In response to a recent inquiry, I was compelled to write a piece about the differences between dropshipping and affiliate marketing. One of the most popular videos on the Drop Ship Lifestyle Channel on YouTube is on dropshipping on Amazon, which has received a lot of positive feedback.
What is Affiliate Marketing and how does it work?
The arrangement described by Chilcote in the question above can be summarized as an affiliate marketing partnership. Consider the following example: I published a review for just a specific pen and mentioned how the pen is what I use all day to write. This is a simple way to convey what I mean.
“Hey, by the way, here’s a link for you all to go then buy that pen!” I’d remark at the end of the assessment, after sharing a link with the reader.
Similar to drop shipping, affiliate marketing entails promoting other’s products on your website. One of the major advantages of affiliate marketing, and one of the main reasons why people are drawn to it, is that you do not have to deal with customer service or order fulfillment.
Because you are only providing referrals for visitors to visit someone else’s internet store, you will not be taking orders yourself. You will not be required to charge the credit card, and their money will not be sent straight into your bank account as well. A potential consumer calling you and stating, “Hey, my card is not functioning” is no longer a problem for you. That does not occur because affiliate marketing does not include the processing of orders, leaving it one of the most significant advantages.
Another significant advantage of affiliate marketing is that you will not be responsible for customer service. If I send somebody to a retailer’s site for them to purchase the pen, then they will purchase the pen. This is not my responsibility if the package arrives at their residence with the ink having erupted during transportation.
The consumer would not call me to get a replacement pen for the one that burst on him. Instead, they will contact the corporation and inform them that “the ink exploded”, “I’m looking for a new pen.” Not having to deal with customer service is a significant advantage in affiliate marketing.
Our eCommerce businesses, in particular, are designed to provide the bare minimum in terms of assistance, which means we sell products that aren’t prone to malfunction.
Let’s imagine you are pushing something extremely technological that you don’t know everything about, something that is quite specialized. In this case, having an affiliate network could be extremely advantageous for individuals interested in affiliate marketing. It may be a new form of technological device or something along those lines. If you advertise it through an affiliate program. Answering these queries or dealing with intricate customer service issues is not something you have to worry about. It is possible that not having to deal with customer service will be a major advantage if you market or produce things in a niche like that.
In order to generate money as an affiliate, you must first receive a commission on each sale made by your customers. The individual who referred to it in the YouTube comments is asking why don’t just refer to this transaction through a personal relationship with the manufacturer and that they could give me 10% of the sale, exactly as the individual referred to it in the YouTube comment. So the way to generate money through affiliates is through commission-based sales.
Here’s a brief refresher about what affiliate advertising is before we get into what drop shipping is all about:
- Promote the products of other people.
- Orders are not processed by you.
- You are not in charge of customer service.
- You are compensated based on sales.
What is Dropshipping and how does it work?
Those unfamiliar with the term “drop shipping” should realize that it refers to the marketing of the product in which products are not kept in stock. Instead of warehousing your inventory, you partner with such a dropshipping provider who does it on your behalf. Customers’ orders and shipment information are transferred to the suppliers, who then send the order straight to the client. As an aid to understanding the drop shipping marketing strategy, below is a graph to illustrate:
There are certain similarities and distinctions between dropshipping and affiliate marketing, as well as between the two. Let’s have a look at them:
First and foremost, you are still advertising other people’s products, which is understandable. Let’s take the pen as an example once more. I would still be advertising someone else’s pen, but it would be through my store rather than their website. That implies I would have to process orders, customers would enter their credit card details into my website, and I would also have to deal with customer care issues.
If somebody has a query before ordering this pen, or someone received defective goods, they would come to the dropshipping firm for assistance and assistance would be provided.
Making money using drop shipping entails earning a profit on each sale you complete. If someone purchases that ballpoint from me for $3 and it costs me $1 to fulfill the transaction, I should be able to earn two dollars, correct? But, then, I have to figure in my expenses, which include things like hosting, purchased traffic, and outsourced customer support.
Dropshipping, on the other hand, does not provide you with a guaranteed quantity of money to make. Ultimately, how you price the products and manage your expenses is what determines your success.
The amount of money you make through drop shipping may fluctuate greatly, but this means that you will have greater control.
Instead of earning a 10 percent fee on every affiliate sale, you may earn much more based on how you monetize your website, how many sales you make, and how many clients you have.
To summarize, keep in mind that drop shipping is defined as follows: You promote other people’s products.
- You are in charge of processing orders.
- You’re in charge of customer service.
- Profits are generated from each sale.
Dropshipping vs. Affiliate marketing: Which is better?
To illustrate the distinctions between dropshipping and affiliate marketing, let’s look at an example that I always use since I believe it will help to highlight the contrasts between both. The funny thing is that I’ve been mentioning the paddleboard example almost continuously since I began Drop Ship Lifestyles in 2013!
Consider the following scenario: you’ve decided to create a YouTube video regarding paddle boarding. You’ve received a large number of views, and now you’re thinking, “What a great product. I want people to buy the paddleboards from us. I’m looking to earn some money out of this.”
So you’ll begin to establish an audience that is interested in paddleboards at that point. You may now compare and contrast these two alternatives.
It is possible to make a 10% commission on each sale if you advertise anyone as an affiliate, which means you refer your traffic or audience to someone else’s store. So, if a paddleboard costs $1,000, you would earn $100 for each time someone utilized your link to purchase a paddleboard of his or her own.
In contrast, when it comes to dropshipping some paddleboards, these statistics can differ as well. However, if you set up your business effectively, you may intend to achieve a net profit of approximately 25% on each sale. This implies that instead of sending someone to the website you recommend them to, you direct them to your website to purchase the $1,000 paddleboard you are offering. As a result, instead of earning $100, you may make a net profit of $250.
At this point, a lot of individuals are undoubtedly wondering whether or not this is worthwhile to have a firm that is “hands-off” in exchange for 15 percent of possible profit. When I say “hands-off,” most people assume that I am referring to the fact that you will be not processing orders or providing customer care. And I don’t want you to hold that view since the matter is far more complicated than that. It’s not quite that straightforward.
Which one is better, dropshipping versus affiliate marketing? Here’s the answer to that question
As a result, you most likely guessed the answer to the question of which is best: drop shipping versus affiliate marketing. If you choose drop shipping as the winner, you are correct! drop shipping is more advantageous than affiliate marketing. As a Dropshipper, you earn more profit from physical goods, you can even have your shop running with affiliates and a better chance to go viral and successful.