Published on November 14th, 2018 | by Sunit Nandi0
Dropshipping And Affiliate Marketing – The Best Of Both Worlds
Many budding entrepreneurs today start out relying on two key things to take their products to the masses: dropshipping and affiliate marketing. On the surface, the two seem very similar. However, once you examine them more closely, you’ll find that they are actually worlds apart and finding the right one to suit your needs is crucial.
To begin with, let’s get a brief overview of dropshipping and affiliate marketing:
Dropshipping allows you to advertise and sell products without the hassle of worrying about stock and shipping. Instead, the manufacturers themselves hold your products and send them off to the customer in your name. Dropshipping also allows you to set your own prices and rules for your products and put more time and effort into marketing, in order to maximise profits and sales volumes.
Affiliate Marketing functions in a similar way, with the merchant stocking your product and sending it to its destination. Your key focus, therefore, is still marketing. However, unlike dropshipping, you are not able to set your own prices your products.
Here are a few more similarities between the dropshipping and affiliate marketing before we begin looking at the important differences:
- To start your business, you do not require much inventory and other shipping based costs.
- Both are tried and tested models which have been in use for quite some time.
- Both models have high valuations and the potential to earn the seller large profits.
- You are able to start working on the business immediately.
- You must create advertisements and drive a large amount of traffic to your pages in order to be successful.
As you can see, both models look quite similar on the surface. However, the devil is in the detail and dropshipping and affiliate marketing both come with their own set of unique business strategies. Here are the advantages and disadvantage of each:
Dropshipping has a fairly simple business model from the outset, as can be seen if you view this dropshipping vs. affiliate marketing comparison. The reason for this is that dropshipping is often sold as being simple. However, in reality, it has many problems.
While it might look like the profit margins are significantly higher, you’ll find that you have a lot more competition from other marketers. That means that, while in theory you can set your prices quite high, if your competitors are cheaper, then you will lose out.
Another issue with dropshipping is that you end up putting all of your eggs in one basket. Most traffic for dropshipping accounts comes through Facebook. This means it’s simple enough to set up. However, if you are building a single business and trying to get people to buy your products, then what happens when Facebook decides you’ve breached their guidelines and your account gets banned? Well, you’re back to square one. This is a major downside of dropshipping.
One final downside of dropshipping is the fact that you have to deal with customers. This makes scalability incredibly difficult and virtually impossible if you want to do it by yourself. Therefore, you can think of dropshipping as having your own shop. If you close and don’t leave anyone to run it then a lot can go wrong.
The great thing about affiliate marketing is that it is far better in the areas where dropshipping falls short.
Affiliate marketing might not seem as exciting as dropshipping on the surface, however, it allows you to create high-income campaigns relatively quickly.
The great thing about affiliate marketing is that there are a lot of different verticals in which to make money. What’s more, you can get a lot of help by signing up to affiliate networks. By doing this, you can get yourself into a position where all you have to do to is focus on your marketing.
The advantage of being able to focus on marketing is that that is where the money lies. Over time you will be able to build a steady source of traffic and know how to get people to buy your products.
A lot of affiliate marketers also use Facebook, much like dropshipping. The difference is, however, that they aren’t linked to a single shop. Therefore, if one Facebook campaign gets taken down, it’s quite easy to set up another.
Affiliate marketing is also far more scalable, as you don’t need to worry about customer issues when you start selling more units. Instead, you can just focus on the profits and putting more money into the campaigns that work.
There are many different affiliate marketing models you can choose from too. Some of the most common are CPA (Cost Per Aquisition), CPL (Cost Per Lead) and RevShare (Revenue Share). Here is a brief overview of these three to give you a better understanding:
CPA – Cost Per Acquisition
CPA relies on you driving traffic to a product or service. When people buy the product, you get a commission, which can sometimes be as much as 50%.
CPL – Cost Per Lead
CPL is similar to CPA, however, all you have to do to earn money is get people to sign up or fill in their details.
RevShare – Revenue Share
RevShare is used for things like gambling sites. If you get a customer to sign up and make a deposit, then you get a share of their continued revenue every time make a loss on the site or app.
There are lots of different ways to make money from affiliate marketing and it’s worth shopping around to see which suits you. However, when starting out you really ought to get the backing of an affiliate network as they are able to give you advice and continuous offers to ensure you keep making steady profits.
In order to choose between dropshipping and affiliate marketing, you’ll need to decide whether you want to build up a brand or just make quick money but having. Dropshipping allows you to build up a recogniseable store that people eventually have loyalty to. However, it’s a long process and you may fail the first few times. Affiliate marketing, on the other hand, allows you to make quick campaigns and doesn’t require you to put all of your energy into a single income source. However, all you’ll have to show for it once you’ve finished is the money you’ve earned.
Both dropshipping and affiliate marketing can be lucrative, it just depends where your motivation lies.