Affiliate marketing
What is affiliate marketing?
Affiliate marketing is an online business model where you earn commissions by promoting products or services from other companies.
When you join an affiliate program, you receive unique product links. Then, you promote the products through your website, blog, or social media. When people click on your affiliate link and make a purchase, you earn a commission.
Source: Unsplash
Affiliate marketing pros
With an estimated 80% of brands offering affiliate programs, there’s no better time to start taking advantage of this income stream. Below, we’ve gathered some of the pros of affiliate marketing and reasons why it’s taking off.
Easy to start
One of the standout benefits of affiliate marketing is its simplicity. You don’t need to create products, which eliminates the time and effort required for product development and inventory management.
Instead, you promote products or services from established companies as an affiliate marketer. You can choose to work with large brands like Amazon or market services specific to your niche.
Typically, there’s a lot of support from the brands to help you get started. For example, the Fiverr affiliate program offers training tutorials and creative assets to help you drive traffic to their website.
Source: Fiverr affiliates
No need to manage customer support
Running an ecommerce business often involves dealing with customer inquiries. In the affiliate marketing model, this burden is lifted from your shoulders. You act as a middleman between the customer and the merchant in the process of product discovery.
Once a customer clicks on your affiliate link and visits the product page, they will contact the merchant directly. In turn, merchants are responsible for providing customer service. This way, you can focus on what you do best—driving traffic and sales—without the hassle of managing customer support.
Low startup expenses
Affiliate marketing boasts low startup costs. You don’t need to worry about inventory, shipping expenses, or handling returns.
Your primary investment is in building your own website and creating content to attract an audience. This affordability makes affiliate marketing a low-risk business model, which is well-suited for anyone with limited initial capital.
Most affiliate programs run by brands are free to join, with some even offering sign-up bonuses to welcome new affiliates.
As a beginner, you can also start by joining an affiliate network that gives you access to the best affiliate programs out there. They make it easier to find programs and help organize affiliate commission payouts. Some of the most popular affiliate networks include ShareASale, AWIN, and ClickBank.
Source: ClickBank
Earn passive income
Once you’ve set up your affiliate marketing system and established a strong online presence, you can continue earning commissions even when you’re not actively working on your business.
In other words, your old content can generate customers for months and even years after publishing. This way, you can earn passive income and have the flexibility to scale your business, explore other ventures, or enjoy more free time.
Affiliate marketing cons
While affiliate marketing boasts many advantages, there are some drawbacks you should be aware of to make an informed decision. Below, we discuss some cons to affiliate marketing to keep in mind.
Low commissions at the start
Affiliate marketing often starts with relatively low rates, especially for newcomers. So initially, you may find yourself earning modest commissions, which might not meet your expectations.
The commission model also means little control over your rates. The average rate for an affiliate program is 10%, but some also offer different fixed commissions depending on a product category.
For items that have lower profit margins, there might be a lower fixed rate, for example, 5% on book sales. Alternatively, high-value categories like electronics have a higher commision rate to encourage affiliates to promote smartphones, laptops, and other items with high earning potential per sale.
No control over pricing
As an affiliate marketer, you have no control over the pricing of the products or services you promote. The merchant sets the prices, and any changes can directly impact your commissions. If the merchant decides to increase prices, it might become more challenging to convert leads into customers.
Plus, because of how affiliate marketing works, if a visitor goes to a business and buys several things, you’d likely only get a commission for the specific product that you shared.
Affiliate links can be removed
Your affiliate link is the lifeblood of your business, as it’s used to track sales generated through your promotions. Unfortunately, these links can sometimes be removed by users who are cautious about their online privacy or have security fears related to malicious software.
That means you’d likely lose the ability to earn commissions from sales generated through those links, impacting your revenue stream. Additionally, depending on the affiliate program’s terms and conditions, removal of links could lead to the suspension or termination of your affiliate relationship.
Limited to some advertising
Affiliate marketing is not always compatible with every advertising platform or channel. Some platforms, like Google Ads, have strict policies regarding affiliate marketing, making it challenging to run paid advertising campaigns.
