the right choice for your business?

Like most entrepreneurs, you may find yourself unable to make a sound decision. If not sure which option is fit for you, make sure to read this piece to the end. Everything detail you need to know about these two profitable business models is well detailed. Let’s start by understanding what is dropshipping?

What Is Dropshipping?

Dropshipping is a business model that eliminates the need to keep inventory and products in stock. This model eliminates back end inventory management. In other words, you sell virtual inventory that is being stored and shipped directly from suppliers to customers. This means zero capital is enough to get you started.

Advantages of drop shipping

Here are a few reasons why this is a suitable model to consider.

  • No capital needed to get started. Unlike most business models that require you to set aside a considerable budget, you need zero money to get started if you decide to dropship. This is because you don’t need to buy any inventory, you just pay for the stock you sell.
  • Time-saving. Working directly with suppliers and having them dropship cut the trouble of having to worry about the practical operations, which are a bit time consuming and tedious. Eventually, you are left with enough time to think about product listing, optimization, supporting customers, marketing, and so on.
  • Diversity. If you are looking forward to selling many products, dropshipping gives you the freedom to offer a wide variety of products. This is s bonus because you will be in a position to give your customers a wide variety of selection.
  • Scalability. Whether you are drop ship small or huge products, the amount of work you do remain the same for you. Nothing changes on your end. You most significant task at this time is to pick that one supplier who is ready to supply, and you have the freedom to select a suitable supplier.

Disadvantages of drop shipping

No business model is 100% perfect, and you must be ready to deal with some of the hiccups in a timely and efficient manner. With that in mind, here are some of the disadvantages that make dropshipping a bit risky.

  • Low-profit margins. More and more sellers are joining this space, making it more competitive than ever before. This means for you to succeed and rise above the competition you must be unique and creative to make profits.
  • Shipping time. The fact you are drop shipping your orders from suppliers means you have no control of the logistics. If the supplier is slow, you have to accept that before finding a more reliable alternative.
  • Dependency on suppliers. When dropshipping, there are critical things that are out of your hand — for example, packaging, shipping time and handling. You have to rely on suppliers who oftentimes are not near you. If they don’t deliver on time, this is more likely to hurt your business.
  • Customer support. You have the responsibility to support your customers in the best way possible. If you don’t have time to support your customers, hiring virtual assistants is a good idea. Fortunately, today, hiring a freelance virtual assistant is as simple as 123.

What Is Affiliate Marketing?

This is a business model where you partner with established businesses (eCommerce entrepreneur) in your niche and ask them to promote your products to his or her audience. In other words, you are leveraging the audience of other eCommerce entrepreneurs while paying a fraction of profit from each sale they make.

Advantages of affiliate marketing?

  • No physical setup. You don’t need a store. Everything happens online. You can work from any location. Physical office is optional.
  • Free to join. It is free to join any affiliate program. The only task you have is that of signing up and reading all terms and conditions. Only that!
  • No customer supports. Unlike in Dropshipping, where you are responsible for customer support, in affiliate marketing customer support is not your task. Once a customer is directed to an eCommerce site, and you get your commissions, your work end there.
  • No technical expertise needed. Your technical knowhow is not a limitation. Whether you have the knowledge or not, you are free to get started.

Disadvantages of affiliate marketing?

  • Delayed payment. Not once cases of late payment have been reported. So, remember this when considering this business model.
  • No extra earning. This is probably one of the downsides that may force you to consider other business models. You only get your commission no matter the effort you inject. Even when you bring more visitors, no extra pay, only the agreed commission.
  • Trust. Because of links been used widely recently to dupe and for other reasons other than those indicated, most people recently don’t trust affiliate links. A good number of them ignore them, and there are those who to prefer to copy and paste them manually on the web. If they do this, automatically your revenue goes down.

Comparison: Dropshipping Vs Affiliate

Now that you have factual information about dropshipping and affiliate marketing let’s compare the two business models. Ready?  See the table below.

 

Comparison criteria  Affiliate Marketing Dropshipping
Way of work Involves referring customers to other business and get a specific % as commission.  You don’t need to store inventory of products.
Commission  You are guaranteed fixed commission. No commission for this option.
Customer data No customer information since you are not dealing directly with them. You will have own customer information. 
Way of payment Whenever any customer clicks on the affiliate link on your website, it redirects to merchant’s website. The tracking cookies remains for a certain time on the visitor’s browser. You sell products from your store. Customer pay to you and then you pay to manufacturer.
Growing Prospect Affiliate platforms continue to grow over the years, but the affiliate marketer remain to depend on the affiliate websites. An online store will naturally grow over time.
Future You are dependent on the retailer/manufacturer as a affiliate marketer whose products you promote With dropshipping business your store can become a full-fledged business.

 

Which one is the best?

This post has detailed you on everything you need to know to make a sound decision. Now it is your turn to make a decision. Which option do you think is suitable? Read, read and read this piece again and then choose a business model you find most suitable.