Affiliate marketing vs drop shipping – which is better? There’s a number of differences between the two business models. With drop shipping you will need at least your own website, whereas with affiliate marketing you can “get away” without having one – although having one is a good idea. In addition to having a website for drop shipping, you will ideally need to invest in a web store software. Unless you know what you’re doing, you’ll also need to pay a subscription for a service to connect you with information and contacts of quality merchants.
Drop shipping is more involved too in that you’ll need to deal with customers and merchants. With affiliate marketing this isn’t necessary as you simply refer customers to products. With both models you don’t handle products yourself. Affiliate marketers send people to other people’s products. Customer service and product delivery is handled by the product owners.
In drop shipping, your website is the “front facing” end of the business. For a customer, they might easily assume you are holding the products, even though you are only a referral based website. You’ll therefore have to deal with customers queries with drop shipping and take orders and relay those orders to the drop shipping companies you’re dealing with.
Affiliate Marketing Vs. Drop Shipping
With affiliate marketing you can start for much less of an investment – in fact zero! Anyone can join an affiliate program for free and refer customers to products online. You don’t even need a website and you can post your affiliate links on social media or through your own email. See where to promote affiliate links.
Affiliate marketing is pretty versatile and there’s many ways for an affiliate to promote their products. There’s no product handling or dealing with customers either. This makes affiliate marketing the preferred choice for many would-be online business owner.
However there are downsides to affiliate marketing which make it difficult. Affiliate marketing is pretty competitive. There’s thousands of affiliates who are potentially selling the same products as you. This makes getting traffic difficult. Traffic is the major difficulty for affiliates due to competition. Drop shipping can be less competitive because there’s less competition. The larger entry costs can put people off and this means fewer competing websites in a particular niche.
So if you find an uncompetitive niche in drop shipping there’s a greater potential to dominate the market. With affiliate marketing this can be more tricky because there’s so many affiliates.
Affiliate Marketing Vs. Drop Shipping
With a drop shipping web store, your entire website store is yours. You can take orders directly from customers and this gives you a certain authority. The customer doesn’t know you are a third party referrer of products and might easily assume they are buying directly from you. You can also sell many different products from multiple drop shipping companies to the same user/visitor using a shopping cart.
This is very different to the affiliate model where affiliates will send people to another website. Visitors can easily click away without making a purchase or leave an affiliate website never to return. A way around this for affiliates is to use the power of email marketing, but still, affiliate links lead customers away from the affiliate themselves towards another website. This hands off approach of affiliate marketing can mean it’s less profitable than with an e-commerce store of your own using the drop shipping model. This of course depends on how popular your store/affiliate site becomes and this comes down to your marketing efforts.
Summary
So which is better in the affiliate marketing vs drop shipping debate? In terms of competition and profitability you might lean towards the drop shipping model. If you can find a niche and dominate it you can be more profitable than with an affiliate marketing business. However there’s a lot more involved in set up of a drop shipping business.
For setting a successful drop ship web store you need not only to find the right products and providers, but also to constantly update prices and inventory. You need to watch your competitors and adjust your price ranges accordingly. You may need to manually order deliveries and answer customer’s questions. There’s also a larger investment of time and effort involved in learning drop shipping and becoming profitable.
Affiliate marketing is considerably cheaper and there’s much less hassle involved in setting up. (See also alternatives to drop shipping). You don’t need to talk to customers or arrange product delivery. You simply refer customers to products online through your affiliate links. However, due to the low entry costs for affiliate marketers this means everyone wants to do it. This floods the market with competing websites and affiliates are everywhere online. As such, it can be more difficult to find your audience with all the noise there is from other affiliates online.
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