E-commerce is an increasingly expanding sector and according to expert marketers in 2022, revenues will exceed $6.50 trillion.
If you are thinking that this is the right historical period to invest your time in an online business, you are right, but, first of all, you need to identify the perfect path for you.
Today we will talk about the difference between dropshipping and affiliate marketing; although both are valid businesses for making money online, they have substantial differences that you need to know to understand the right one for you.
- Affiliate marketing
Dropshipping is an online business model that allows you to run an ecommerce business without stocking any products, therefore without the need to physically own the goods.
How does dropshipping work?
- As a dropshipper, you manage your ecommerce independently.
- The customer buys from your online shop at the price you have agreed upon.
- The product is automatically shipped to your end customer from your supplier.
- Earnings only originate from the margin that you have decided to enter during the sale.
- You will have to research the best dropshipping products to resell, take care of customer care and develop an effective marketing strategy.
Dropshipping is a great online business if you want to run an ecommerce business but don’t want to risk very high amounts and have a small budget to invest. In fact you won’t have to spend money to create inventory and to manage the warehouse.
Basically, dropshipping allows anyone to run an ecommerce business!
The pros of dropshipping:
Low risk. You will pay for the product only after you have received an order.
Low costs. The initial costs are really low when compared to all other businesses, what you will need is mainly a website and a reliable supplier.
Maximum concentration. All your energy will be focused on the really important things, such as building your brand and customer service, since all the more boring and bureaucratic issues such as shipments will be handled entirely by your supplier.
Possibility of expansion. If you wish, you can sell anywhere in the world, simply from your home, or perhaps from a beach in the Caribbean.
Wide range of products. You can really offer a huge choice to your customers, since you don’t have to physically own the goods, your virtual warehouse is practically endless.
The cons of dropshipping:
Customer care. You will have to concentrate your energies on providing an efficient service to your customers, nobody wants to wait for months to receive an answer by email.
No quality control. If you don’t choose a professional dropshipping supplier, you can’t be sure of the quality of the product and its packaging. Test the products before reselling them on your ecommerce and rely only on serious professionals who guarantee you high standards of quality and reliability.
Affiliate marketing is a way to make money online by recommending other companies’ products and services to your audience. This online business works because more than 90% of customers read online reviews before making a purchase. Did you know? Therefore not everyone has the skills and influence to earn substantial amounts with affiliate marketing.
Just by recommending products to your audience you can receive a portion of the profit. If someone makes a purchase after clicking on your affiliate link, you will receive a percentage of the sale as a profit.
How does affiliate marketing work?
Earning thanks to this online business is not too complicated, in fact the mechanism that hides behind the affiliations is simple: the more you make agreements with companies that need to advertise and sell products, the greater your earnings will be. But it’s not that easy, your income comes mostly from your ability to recommend products and sell services.
Often those who earn with affiliate marketing are prominent personalities as influencers with a tight community and which they have an influence on during the purchasing process.
One of the best-known affiliate programs is Amazon’s, which offers a very intuitive circuit, with crystal-clear margins and earnings.
Once you have signed up for Amazon’s affiliate marketing program (or any other program) it will be up to you to decide how to proceed; you can share links on your social networks, deal with email marketing and newsletters, or start a blog on your site.
The pros of affiliate marketing:
Very easy. Getting started is super easy, you just have to do research and play your cards right.
Low costs. To get started, you just need a blog, or a very popular social profile.
There is no customer service. Since you will not be selling the products directly, you won’t be involved with that, the brand itself will take care of it directly.
Passive source of income. There are no limits to where to insert affiliate links and this is great news if you love creating content on different platforms.
The cons of affiliate marketing:
Low commissions. Some companies pay very low commissions.
Payments are not immediate. It may take months for payment to be received.
You have no control over the price
High competition. Some niches are becoming saturated and there is a lot of competition.
Variable earnings. Businesses can change their earnings percentage without warning, and your profits could plummet.
After analyzing the pros and cons of both business models, we also want to point out their similarities. We are sure that after this general overview you will be perfectly able to identify the right business for you.
Both businesses allow you to start a business without the need to own inventory or manage the shipment of goods.
Both are low-risk business models.
Both have high earning potential.
Both require similar skills such as the ability to create advertising, drive traffic to a landing page and marketing knowledge.
Both have low startup costs and are easy to get started.
In conclusion, both dropshipping and affiliate marketing are excellent business models that will allow you to make money online with a minimal initial investment.
You have to work hard on both activities, but once you’ve got it all set up you will reap the rewards of your hard work.
Whether you choose dropshipping or affiliate marketing as your business model, you will have the benefits and freedom of being able to work from home. What could be better?