Drop Shipping Vs Affiliate Marketing
My Personal Experience
I have mentioned in a few of my posts on my site about drop shipping as an option for a business. So I figured I would do a comparison Drop shipping versus Affiliate Marketing.
I will cover both options and show the differences of each.
Back when I started my online adventure in 2004 I had recently been laid off from my job and needed an income source. I paid for a course that would supposedly help me start my own online retail business. I will say it was not a scam as it did work, but just not to the level I had hoped and that manily was due to lack of experience at the time and limited income for advertising, I will explain. Basically it was a 2 fold business model, using eBay as a seller and also having a retail website for more bang for the buck. Im not here to give you a sales pitch, Im here to give you an example and show you what I did and give you a choice..
So here’s how it worked.
I was a Drop Shipper. What is a Drop shipper you ask? I’ll try to explain
Say I am selling something on my retail website for $200 and you buy it. What I do is, this. I have No inventory on hand so I use the money from the sale to purchase the item from the manufacturer at just above their cost( just for example’s sake) $75, so that leaves me $125 as the difference. And now the manufacturer will ship the item to you with my label or business name on the label. After shipping and whatever handling costs are associated I would keep whatever profit I could achieve from it.
So What that system does is allow you as the retailer to set the sale price based on how much you want to make for each item. I chose to make less per item than my competitors but that meant I needed to sell more to make the same money- Get it?
Thats called selling in volume.
To run that business I need to deal with prices and figure out profits and also deal with customer service and returns. It sort of gives you the feel of a brick and mortar business since you still deal with all the transactions and customer service. Some folks really like it that way as business owner, get your hands involved in the entire process.
What I dealt with as a drop shipper
- Setting retail price for items above manufacturers cost.
- Customer service
- Defective Items
- Website details
- eBay Auctions and posts
- Fee’s for supplier membership or program or both
So as time went on this was working fairly well except I was not getting enough traffic on my website since I really didn’t know much about keywords and SEO at that time. So I used PPC, Pay per click marketing to get traffic. It works but it can get expensive quick, as I found out when I made a $500 mistake by paying .30 a click instead of .03. I was wondering why I was at the top of page one, I thought it was an error until the bill came “oops”. But I did make a few sales from that so it was sort of a wash. Overall I did fairly well with this method. I could go on all day talking about drop shipping and the lessons learned as it was great experience and it gave me confidence and helped show me that an online business can truly work and it is all about what you put into it, that makes it a success. My main item I sold was memory foam and latex foam mattresses and toppers on my website
How about the eBay part of this equation? well I also was Drop Shipping on eBay. I had a variety of items from a retailer that sold to me at a discount so I could sell in bulk on eBay. This is how most power sellers make a great living on eBay. They get stuff at a huge discount because they commit to sell several hundred of the item. I was not that extreme but I did get a discount so I could make a profit. My main Item was Radar detectors, yes I know it sounds silly but it was a huge market when I was doing it. I sold many but still had to deal with power sellers under cutting my price and my market, so my profit was very small for each item.
Some drop shipper suppliers require a fee for membership but many don’t as long as you are making sales and promoting their product. But the fee’s are something to consider before starting. I was a member of a wholesale website that has hundreds of suppliers associated and they charged yearly fee. A good place to start with drop shipping is Worldwidebrands.com is a place to look if you are interested in finding several options for suppliers and tools and to choose from as well as marketing tips. They have been around for a while and are a reputable place to start if that is how you want to go.
Lets talk about Affiliate Marketing and why it is different from Drop Shipping
I am now no longer a Drop Shipper as I am an Affiliate Marketer. The difference?
- I do not set the price of an item
- I do not deal with customer service
- I have no returns nor defective items to deal with
- website details are easier
- I have no inventory
Because I advertise “for” someone who is selling that item. I advertise it, I sell it at “their price” and when the sale happens it goes thru the manufacturer or retailer. Not me. I get a commission in various amounts of % of sale for each item sold, and the manufacturer or retailer like Amazon or Walmart or whoever, deals with all the other stuff like shipping and returns and customer service.
See the difference?
Affiliate marketing is a very successful business model and I am sure you may not even realize you paid a marketer when you made an online purchase recently. The part I really like is that you can make a living on auto pilot once you have a foundation. By that I mean, you do not have to deal with the day to day transactions, you still do have to keep your website current and relevant but you can make money while you sleep or go on vacation or at the kids soccer game or even while working at a different job. You still have to work hard at an online business, because if you relax to much you get passed by others doing the same thing. But your time is spent doing research and improving your brand rather than customer transactions
as far as fee’s go? well the only fee’s I have is my membership to my option I recommend below and a keyword tool I use which has 3 membership levels all affordable including a free option, the Max is $49 a month.See Review Here Not bad if you are running a business full time.
The amount of traffic online is estimated to increase 8-12% this year alone. With 3 Billion people already online that makes a HUGE target audience. Affiliate Marketing is here to stay and is one of the fastest growing businesses out there. The days of big department stores and malls is starting to come to an end. Most commerce is done online now. So why not get in the game?
If you are interested check out my #1 recommended option for all things affiliate marketing. And get going for “free” and try it out for yourself. I have a few more options on my “good reviews” page that you can try if this does not meet your needs.
You can do it as well.
This was just a quick post on the differences between drop shipping and affiliate marketing, I hope it helped you to see how they can both be good and also different.
What has been your experience with an online business? I would love to hear about it, even if you have never done it, i can guide you and help you get there. Please comment and lets talk about it