Things to Consider in Dropshipping vs Affiliate Marketing
It is a proven fact that all of us are living in a world where online business with eCommerce has a global monopoly. In an era of digital resurgence, businesses can’t refrain from taking the advantage of various online business avenues which are available beforehand. In fact, the present era is the most suitable time for any business to grab an opportunity to avail the modern innovative business ideas with the use of different avenues. Two such incredible online opportunities for the business owners today are dropshipping vs affiliate marketing. Both are already transforming the way businesses operate nowadays.
Both dropshipping and affiliate marketing are low risk yet high return yielding business models. They have already become perfect choices for online business worldwide. While both models offer you ample benefits, they equally bring certain limitations for you. Whenever you choose your ideal business model, assess your business requirements meticulously, and don’t forget comparing various factors in the light of the above mentioned two models.
In this article, you will be acquainted with an in-depth understanding of the different factors and nuances of dropshipping and affiliate marketing. Business owners must assess which model can prove an ideal choice for their specific business needs.
What is Dropshipping?
The dropshipping model solely depends on a manufacturer or a wholesaler who performs the role of your drop shipper. Whenever any customer places an order on your website, that particular manufacturer ships the product to your customer on your behalf. You don’t require holding any physical inventory for this purpose. In fact, dropshipping enables you to sell the products without even carrying any inventory risk or to even worry about the shipping procedures.
In case of trading vs. drop shipping, a business owner has to purchase an inventory from the wholesaler in bulk. Business owners are supposed to bear additional expenses in terms of warehouse spaces, the cost of unsold inventories and also the funds to incur for the product insurance amongst others.
What is Affiliate Marketing?
Affiliate marketing is also popular as an influencer marketing. It applies the monetization strategy in which you advertise or promote other brands’ products. An affiliate gains commission on each product sold through affiliate marketing. Affiliations are done through multiple mediums including affiliate links, referral codes and coupons to name a few amongst others. Once a customer orders any particular product through an affiliate link, the brand ships that order besides taking care of the after-sales services. If you are wondering how to start affiliate marketing, you must focus on the following aspects:
- Discover your niche;
- Generate a following;
- Provide high-quality content to inform potential buyers;
- Generate traffic to your personal blogs or website;
- Join the affiliate programs;
- Convert sales.
To consider the eCommerce vs. affiliate marketing factors, you should remain abreast of this fact that eCommerce involves the selling of products or services through one’s own website, unlike affiliate marketing. Here, you are owning a business and its assets with total command over it. Many popular eCommerce websites as global giants like Amazon, Shopify, BigCommerce, etc., opt for dropshipping is a source for their revenue.
The Similarities between Dropshipping and Affiliate Marketing
Before getting into which model between dropshipping and affiliate marketing is more sustainable for you, let’s glance at some of their similarities:
- In both dropshipping and affiliate marketing, you can run your business without having to worry about shipping and inventory;
- They have lesser risks and reasonable returns;
- Both require initial minimal investments;
- Both can reap more benefits with their strong online presence;
- You can easily promote your products on Facebook, Instagram, etc.
Dropshipping vs Affiliate Marketing - How they are different?
With having their unique benefits both Dropshipping vs Affiliate Marketing are important in their specific contexts. It is still unjustifiable to rank one on another as their respective features make both unique. Here we have brought into limelight their notable elements that bring both into leading positions.
1. Setting Your Own Profit Margins
One of the major dropshipping benefits is that entrepreneurs have total control over their selling price. They have the privilege to set their prices as per their profit margins in the context of their respective choices. For example, if you source a drop shipper who manufactures a particular product for $2, you can sell the same product for $10 or even $20, depending on how you pitched that particular product. Dropshipping provides you with the flexibility of adjusting prices according to the long-term goals of your business.
In affiliate marketing, an affiliate hardly has any control over profit margins. The affiliate receives a pre-defined commission which is set by the owners of respective products to be sold. The commissions and incentives might drive you towards achieving higher sales, you are still left with a tiny portion of the profit.
2. Ownership in Building Your Brand
Those online businesses that opt for dropshipping own 100% of their business. Having complete ownership of business encourages you to build your brand to ensure total customer satisfaction. You invest in the financial, operational, marketing and many other aspects of the business to gain that competitive edge. On contrary, influencers or affiliates have no ownership with regard to businesses or products dealt in. You hardly have any control over your business operations as your role remains restricted to mere product promotions and sales.
3. Marketing and Advertising Campaigns
With dropshipping, you advertise your own website and domain to the best extent possible. No third party is involved in your promotional decision making. You set your own marketing and advertising budgets so you remain free to choose the channels for digital marketing that too according to your marketing goals. As a business owner, you can cater to your preferred target audience to increase customer engagement. An affiliate is actually a third party that simply takes certain steps to promote the products. In such types of performance-based marketing, an affiliate promotes the products under his/her name or influence. The success of the promotion campaign of a particular product solely depends on an affiliate’s ability to promote the product.
4. Customer Support
In all types of customer redressal and grievance handling issues, dropshippers will usually be in charge of the customer support initiative. They must ensure total customer satisfaction to build the desired customer loyalties. However, as businesses flourish, customer support becomes a more challenging task to perform due to many strategic factors. Unlike that, affiliates hardly have any association with the end-customer. Their responsibility is over once they drive sales and achieve their targets.
5. Payment Clearance
In the conflict between dropshipping vs affiliate marketing services in the USA or any other part of the world, payments could be another deciding factor. Don’t you enjoy payments being transferred to your bank account the moment customers purchase any product? In dropshipping, your payments are easily transferred upon purchase. The case is different in affiliate marketing. It always comes with the strings attached. The payments might only be processed once you reach a certain performance benchmark. For example, the company you are affiliated to will ask you to sell the products worth a minimum $150 or more so that you avail your total payment. Affiliate marketers have often been the victims of unreliable delayed payments.
Dropshipping vs. affiliate marketing 2020 has encouraged many eCommerce businesses to thrive due to one reason or the other. Manufacturers and business owners focus more on building quality products to ensure they attain total customer loyalty and satisfaction. Customers usually spend a large portion of their income on online shopping nowadays to help the businesses escalate to a greater extent. Dropshipping is undoubtedly a more sustainable model for the long run therefore endures.
However, if you are in the testing phase of your business, combining dropshipping and affiliate marketing would be advisable and profitable as well. It will facilitate you to identify what works for your business and how should it enable you to structure your marketing goals. Last but not the least, keep a portion of your budget for other marketing functions like Google or Facebook Advertising. It will certainly prove beneficial for you to sustain in the market with constantly increasing clientele base.
Minimize Risk and Simplify Dropshipping with Shop1
There are a few valid concerns for new dropshippers looking to get started. When you don’t have experience with marketing campaigns, suppliers, and the other parts of running a dropshipping store, it’s a bit intimidating to jump in.
With Shop1, you can take much of the work out of dropshipping. With access to Shop1’s directory of pre-approved American dropshippers, you can cut down on the time it would take to find your own, and save the headache that unreliable suppliers cause. You’ll also be able to get a responsive and beautiful website setup in just a few minutes that will handle order and inventory management so that you can spend more time on making advertising work and optimizing your pricing strategies.
If you want the simplest start in the world of dropshipping, get started with Shop1 today.