The internet has opened a wide world of possible revenue streams. Not just for businesses – any ordinary Joe can make a living from their online efforts. Building a steady and sustainable income online doesn’t come easily. If you are willing to put the effort in, you can reap the rewards. Would you rather work hard for a boss or for yourself? There are a host of ways to make money online, some better than others – but the 2 most common are affiliate marketing and drop shipping. Both have their advantages and your niche will decide which methods you choose.
The basic idea of affiliate marketing is that you send traffic to a merchant site and if visitors buy from that merchant within a specific period, your commission is a percentage of the final sale value.
Drop shipping on the other hand is a completely different prospect, a lot more work is involved but the rewards are far greater. When you sell through drop shipping you take the responsibility off the merchant, the traffic never leaves your site, you handle the whole checkout process and when someone places and order you then pass this to the drop shipper who will dispatch the goods to the customer for you. In essence you are responsible for the whole process except for holding and dispatching the stock.
The key differences between affiliate marketing and drop shipping.
To really know which method is best for a specific niche it is important to understand the differences.
Affiliate marketing is purely commission based and you will only be paid for the traffic you send that ends in a sale. The commission rate is set by the merchant, and unless you can reach specific sales targets there is little opportunity to increase the percentage paid. Once you pass your traffic to the merchant you are relying on their sales funnel to convert your traffic, this is probably the most important aspect of affiliate marketing but its completely out of your control.
If you act as drop shipper the traffic will stay on your site throughout the sales funnel, giving you the opportunity to test and increase conversions. But if your customers have any issues with the goods you will be the first point of contact and as such will have to deal with these issues.
In general affiliate marketing is about lead generation, you pass the leads/traffic to the merchant and they take over the sales process from there. Drop shipping is about direct selling where you are responsible for leading the traffic through the entire sales process.
As your goal as an affiliate marketer is to push your traffic to the merchant a simple uncomplicated site will usually work. A drop shipper needs to have a fully functioning ecommerce site, with secure pages and a checkout process. A lot more can go wrong with ecommerce sites so it is wise to continually monitor your site for any errors or issues. There are also additional running costs involved with an ecommerce site.
Which is the best fit for your niche?
As discussed earlier, different models will suit different niches and here are some guides as to which model will work best for which niche.
Affiliate marketing will work best if your niche:
- Relatively low profit margins
- The niche is dominated by large well established sites, who have their own affiliate programs and know how to make a sale
Drop shipping can work best
- If the margins are large enough to justify the extra work needed
- You can find a supplier willing to act as drop shipper
- There is less competition in the space
- The products you are selling are tightly targeted at a small niche, where the market is not properly catered to
- When you can dominate that niche
This is a guest post by Neil Jones who is head of marketing for eMobileScan who are one of the UK’s leading mobile computer specialists with one of the widest ranges in the Uk including the Motorola MC75