Affiliate marketing vs dropshipping, which one should you go for?
E-commerce is a big player in today’s marketing scene. In fact, marketers expect it to grow to a staggering $6.54 trillion in revenue by 2022. Therefore, hopping on the bandwagon is a good idea as you can expect a great return in investment.
To make a profit off of your investment though, there are some decisions you should make. For example, you need to choose affiliate marketing vs dropshipping. Both of these business are ways to get your product to your customers, but they each have their own advantages.
Read what we prepared below to know which one suits your e-commerce business. We’re going to talk about their differences, advantages, and even their similarities.
We’ll even cover how you can put their best aspects together to make your own unique marketing strategy:
Affiliate Marketing vs Dropshipping: what are they?
What is affiliate Marketing?
First off, what is affiliate marketing?
Being an affiliate marketer means that you are, in essence, a referral. The way being an affiliate marketer works is to lead a customer towards a product page of the businesses you’re affiliated with.
This means that you don’t have an actual inventory in your possession at all times. This also means that you don’t have control over the price of the item the customer is looking for. You also don’t take money from the customers themselves.
Instead, you take money from the people you’re affiliated with. So, each time the customer you refer buys a product from your affiliate business, you get a percentage of the sale added to the total amount the businesses will pay you on your next payday.
Becoming affiliated with a business is easy. All you need to do is build up a reputable e-commerce website. You’ll need to present yourself as a professional to partner up with the best affiliate sites today.
To become a reputable website, you should consider making a few changes to your website. For example, you can consider making your website a mobile-first one. This is because many people access the internet through their smartphones nowadays.
So, your website will have a bigger appeal to mobile shoppers. This ensures that you launch a successful affiliate marketing campaign.
Benefits of Becoming an Affiliate Marketer
As mentioned above, one of the benefits of being an affiliate means you don’t have to worry about inventory. The businesses you’re affiliated with are the ones who are responsible for keeping stock of the merchandise. The only thing you’re responsible with is making the sale.
This means that after you’ve made a sale, all you need to do is wait for the next customer, and soon enough, your paycheck. Speaking of getting paid, you don’t need to worry about missing a paycheck when you’re a marketing affiliate.
When you sign on as an affiliate with a business, they give you a tracking cookie. This will help them keep track of all the sales that you make to customers. You give this tracking cookie to customers and upon making a purchase, the affiliate website checks the tracking cookie to see who they gave it to.
They then cache this back to your affiliate account and they give you a percentage of the sale.
What is Dropshipping?
Dropshipping is a business model much like affiliate marketing. But unlike being an affiliate, a drop shipping model means you’re going to have more of hands-on experience. Dropshipping, in essence, follows the same business strategy as affiliation does, but with some changes.
For instance, dropshipping also doesn’t need you to store products in your location. However, instead of referring your customer to a page with their order on it, you place an identical order to a distributor nearby.
They will handle the delivery and fulfillment of the product. So, you don’t have to worry about product management like in being a business affiliate. You do have to manage customer service, though.
This is because the customers are buying from a storefront made by you. This means you’re the one that customers talk to when it comes to making a sale. Handling customer service in this regard is important because it’s your reputation on the line, not the distributor.
Is Dropshipping Profitable?
Dropshipping can prove to be a profitable business model as time goes on. In fact, it even proves to be one that presents a low risk for your finances. Making money through dropshipping depends on the distributor.
When you make a sale, the distributor determines the product’s price, this is the wholesale price. You can add a margin of whatever you deem fit as your interest for the product when someone buys it. That margin is the profit you make from using a drop shipping business model.
So, in theory, you can sell a $5 item for around $15. That said, you should remember to be reasonable with your interests. Having too high markup may result in your business model failing hard.
Combining Affiliate Marketing and Dropshipping
Yes, it is possible for you to combine both business models to generate more passive income (it’s not a competition, it’s not affiliate marketing vs dropshipping). This requires you to have more hands-on work than usual, but the payoffs are worth it.
Most marketers do this by paying close attention to their dropship customers. If you’ve made business with a customer, then you’ll likely have their contact information. You can then send them information about a product they may have some interest in.
As we said, this needs some attention to your customer’s interests to become successful. The rewards are well worth every effort you put into this though. Your passive income from dropships and affiliate business will soar as a result.
Utilize Affiliate Marketing and Dropshipping Today
Choosing between affiliate marketing vs dropshipping can be tricky. With the help of our guide, however, you should find it easier to choose the right business model for you. Choose the right one or combine them both to gain passive income today!
If you end up choosing the drop shipping business model, you may find it hard to choose products to sell.
Don’t worry, we’ve got more posts to help you sort this out.
Check out our guide to learn how to
for your drop shipping business. This may be what you need to turn your business into a success.