Such limitations can force you to rely more on organic traffic and content marketing, which can be slower to yield results.
Dropshipping
Source: Unsplash
What is dropshipping?
Dropshipping is an ecommerce business model where you sell products to customers without holding any inventory. Instead, you purchase products from dropshipping suppliers once you make a sale.
The supplier handles storage, shipping, and fulfillment, allowing you to focus more on marketing and customer service. It’s a low-risk way to start an online store.
Dropshipping pros
Almost 30% of online stores choose dropshipping as their fulfillment method. From scalability to higher profit margins, there are good reasons why dropshipping is so popular. Below are some of them.
Build your own brand
One of the standout advantages of dropshipping is the chance to build your own brand. Unlike affiliate marketing, where you promote other companies’ products, dropshipping allows you to curate your product catalog and establish a unique brand identity.
This means you have control over your product customization branding, product descriptions, and customer experience. In other words, you have full ownership over your own business, its reputation, and, ultimately, its long-term success.
Higher profit margins
Another advantage? Dropshipping is known for better profit margins compared to affiliate marketing. Since you aren’t limited to fixed commission rates and can set your own prices, you have greater potential to earn substantial profits per sale.
While dropshipping involves product costs, shipping fees, and other expenses, savvy ecommerce entrepreneurs offer top-selling products with competitive prices, allowing for a healthy profit.
One thing that can help you get higher profit margins is finding a high-value dropshipping niche. For inspiration, check out the Bicycle Booth, a print-on-demand business catering to cycling enthusiasts and selling cycling accessories, gear, and apparel through a quality online store.
Source: Bicycle Booth
Instant payment
In the dropshipping business model, you instantly receive payment from customers. Unlike affiliate marketing, where you often need to wait for commissions to accumulate or reach a payout threshold, dropshipping provides instant cash flow.
If you use Shopify for your ecommerce store, many different payment methods are already supported, including Visa, Mastercard, Apple Pay, and more. You can also opt for PayPal, which is one of the best payment gateways for dropshipping, especially for international payments.
Easy to scale
Dropshipping is highly scalable. As your brand gains traction, you can easily expand your product range, test new designs, and target additional customer segments.
It’s much easier to scale compared to an affiliate website, which largely depends on the merchants who initiate the affiliate programs and want to have their products promoted.
Compared to traditional ecommerce stores that need substantial investments in inventory, warehousing, and logistics, scaling up your dropshipping business requires minimal additional investment. With the right strategies in place, you can rapidly increase your sales volume and revenue to scale globally.
Dropshipping cons
Even though dropshipping is one of the easiest business methods to try out, it’s not suited for everyone. Here are some dropshipping cons to keep in mind.
Customer support needed
Dropshipping is more hands-on than affiliate marketing and requires customer support. You are the face of your brand, so customers will turn to you with questions, concerns, and issues related to their orders.
Excellent customer support is important for building trust and retaining customers, but addressing inquiries, resolving issues, and handling returns can be very time-consuming. This is an additional responsibility when compared to affiliate marketing.
If it sounds like too much work, don’t be discouraged! Outsourcing customer support can be a smart move, especially if you’re looking to streamline operations and focus on other aspects of your business. Platforms like Upwork, Freelancer, or specialized customer support agencies can be great for hiring a virtual assistant.
Limited control over the quality of service
When you dropship, you rely on third-party suppliers to fulfill orders and deliver products to your customers. In turn, you have limited control over the quality of service provided by these suppliers.
If a supplier makes mistakes, ships the wrong products, or experiences delays, it can reflect poorly on your brand. In the worst cases, it can lead to customer dissatisfaction and negative reviews.
Managing supplier relationships and ensuring consistent quality can be challenging, so it’s essential to find a supplier with an excellent reputation and solid market experience. Do some research to find what other customers are saying and get sample orders to check the product quality.
If you’re looking for a dropshipping supplier, Printful is one of the most reliable companies to work with. Printful offers print-on-demand dropshipping services for apparel, accessories, and home & living items.
